Committee of Supply – Head W (Ministry of Transport)

The Chairman: Mr Cedric Foo, may I invite you to please take all three cuts together?

Public Transport

Mr Cedric Foo Chee Keng (Pioneer): Mr Chairman, Sir, I beg to move "That the total sum to be allocated for Head W of the Estimates be reduced by $100".

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Sir, my first cut is on public transport and specifically the public transport fares. The current Fare Adjustment Formula for MRT and bus transport has been in place since 2008. The Minister has said that the formula will be reviewed this year for implementation next year. I would like to ask him to share with us his thoughts on whether the formula has produced the desired outcomes and which aspects of the formula were considered effective by him and which not as effective. Also, it would be good if he could share with us the process of the review as to which party has been appointed to conduct the fare structure review and when would the findings of such a review be completed.

For this year, 2012, given the uncertain world economic outlook and the recent MRT train breakdowns, any fare hikes for commuters must be carefully considered. Many commuters have expressed that they would like to see the PTOs improving their service standards first before applying for fare hikes. This is a reasonable request if we consider that commuters have just experienced massive train breakdowns and the fact that the PTOs' past returns have been quite good and, in my view, more than commensurate with the risks that their shareholders bear.

Sir, I would like to suggest to the Minister to make 2012 a "gap year" where fare applications from PTOs will not be entertained. We can then move forward next year with the new fare formula and after the service improvements have been made.

Sir, my second point relates to Polytechnic students. We are elected to this House by the people and we have many duties. One of the most important, in my view, is to listen carefully to the people who elected us. If we disagree with a particular view, no matter how popular those views may be, it is our duty to explain why it cannot be done. If we agree with a certain view, we ought to champion them and sometimes rather relentlessly, especially for people who are unable to effect change themselves – like students, minorities and the disadvantaged in our midst. It is for us as their representatives to do so on their behalf.

2.45 pm

Sir, in his "inclusive Budget" this year, Deputy Prime Minister Tharman Shanmugaratham has answered the calls of many Members and had addressed most of these issues on how to make Singapore a more equitable society. Unfortunately, one group of Singaporeans are still unfairly treated – Polytechnic students who pay more than their peers in JCs and ITEs. Sir, whoever I speak to, they all feel that this inequity should be corrected. The only problem is everybody is saying someone else should bear the increased cost. And as I said before, if we are prepared to inject funds directly into the PTOs to improve bus service levels, we should also, as a Government, be prepared to inject funds to correct this inequity. I hope the Transport Minister has some good news for Polytechnic students for us.

Committee of Inquiry

Sir, my next cut relates to MRT breakdowns. The Minister convened a Committee of Inquiry (COI) to investigate the breakdowns in January. It has been three months since. I would like to ask the Minister for an update on the COI. How have public consultations been and what has the COI found so far? And when can the public expect its full report?

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Also, in the meantime, while the COI is going about its investigations and compiling its report, I would like to ask the Minister about the actions that have already been taken by LTA and the PTOs.

Public Buses

Sir, my next cut relates to public buses. I am glad to see that the Government is actively seeking to relieve congestion in the public transport system by partnering with the Public Transport Operators (PTOs) to add about 800 buses over the next five years. I would like to ask the Minister to elaborate how this substantial sum would benefit commuters in terms of service levels and when can commuters start to see these higher service levels. Additionally, by adding 800 buses or 20% more capacity, would this not cause more road congestion, especially during peak periods and, therefore, slowing down vehicle speeds in general? I would appreciate it if the Minister can elaborate on how this can be resolved and explain how the overall net impact would be positive for commuters and other road users.

Sir, back in 2008, under Minister Raymond Lim, the Land Transport Master Plan was launched. Under this Master Plan, it was envisaged that the bus service industry would be opened up for "contestability for the market", potentially beyond the two existing bus operators. So every few years, the bus routes would be parcelled out and incumbents as well as prospective participants can bid for a certain parcel of bus tracks. Sir, I would like to know if the Minister can confirm whether or not he continues to see benefits in having contestability for the market in our bus sector and, if not, if he could share with us his preliminary views about how our public bus industry sector should evolve.

The Chairman: Mr Ang Wei Neng, please take your two cuts together.

Public Transport Capacity

Mr Ang Wei Neng (Jurong): Mr Chairman, Sir, I declare my interest in the transport industry as I am a Vice President at SBS Transit.

When it was first announced that 800 buses would be added over the next few years, one of the immediate concerns was whether this would add to congestion on the roads, and Mr Cedric Foo also raised the same concern. In my view, this is a valid concern.

All of us know that buses carry more people, up to 90 passengers per single-deck bus and up to 131 passengers for double-deck buses. Thus, buses are much more efficient than private cars and, logically, we need to accord more priority for buses on the roads. This is self-evident to most people. However, there are bound to be pockets of time when certain bus lanes were not occupied fully and that irked some car users. Indeed, very often I received complaints from these car users.

The average bus speed had already deteriorated from 19.1 kilometre per hour in 2007 to 17.8 kilometre per hour last year, according to the Ministry of Transport (MOT). With the planned increased of 800 buses over the next few years, the bus speed would deteriorate further if we do not implement any additional measures. The couple of millions of bus passengers everyday will suffer a drop in bus speed and a longer travelling time.

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Sir, some car users might protest against more bus priority measures. They argue that they are already paying a lot for their cars, for the COE and road tax but bus passengers pay none of those. I can understand the concerns of the car users.

Ideally, cars should be able to share the bus lanes, giving way to buses only when necessary or when needs arise, much like the YOG bus lane concept. In practice, this can be difficult. Even ambulances find it very difficult to get cars to give way to them. Sometimes, the cars may want to give way to an ambulance on the fast lane but they find it hard to filter to the left as the cars on the left lane do not want to give way to them as well. Hence, I urge MOT to consider all stakeholders' concerns and make a decision that will benefit the entire nation. We must be careful not to take protest by those who are more vocal and articulate as representative of the majority of Singaporeans. To improve bus speeds, it is more than just expanding 35 bus stops around the island. We need a series of concerted and bold measures. I hope MOT can devise a strategy to improve the bus speeds as promised in the Land Transport Master Plan (LTMP).

Another feasible solution to smoothen the peak hour traffic is to stretch the morning peak hour over a longer period of time. So far, the measures to moderate demand during the morning peak hours on the train concentrate on providing incentives for people to travel earlier on a voluntary basis. However, we hear that most people treasure their sleep more than the few cents they could potentially save. And for road users, there is ERP to regulate them.

Maybe we need more legitimate reasons for people to travel earlier or later. To this end, large organisations could consider staggering their operating hours. Some of their employees can start working earlier, say, at 7.30 am, while others can start later at 9.30 am without compromising productivity. In reality, some people with school-going children may not mind going to work earlier after sending their children to school. Others may welcome another half an hour of sleep to start work later.

From the economic point of view, it might be worth experimenting with the staggered work hours concept along a major corridor but we need a big push from the Government. I thus urge MOT to form a high-level working committee to study possible measures to lengthen the morning peak hours to ease the traffic congestion as well as the demand for peak-hour travel on public transport.

Update on Barrier-free Accessibility

I move on to my next cut on barrier-free accessibility. Sir, I would like to express my appreciation to LTA for making more MRT stations friendly to the disabled and elderly passengers. For some cases, even the pedestrian overhead bridge near the MRT station is also elderly-friendly and the example is the bridge near the Botanic Gardens MRT station. The Botanic Gardens MRT station is part of the Circle Line and is one of the newest MRT stations. This overhead bridge has a lift on each side as shown in the second picture. Although this overhead bridge is not heavily utilised during the peak hours at about 8.00 am, these lifts still come in handy for the elderly. Similarly, the escalator at the overhead bridge near the Clarke Quay MRT station, as shown in the third picture, is also very useful.

However, the same cannot be said for the overhead bridge beside the Lakeside MRT station, as shown in the last picture. As Members can observe, this overhead bridge is very busy even at 7.14 am. I understand that the LTA is doing a trial by retrofitting lifts at overhead bridges near six MRT stations but it appears to be taking a bit too long since the last announcement in early 2011.

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I hope the LTA can provide an update on the trial and consider installing escalators at the overhead bridge near the Lakeside MRT station as an interim measure so as to benefit Jurong residents. And the same can be said for many other pedestrian overhead bridges that are beside heavily-utilised MRT stations.

Bus Drivers' Wages

Mr Seng Han Thong (Ang Mo Kio): ( In Mandarin ): [Please refer to Pg 2252 for Vernacular Speeches.] Much has been discussed inside and outside Parliament on the $1.1 billion fund from the Government for the purchase and running of the 550 new buses. The Deputy Prime Minister and Minister for Finance has also explained how the fund would be allocated. We have been talking about raising bus captains' pay, but we have not asked where the money will come from.

May I ask the Minister if conditions are set for the public transport operators (PTO) to enhance the wages and welfare of the bus drivers? If yes, how can it be funded and when can it be implemented?

PTO must also give the bus captains' image a make-over and re-package their wage and welfare, especially when there is so much talk about unsatisfactory working conditions and low pay. Otherwise, how can we attract Singaporeans to join the profession? A bus without a captain cannot move at all unless this is a driverless bus. Thus, PTOs must take a two-prone approach by giving a make-over of the image of bus captains and enhancing the pay package so that the 550 new buses can be rolled out on our main roads. I remember SBS Transit launched an initiative to recruit bus captains in 2003. It commissioned a TV series entitled "She Drives Me Crazy" with Kym Ng playing the role of a female captain. SBS dedicated it to all the bus captains. And within three months, it managed to recruit more than 200 bus drivers. I would urge PTOs to launch another creative and crazy campaign to recruit more Singaporeans as bus captains.

Enhancing Public Transport

Dr Lily Neo: Sir, the Minister for Finance has announced a significant initiative to enhance our public transport, such as the $1.1 billion funding for buses and $60 billion for rail. What is the timeline for MOT to ramp up service improvement and enhance our public transport? If the implementation is executed well, then this funding should further improve our land transport. This will likely persuade more Singaporeans to take buses and increase bus operators' revenues. How will MOT then ensure that the profitability enjoyed by public transport operators (PTOs) as a result of this funding will be returned to the Government? Did MOT clarify how will such funding bring benefits to Singaporeans in the near term? How does MOT hold PTOs accountable to the good deployment of the 550 new buses for the purpose of shortening waiting time, reducing overcrowding, better accessibility and connectivity with better routes with feeder buses? Does MOT specify guidelines to ensure that the new buses are not being used to ease PTOs' day-to-day responsibilities or their bottom lines at the expense of vast optimal outcomes? How does MOT plan to monitor subsequently as PTOs are private entities and not under the Government's jurisdiction but receiving Government funding and an almost monopoly right? For example, how does MOT ensure that the PTOs are lean and productive? How much do the PTOs pay their top management? It was reported that SMRT paid its past CEO, Saw Phaik Hwa, a remuneration of more than $1.6 million in 2010. May I ask MOT, should the PTOs be not profitable despite this latest $1.1 billion funding due to high remuneration for staff and for inefficiency, are they allowed to resort to hiking transport fares for more profit?

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In Australia and Britain, their governments give to successful bidders to run bus systems and pay them for their services in a hybrid system. Such a system will avoid any issues caused by monopoly or oligopoly. Could we have the system here?

On rail capacity, during peak hours, every train will be fully packed with both sitting and standing passengers, and it is not uncommon for passengers to have to wait for several trains to pass before being able to board.

3.00 pm

Apart from the announced expansion of rail network, what are the plans to further improve service levels and what are the measures taken to prevent future rail disruptions?

I am glad that almost half of our buses now are wheelchair accessible. But with mobility difficulty and failing vision due to advanced ageing or limited physical movement of the handicapped, taking public transport is a hurdle to the elderly and the less mobile. They need a lot more effort and taking more time, thus delaying other commuters too. It is better to make available other transport modes to make travelling more conducive for this group - transport mode that provides assistance in getting in and out of vehicles, accommodating wheelchairs and with pick-up and drop-off arrangements. Could MOT play its role in providing this facility, just like many developed countries which provide such service, for example, the taxi scheme in London?

Chairman: Mr Nicholas Fang is not around. Er Dr Lee Bee Wah. Please take your two cuts together.

Better Connectivity to Khatib MRT

Er Dr Lee Bee Wah (Nee Soon): Sir, when I heard the Minister announced that 800 new buses will be added, my eyes were wide open. My residents who have just shifted into the new BTO flats at Jade Spring and Dew Spring have been telling me that to get to the nearest MRT station is a chore. These residents live near two MRT stations – Yishun and Khatib stations. This sounds like a privilege. Unfortunately, shuttle services are irregular and overcrowded.

I have just received an email from one of my residents. She told me that she arrived at the bus-stop at 6:55 am, first bus 806 came and gone, she could not get up. Second bus 806 came and gone, she was still at the bus-stop. The third bus 806 came, she was still at the bus-stop. Only when the fourth bus came, she managed to get up.

The total journey to the Yishun MRT station alone can take up to 30 minutes, including waiting. This is about the same duration as travelling by MRT from Yishun to Dhoby Ghaut Station. Thus, it means there is a lack of efficiency in the network bus connector services.

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The nearer MRT station is actually Khatib Station. But this is a worse choice as there is no bus service to Khatib Station. You either have to take a taxi ride or a walk of more than one kilometre.

Besides Jade Spring and Dew Spring, I still have Flora Spring, Vista Spring, Orchid Spring which are under construction. I need the Minister to spring into action quickly! I urge the Minister to address the problem of long waiting times and overcrowding of feeder buses, as well as look into introducing a new bus route to Khatib Station in anticipation of the demand and to improve the service to residents.

Concession Fares for Polytechnic Students

I move on to my next cut. Ever since the student travel concession scheme was extended to JC students, the Polytechnic students have been left in the cold. I feel strongly that these students who are in the same age group as their JC counterparts should not be penalised unduly just because they choose to take a different route in education and do not wear uniforms. An enrolment into a Polytechnic is not an enrolment into a job.

The cost of pursing a Polytechnic education has gone up with the latest increase in fees. We are only putting an additional financial burden on the parents of these students by not extending to them the fare concession, when we could have provided them with a relief.

I note that the Minister for Transport has told this House that it will cost the transport operators $28 million per year if Polytechnic students are to be given travel concessions. But bear in mind that Government in this Budget is spending $1.1 billion for Bus Services Enhancement Fund. If there is a willingness to look upon Polytechnic students with a gentler eye, I am sure it can be done.

I urge the Minister to engage the public transport operators again and seriously look into addressing the help that our Polytechnic students require. The funding could come from PTO or come from Government, or a combination, I leave it in the magic hand of our Minister.

The Chairman: Mr Liang Eng Hwa, please spring into action!

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, Polytechnic students are not given similar student concession as JC and ITE students because they are administratively tagged as tertiary students, as compared to the tagging of non-tertiary students for JC and ITE, which then begs the question as to why we allow an administrative tagging to determine how much concession the students get.

Currently, a monthly hybrid concession pass for JC and ITE students will cost about $52.50 while a similar monthly pass for Polytechnic students would cost almost double at $97. We know that the bulk of the Polytechnic students and JC students are about the same age and the financial situation faced by the Polytechnic students cannot be any much different from the JC or the other students of about the same age. The explanation in the past for this differentiated concession has always been that if the same concession was to be extended to Polytechnic students, it would cost the PTOs $28 million; and the public transport operators will have to levy higher fares from other commuters to make up for this loss of revenue.

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Sir, why must the Polytechnic students have to go through this burden to be extended similar concessions for students of the same group? Is this fair to them? I find it hard to explain to the Polytechnic students that if the same concession were to be given to them, some other commuters will have to pay at a higher fare for it.

Sir, the way we frame the solution to this problem does not work well in terms of strengthening cohesiveness. Can the PTOs bear the additional concessions, or can the Government structure new tax incentives to entice the PTOs to extend the same concession to the Polytechnic students? Or can the Government absorb the subsidy altogether?

As a former Polytechnic student, I appeal to the MOT and the LTA to review this again and look at ways where PTOs can extend consistent and fair concession to Polytechnic students immediately.

Ms Jessica Tan Soon Neo (East Coast): Sir, this transport concession for Polytechnic students has been a long-standing issue raised by several Members of this House.

Education is an important lever to enable inclusive growth in Singapore. We have emphasised the importance of education and the need to ensure that all our students regardless of background are given equal opportunity to quality education to develop their potential. Under MOE's education roadmap, there are various pathways for post-Secondary students that are offered to our students to develop their skills and to meet their needs and aspirations. In fact, the tagline in the brochure asked students to, "follow your strengths, fulfil your potential". Students have the option of either JC, Polytechnic or ITE. Based on the cohort of post-Secondary students in JC, ITE and Polytechnic, Polytechnic students form the largest population of post-Secondary students.

Currently, only JC and ITE students have transport concessions. While I understand that the cost implication is not a trivial matter, it is hard to agree that full-time Polytechnic students are excluded from the transport concessions that their peers in JC and ITE receive. I am appealing to MOT to look at how we can adopt an equitable model for transport concession that can cater for all post-Secondary students in JC, ITE and Polytechnic.

Transport Fares and Concessions

Mr Baey Yam Keng (Tampines): Sir, currently, there are just five categories of public transport fare concessions, for pre-schoolers, students, tertiary students, full-time NSmen and senior citizens.

Sir, I remember several Members and I have raised the issue of making senior citizens' concession available throughout the day in the House in the past. It was a long-drawn appeal over many years until finally the PTC announced so in the latest fare revision last August. And one week before that in August 2010, then Minister for Transport mentioned in response to some PQs on bus fares that the public transport operators had to make the "business" decision on concessions. But given that the two bus operators are listed commercial entities, I would be surprised that any of them voluntarily offered to take in less revenue. Hence, I was not surprised that it was the PTC which mandated it, but I am now also confused exactly which is the body that has the authority to do so.

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I would like the Ministry to clarify this as we, as Members of the House, will know then who to turn to when we are championing for our residents. Is it the PTO, PTC or MOT? Sir, in my view, it should be the Government, whether it is the MOT or LTA. It is the Government which should set the values for our society. Just as we have decided to care for the elderly because they have contributed to society and it is now our obligation to take care of them when they are old, I would like to appeal that concessions be given to:

(1) the disabled because of their unfortunate physical conditions which limit their ability to make a better living; and

(2) the recipients of the Public Assistance scheme as a more holistic package to help those who really need it.

In addition, I would also like the Ministry to review the tiers of concession for students. Sir, in the past, students go on to "A" levels after they turn 16, before proceeding to University or Polytechnic.

Today, as Ms Jessica Tan has said, 43% of each cohort goes directly to Polytechnic after "O" levels, making it the most common next phase of education. Subsequently, about 15% of each Polytechnic cohort makes it to our local Universities; but by 2015, this will be increased to 20%. If it includes those who go on to private or overseas Universities, the proportion would be even higher. So, Polytechnic education is not the same as before when it was classified as tertiary or the final level of formal education. It is now more akin to a post-Secondary education, especially when the students are of the same age group as those in JC. Hence, I would like the Minister to consider a review of the current tiers of student fare concessions.

Mr Alex Yam (Chua Chu Kang): Sir, I echo the sentiments specified by Mr Cedric Foo, Er Dr Lee Bee Wah, Mr Liang Eng Hwa, Ms Jessica Tan and Mr Baey Yam Keng on the issue of concessions. This may have been a long-drawn discussion through many years but it is still something that is worthwhile for us to discuss in this House.

The Public Transport Council, in its recommendations in 2011, included extending the travel fare concession for the elderly to the full day. This was also hard fought. While this has proven popular, there are, of course, significant sentiments on other parts of the recommendations in 2011. Another issue, of course, is the continued rejection of concession to be extended to Polytechnic students.

Since July last year, my interaction with many Polytechnic students has always revolved around transport concessions whatever the topic we start off with. The lack of parity with fellow students in pre-tertiary or post-Secondary institutions has been a constant issue for many years. The explanation that Polytechnic students are tertiary ones has been oft-quoted and used. But, however, this perceived issue of semantics and administrative pegging has hardly been palatable for many. As more and more of our students aim for Polytechnic education, their choice in education should not become an inequitable one when it comes to transport fares. To compound matters, the explanation of costs to the operators does not address the parity issue. The recent estimate that it will cost $28 million to grant concession to students is also hard to digest for many of them. This is especially true in light of the 800 new buses and the $1.1 billion package in the Budget for this year.

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It must be acknowledged, of course, that the issue of concession will always be an emotive and constant one. But a good transport system should be efficient, inclusive and progressive. As such, I urge the Ministry to undertake a review of the fare concession issue again, if not for this Budget, then for one in the very near future.

Mr Yee Jenn Jong (Non-Constituency Member): Sir, there are many requests for more public transport concessions for the disabled and Polytechnic students. On 21 November last year, Minister Lui Tuck Yew said that the Public Transport Council was aware of the concession request for these two groups and would work with the operators to see how best this request could be considered in future reviews of fares.

I feel the opportune time for review is now, especially with the Government investing $1.1 billion in the operations of new buses for the public transport operators. This Budget is called an inclusive Budget that provides targeted help to those most in need of them. It would be a good gesture by the public transport operators to reciprocate our Government's generosity by granting this request to these two groups who truly need better concessions.

Liveable City

Ms Jessica Tan Soon Neo: Mr Chairman, while we continue to upgrade our transportation infrastructure and increase capacity for our transport network, what is being done to ensure that our roads are able to accommodate the increased load?

3.15 pm

Take the example of my constituency in Changi/Simei. It is a small town of about six square kilometres. The number of residential units is increasing, with new public and private developments. Last year, we saw the completion of a new DBSS development. We have two new private condominiums in the pipeline to be completed by 2014. This will result in a 10% increase in the number of residential units. In the vicinity, we will also be having SUTD, the new university to be built by 2017. This will put a further strain on the current infrastructure and road capacity with the increasing population, especially during peak hours. Despite proactively highlighting the concerns to relevant agencies, there is still no immediate plan to increase road capacity to handle the impending increase. While the Downtown Line (DTL) project which is scheduled to complete in 2017 will help over the next few years, our present road system will prove inadequate and cause a lot of build-up and congestion which we are already seeing today. I have asked the Ministry to relook at the current capacity and look at how we can assist here.

The other area I would like to cover is noise and the level of noise along the transportation network. Since 2008, SMRT has increased the frequency of trains and added trains, but due to this, this has resulted in a high level of noise, and residents in several estates, for example, Bishan, Jurong, Eunos and Changi/Simei, have complained to SMRT of a noticeable increase in the noise generated from the MRT tracks for residences located in close proximity to the MRT tracks.

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In Changi/Simei, about 10 blocks, both private and public, as well as several landed properties are affected. And trains run from 5.18 am till about midnight, with an average of 10 minutes' interval. So this is extremely persistent. I would like to ask the Ministry what specific steps are being taken to manage the increase in noise as well as to mitigate both in the short term and the long term, and are these standards for the noise limits really appropriate for the population density that we have, as well as the amenities being built so closely.

Reducing Noise Level along MRT Train Tracks

Mr Ang Hin Kee (Ang Mo Kio): Sir, residents who stay near to MRT tracks have to put up with noise of passing trains on a daily basis. In its report, LTA shared that the train noise is within 80-85 decibels. This is like listening to loud music in a room and, might I add, not even a song of their own choice. In June last year, LTA announced that it would embark on a noise measurement study to be completed by the second quarter of this year. The study will span an entire length of elevated tracks island-wide and cover more than 500 flats located near to these elevated viaducts. The objective is to identify locations which require special attention. Currently, LTA has installed low noise barriers at the new viaduct and platform at Jurong East Station to reduce the noise to the same level before the implementation of Jurong East Modification Project. They will also pilot such barriers along the open tracks at Bishan MRT Station.

May I suggest that LTA speed up the noise measurement study and implement solutions to reduce noise as soon as possible. Secondly, can LTA extend the study to cover more areas? I have visited shops along Bishan MRT Station and, indeed, the area can do with more noise barriers. Similarly, I have visited many homes near Ang Mo Kio MRT Station and visited the residents living near the station. They, too, face the same problems as those in Bishan. Many a time, I struggle to hold a conversation with them because of the passing train and we have to stop talking for every three or four minutes or so. Can noise barriers be installed earlier and in more areas to bring relief to residents who may have been putting up with the high noise level for years?

The Chairman: Order. I propose to take the break now.

Thereupon Mr Speaker left the Chair of the Committee and took the Chair of the House.

Mr Speaker: Order. I suspend the Sitting and will take the Chair at 3.40 pm.

Sitting accordingly suspended

at 3.20 pm until 3.40 pm.

Sitting resumed at 3.40 pm

[ Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

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Head W (cont) −

Mr Lui Tuck Yew: Mr Chairman, Sir, first, let me thank Members for their helpful comments, useful feedback and thoughtful suggestion and, of course, their challenging questions. Let me start, first of all, by providing an update on the 2008 Land Transport Masterplan (LTMP) before I move on to deal with some of the issues that they have raised. I will then outline some of our key initiatives going forward.

2011 saw the completion of two major rail projects that significantly enhanced the capacity of our MRT network. We opened the last stretch of the Circle Line, from Marymount to Harbourfront, in October 2011, and this brought increased convenience and enhanced connectivity to many commuters. Because it is an orbital line linking all the main lines, the Circle Line helped to reduce crowding on existing lines, especially the city-bound stretches in the morning. For instance, the morning peak loading levels have decreased by about 5%-10% between Serangoon and Little India, and about 3%-5% between Bishan and Novena.

The Circle Line also connects a range of destinations that were previously not served by rail, such as the NUH, the cluster of R&D hubs at One-North, attractions like Holland Village, the Botanic Gardens and Haw Par Villa. I hope the convenience has persuaded some motorists to give public transport a try, as this is all part of our intention to make public transport a choice mode.

The other key infrastructural project that we completed last year, a year ahead of schedule, was the Jurong East Modification Project (JEMP). This unlocked a major infrastructural bottleneck in our MRT network. Together with the additional 22 trains that were delivered progressively from May 2011, we have been able to inject more capacity along the North-South and East-West Lines, with more than 800 weekly train trips added. In particular, the congestion between Chua Chu Kang and Jurong East has seen meaningful improvements. As a result, the public transport operators (PTOs) have been able to add 1,300 weekly train trips in 2011 alone, and another 116 trips so far this year. If we compare this to 2008 when the LTMP started, the PTOs have increased capacity by about 30% or a total of 2,900 weekly train trips.

From 19 March 2012, the SBST will add 60 weekly train trips on the North-East Line between 6.45 and 7.30 in the morning. This will reduce current waiting time significantly.

The installation of the Half-Height Platform Screen Doors (HHPSDs) on all elevated MRT stations along the North-South and East-West Lines has enhanced the safety of rail passengers and minimised train disruptions due to track intrusions. I am happy to inform Members that this programme that was debated quite extensively in past years is substantially completed and only some outstanding works remain for Kranji Station, which should finish by mid-March.

Before I turn to the improvements that we are making to our rail system, let me dwell briefly on Mr Cedric Foo's question on the update of the investigations into the MRT disruptions. As Members of this House would be aware, the Committee of Inquiry's (COI) public hearings will begin in April. They have received, I think, 27 inputs from the public altogether. The investigations, I understand, are still ongoing, and after it is completed, I am sure that the Chairman will be able to give an update once the public hearings have started. But let me give an update on the measures that have been taken between LTA and the PTOs and the other improvements that have been made thus far.

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Firstly, both LTA and PTOs have worked to improve the incident management processes, learning from the shortcomings in December last year. They have made good progress. Both operators have agreed to provide regular bus services free of charge at designated points nearest to affected stations in the event of an extended MRT service disruption. This means more choices for commuters, as they can choose to resume their journeys expeditiously using the regular bus services or wait for the free bus bridging services. Plans are also underway to improve bus information provision at MRT stations, and to install signages to guide commuters to the designated bus bridging points.

3.45 pm

Secondly, on emergency preparedness and training of personnel, LTA and SMRT recently carried out a joint high level table-top exercise to further improve and coordinate their plans to manage train service disruptions. This is the first in a series of exercises that will progress to include ground deployment exercises and to include more agencies in future.

Thirdly, on regulatory improvements, LTA has also issued to the PTOs a Code of Practice (COP) on incident management during service disruptions. The COP sets standards for compliance on key aspects of incident management, including information management, crowd management, and incident reporting by the PTOs to relevant authorities such as the SCDF and police for timely support and coordination on recovery efforts.

The objective of all these measures is to reduce discomfort and inconvenience to commuters by ensuring faster information dissemination, timely recovery actions and better coordination in the handling of train service disruptions. We will also review other aspects of our current regulatory and penalty framework with a view to strengthen this further, and will take on board the COI's more holistic findings, where applicable.

Let me now update the House on our medium-term plans to improve the rail network. The North-East Line (NEL) will receive 18 more trains, instead of the 12 that were previously planned. These additional trains will cater to future demand and increase the train fleet by about 70%. The Circle Line (CCL) will also receive 16 more trains, increasing the fleet by about 40%. The tenders were recently awarded and we expect the trains to arrive from 2015.

For the North-South and East-West Lines, we will bring in 13 more trains by 2014. In addition, we have called for a tender to procure another 22 trains, of which 13 are for the Tuas West Extension due for completion in 2016. If you take these additional trains coming into the North-South and East-West Lines and add them to the 22 trains that were delivered from May last year, it will increase the train fleet by more than 50% compared with what it was prior to May 2011.

The injection of additional trains has to be synchronised with improvements to existing and new infrastructure. For example, ongoing works to upgrade existing depots to house these trains will be completed in 2014. In conjunction with the Tuas West Extension, we are also building a much larger depot by 2016 in Tuas to house the additional trains needed to enhance the capacity of the North-South and East-West Lines.

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The other major project is the upgrade to the signalling system of the older lines. The contract has been awarded and we expect completion for the North-South Line by 2016, and the East-West Line by 2018. The upgrade will allow trains to run at shorter intervals of 100 seconds during peak periods, instead of 120 seconds today, a potential 20% increase in capacity during peak hours. The LRT system will also benefit from more capacity and trains. Last year, we announced the purchase of 13 train-cars for the Bukit Panjang LRT, increasing the current fleet of 19 cars by about 70%. These will arrive by around 2014 and will help ease loading levels.

For the Sengkang-Punggol LRT, we have completed an engineering study and confirmed that upgrading the Sengkang-Punggol LRT from a one-car system to a two-car system is technically feasible. This is a major upgrade. It involves changes to the signalling, communications and power systems, as well as depot works and modifications to the existing train-cars. The upgrade will increase the capacity of the LRT during peak hours. We are finalising the details for implementation, including the number of additional train-cars that we will buy.

Besides adding more capacity to the existing rail network, we continue to expand the rail network to bring connectivity to more parts of Singapore. Our next major rail line is the Downtown Line. The first stage is from Bugis to Chinatown, and that is scheduled for completion next year. The other two stages, from Bukit Panjang to Bugis will be running by 2015, and from Expo to Chinatown, by 2017. We also expect to open the North-South Line Extension that will run to the Marina Pier in 2014, and the Tuas West Extension in 2016, extending it beyond Joo Koon, where it currently terminates today. Beyond 2017, the LTA will also be building the Thomson Line and the Eastern Regional Line. When completed, about 400,000 households will be within a 400-metre radius or about a five-minute walk of a train station.

It is important to regularly gauge the receptivity of commuters to the improvement works as well as their level of satisfaction and areas of dissatisfaction. SIM University, commonly known as UniSIM, conducts an annual Public Transport Customer Satisfaction Survey (PTCSS). The most recent survey was done in October 2011, just after the fare adjustment exercise, but prior to the December train disruptions. The picture is mixed. Overall satisfaction with public transport services has declined slightly from a year ago. The decline in satisfaction levels for bus services is more significant. This is consistent with other public feedback that satisfaction is lower compared to 2010.

The respondents were also asked a direct question on whether public transport had improved compared to 2010. I think this has some bearing, especially as Mr Cedric Foo had raised this point, on whether fare hikes should precede or come after service standards have improved. When asked a direct question on whether public transport had improved compared to 2010, 68% of respondents felt that rail services had improved compared to a year earlier, while 70% felt bus services had improved. This suggests that whilst commuters were less satisfied with public transport services compared to 2010, they did notice the public transport improvements that had been introduced. I have talked about more trips on the MRT earlier.

On buses, we continue to make small but targeted improvements under LTA's existing quarterly review process with the public transport operators. Under this process, LTA works with the operators to deploy higher capacity buses and add more bus trips to increase frequency and capacity along sectors that experience persistent heavy ridership.

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Since this process started in June 2010, they have improved 93 unique bus services, with some services being improved more than once. In the last quarter of 2011, 39 bus services were improved, the highest number to be improved since the process began. But these are small, targeted improvements.

When I joined the Transport Ministry last year, I spoke about the need for the Government to partner the operators to significantly enhance bus capacity ahead of the roll-out of new rail lines. On their own, the operators will add capacity in tandem with ridership growth to meet the Quality of Service standards mandated by the Public Transport Council. But this would not be anywhere close to the level of capacity injection that would significantly and decisively improve waiting time and congestion levels from what they are today.

Deputy Prime Minister Tharman Shanmugaratham has announced in his Budget Speech the decision by Government to provide $1.1 billion worth of funding for a Bus Services Enhancement Programme (BSEP) that will commence this year. Under the BSEP, 550 buses will be funded with Government's assistance, which together with the 250 buses from the operators to meet expected ridership growth, will lead to a 20% increase in the public bus fleet. The capacity injection will be front-loaded with about 70% added within the first three years. This is a considerable undertaking. When we checked back our records, we found that the PTOs took some 20 years to achieve a similar increase in fleet size. So, what we are partnering the PTOs through this BSEP will translate into a significant improvement in the quality of bus services over the next five years.

Of the 550 buses that Government will help to progressively add, about 300 buses will go towards reducing crowding and improving frequencies of existing bus services, especially during the peak periods. The remaining 250 will be for new bus routes. The PTOs will be expected to deliver higher service levels, beyond what the current Quality of Service (QoS) standards require of them.

First, the PTOs will be required to reduce the loading levels for all basic bus services from the current 95% to 85%. Commuters can expect about 10% more capacity along the more crowded stretches of bus routes during peak hours. With more buses injected to spread the load, bus frequencies will also go up. Overall, this will mean shorter waiting times for commuters during peak hours, a higher likelihood of getting onto the first arriving bus and a more comfortable ride.

Second, the PTOs will have to improve the peak-hour frequencies of feeder bus services, which play an important role in our integrated public transport network. We will require 95% of all feeder services to operate within 10-minute scheduled intervals or better, up from the current 90%, as you can see on the slides. The remaining 5% will operate within 15-minute scheduled intervals, tightened from the current 30 minutes. In addition, we will require these to be sustained over two hours during both the morning and the evening peak periods, up from today's 1-hour requirement. Hence, commuters can look forward to more frequent feeder services.

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Third, the operators will have to improve bus frequencies across the board during peak periods, not just for feeders, but also for trunk routes. Today, 80% of all basic bus services, trunks and feeders, already operate within 10-minute scheduled intervals. Going forward, we will require the next 10% to operate within 12-minute intervals, and the last remaining 10%, within 20-minute intervals. These will be a significant improvement from the current 30-minute requirement.

Fourth, we will improve the connectivity of the bus network over the next five years by progressively adding around 40 new bus routes. For residents, these bus routes will improve connectivity to major transport nodes and to key community and commercial facilities in the neighbourhood. One such example is a new route that will be introduced in the Telok Blangah Heights region. Subject to further detailed routing studies that LTA will have to complete, this new service will help improve the local connection of this estate to Telok Blangah MRT Station.

This is particularly important as the town continues to expand further with more developments coming up further away from the MRT station. Residents staying in this hilly region, and especially the elderly, can enjoy transfer and walk time savings with the introduction of this new service. Like all the other new routes that will be introduced under the programme, LTA will engage community leaders to better understand the specific needs of residents.

Eight bus routes, parallel to stretches of the existing rail network, will also be introduced progressively from the third quarter of this year. We will have to monitor the performance of these services closely and if necessary, adjust them, as past experience has shown that commuters still prefer the faster travel that trains offer, even when the trains are known to be more crowded than buses. It will take some time for the new buses to arrive, for supporting infrastructure like bus depots and bus parks to be built and, more importantly, for the PTOs to aggressively ramp up their recruitment of bus drivers.

4.00 pm

By the end of 2014, with 70% of these new buses in operation, there will be tangible and significant improvements across the bus network. But let me caution that finite resources mean that there will be many competing demands. We will have to carefully assess and prioritise all the requests that are made. And already, many Members are making requests. I had a conversation with one of our MPs just a few days ago. We were about to conclude our conversation, and for me to get back to the sanctuary of the Chamber, when two other Members joined us. They were rather disappointed that we were about to wrap up our discussion but the first one very quickly added, "Whatever she wants, I also want." The second one was no less direct but slightly more specific, "Whatever she gets, better give me also." So, let me repeat my last line which is that finite resources mean that the many competing demands will still have to be carefully assessed and prioritised. But I hope all Members will support this BSEP fully.

The Government will set aside about $1.1 billion to fund the purchase and running of the 550 buses for the next 10 years. This includes the salaries of new bus drivers to drive the additional 550 buses, and all other running costs that are associated with these buses, including fuel and maintenance. Just to give some context to the $1.1 billion – the cost of a new bus is about $500,000, while the daily operational cost of running a bus is about $600, or for 10 years for one bus, it is about, I think, roughly $2.2 million, based on the data that we get from the existing bus fleet of 4,000.

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Dr Lily Neo asked whether this $1.1 billion will end up unfairly benefiting the PTOs. It will not be the case. Far-sighted and enlightened as our Minister for Finance undoubtedly is, it took quite some effort to convince him. He was not fully convinced until he was very sure that we had the mechanism in place that the PTOs will not profit from the injection of the buses and the funds. Our funding for the 550 buses will not result in a profit for the operators. We will pay the operating costs of these buses and will recover the revenue derived from operating them. The $1.1 billion is a budgeted figure, and we will release funds to the PTOs at a pace commensurate with their incurred expenditures from running the programme. And in return, the PTOs will be required to deliver the agreed service level improvements. The LTA will track and monitor their performance, and work closely with them to ensure that the resources provided translate into the intended outcomes to benefit commuters. As an additional safeguard, the LTA will scrutinise the PTOs' actual costs for the purchase and running of the buses, bearing in mind that they still have to operate and run efficiently the 4,250 buses that they have to pay for themselves. And should their costs turn out to be lower than expected, our Government funding will be reduced correspondingly. So, one way or another, there is no profit to be made from the funding that we will provide for these 550 buses under this enhancement programme.

Without Government funding, the bus companies would not be able to step up capacity and service levels so quickly. The reality is that the finances of the bus industry have been deteriorating in recent years and the PTOs' bus operations have been running operating losses for some time already. From 2006 to 2011, public transport fares went up by a total of 0.3%. During that same period, fuel prices went up by about 34%, while national wages increased by about 26%. As Deputy Prime Minister Tharman Shanmugaratnam said in his Budget Round-Up Speech, it would not be viable for the PTOs to bear the additional costs of the 550 buses using their own financial resources, unless fares were sharply increased by about 15 cents. Therefore, the $1.1 billion that the Government is putting into this programme is, in reality, a subsidy to benefit public transport commuters so that they enjoy a higher level of service. It is not a subsidy to the operators.

The PTOs will have to continue to strive for productivity improvements since they remain wholly responsible for managing the costs of their own bus fleet. They will also need to receive reasonable fare adjustments granted by the PTC to cope with underlying cost increases across their fleet.

Mr Foo asked whether such direct engagement of the incumbent bus operators to run this enhancement programme goes against our intention to introduce greater contestability into the industry. The short answer is no. Our longer-term intention, as we have shared in the Land Transport Master Plan, is to inject contestability into the bus industry and this remains unchanged. What we have in mind is to eventually carve out meaningful packages of bus routes, some of which will then be competitively tendered. The intention of competitive bus route tendering is to allow the most cost-efficient operator to win the rights to run these packages. This is a natural check to ensure that cost efficiencies are maximised. But this is a complex matter, and such a major change will take time to prepare for and execute. It is critical to get the fundamentals of such a change right, and for the implementation to be as smooth as possible to minimise disruption to commuters. We should not rush this, and we will take the necessary time to study and get this right.

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Our overriding priority for the BSEP is to ramp up bus capacity significantly and quickly in the next few years for the benefit of commuters. The most expeditious way is to add capacity using the current framework. We are mindful to do this in a way that does not impede us in our longer-term plans. We also do not preclude the possibility of engaging other operators to run selected aspects of the BSEP on a limited scale.

What else are we doing to help the PTOs roll out these improvements expeditiously? Mr Seng Han Thong made a very interesting intervention and has correctly pointed out that the shortage of drivers is a key factor. We will consider, of course, Kym Ng or Rui En or one of the other actresses to perhaps help us out in this effort as well since the previous effort was so successful. Now, wages for the public bus drivers, although last raised in 2010, are something that is a challenge for the PTOs to do more, against the backdrop of the worsening bus industry financials that I have just mentioned earlier. Many have commented that bus drivers' wages will have to rise significantly, and for the profession to be made more attractive, for the BSEP to succeed. And that is right. I understand that the PTOs are already looking into this, as they have to prepare themselves to roll out this programme expeditiously. How the PTOs structure these salary increases, and what else they need to do to improve the overall terms of employment to attract sufficient numbers of new bus drivers and to also retain their existing drivers, these are internal company matters that I ought to leave to the operators to deal with. It is also a dynamic situation because the operators have to grapple with other industries that similarly have to target locals in the face of a reduction in the intake of foreign labour. But they know this is a top priority for them and they are working hard on this.

Our buses and bus captains play an important public transport role. Over time, we have made structural improvements and refinements to better support public bus financing. We extended the lifespan of public buses, and waived the need for COE and the 5% Additional Registration Fee (ARF). Such measures help the bus operators cope with the significant disparity between rising fuel and wage costs and the fare increases that I mentioned earlier.

And yet, there remains a marked difference between the support that is given to the bus and rail sectors. For instance, the Government funds the development and land costs for rail depots, and grants rail operators the right to generate and retain non-fare revenue such as advertising revenue in their MRT stations. Such support is comparatively lacking in the bus sector.

Going forward, and consistent with what is done for the rail industry, the Government will bear the development and land costs for bus depots and bus parking infrastructure, and lease these to bus operators at a nominal fee. This will also lower the entry barriers for new operators when contestability in the bus industry is introduced, as bus parking and depots are key infrastructure for running bus services. We will also allow operators to retain a portion of the advertising revenue from bus shelters, which today is retained by the Government. This will provide the operators some help to cope with rising costs in the future. Nevertheless, these assistance measures that the Government can give to the PTOs, while helpful, cannot fully insulate them from the rising cost pressures that they face, and it will still be necessary for them to continue to be productive and cost-efficient, and for a sustainable system of fare adjustments to be implemented, which I will dwell on a little bit later in my remarks.

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In the longer term, we hope that the improvement of bus service levels through the BSEP will work with rail capacity enhancements to make our public transport system the choice option for more commuters, and allow us to reap the full benefits of the multi-billion-dollar investments that we are making in building new rail lines.

Mr Ang Wei Neng would be pleased to note that we will continue to explore and implement targeted solutions to improve various components of bus journey times so that our injected capacity is optimally utilised. He talked about our plans to expand 35 bus bays into bus hubs so that more buses can be put in and simultaneously take on board or discharge passengers.

We will also continue to look out for opportunities to introduce more bus priority schemes but we will also have to bear in mind the potential impact on other road users. Mr Ang mentioned that the overall speeds for buses have gone down, and indeed that is true, although we also note that for the buses that are operating in bus lanes, including the full-day lanes, there has been a 7% improvement in speeds after the 2008 measures were made. And we also have to do more to make sure that the Mandatory Give Way to Buses Scheme is taken seriously by all commuters, especially those who are driving cars and commercial vehicles. Putting in more buses in place of cars on our roads is necessary in a compact urban environment like Singapore's, because buses ultimately are a more efficient use of available road space.

Even as we aggressively enhance the capacity of our rail network and bus services, more can be done to better distribute the loading on the public transport system during peak travel periods. This will help improve the commuting experience and optimise our overall capacity.

Last October, SMRT enhanced its discount scheme to 30 cents – from 10 cents to 30 cents – for commuters who travel early and exit designated stations within the city before 7.45 am. Previously it was 10 cents before 7.30 am; it was improved to 7.45 am, and 30-cent discount. Early data suggest some positive effect in commuter behavioural change, but I think it is necessary to give ourselves another few months to be sure of the trend, and whether we need to refine the discount scheme for greater effectiveness.

The LTA is also supporting an innovative trial by the National University of Singapore (NUS) and Stanford University to encourage off-peak travel on the rail network in Singapore. The trial uses a credit-based system and awards extra credits to commuters for travel during the shoulder peak. Since its launch in January this year, about 7,000 commuters have registered for the trial. Some commuters participating in the scheme have found the use of incentives appealing. And to quote one of them: "I am glad that there are initiatives to study commuters' travelling patterns to work out something that would help to ease crowding and create a more pleasant travelling experience for the many commuters like myself." Others find that the incentives and the rewards are something that we look forward to.

Individual commuters have also taken up the LTA's invitation to suggest other ways to encourage commuters to avoid the most crowded commuting times. Some have expressed that they would like to travel earlier or later but are constrained by the existing practices or working hours of their organisations. This is a valid point. The Ministry of Manpower has been encouraging employers to put in place flexible working arrangements for their employees, including giving them a choice of staggered working hours. This can enhance work-life harmony and balance for employees, and help ease the strain on our transport system. However, a recent survey showed that less than one in 10 establishments offered such flexible working arrangements to their employees. Mr Ang Wei Neng also touched on this point and he would be pleased to know that Ministers of State Mrs Josephine Teo and BG Tan Chuan-Jin will co-chair an Inter-ministerial Workgroup to look into how to further enhance the prevalence of such flexible working arrangements. The Workgroup will be engaging stakeholders in both public and private sectors.

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4.15 pm

Mr Ang Wei Neng has also asked for an update on the progress of LTA's initiative to retrofit lifts at existing pedestrian overhead bridges next to the six MRT stations, and made a quiet, yet forceful advocacy for the same to be done at Lakeside Station, and, indeed, I hear him. The main construction works for the pilot programme at the six MRT stations will commence in the third quarter of this year and will complete by 2013. We are mindful of the needs of the elderly and disabled and we are indeed looking at what more can be done to make our MRT stations and major bus nodes more accessible.

As we run more train trips and our system gets older, railway noise levels have increased. The residents living close to MRT viaducts are most affected, understandably so. Mr Ang Hin Kee, Ms Jessica Tan and others on previous occasions have asked how we intend to address this. Railway noise is a complex issue. It is often site-specific. Depending on the proximity to elevated train viaducts, residents are indeed affected to varying degrees. There are also areas where railway noise is louder, particularly where train tracks merge or diverge.

Many of our new rail systems will be underground systems, and this limits the extent of railway noise. Our focus, therefore, is how to address the more problematic areas along existing elevated rail lines. Today, the NEA's guidelines state that railway noise levels should not be more than 67 decibels sustained over a one-hour period. However, passing train noise can be higher, particularly at locations where the ambient noise levels are already close to 67 decibels.

The LTA has embarked on an island-wide noise measurement study along the entire length of our elevated MRT tracks. We expect the study to be completed next month, and it will help LTA identify the areas that require special attention.

On the specific measures that we are taking now to mitigate rail noise, the LTA currently requires the SMRT to regularly check and maintain the trains and tracks according to a comprehensive maintenance programme. For example, the train wheels are re-profiled and tracks are ground frequently to remove defects that may result in noise. This also contributes to the complaints about works that are being done in the middle of the night because this is the only time that we are able to do such works after the close of running hours. The LTA is working with SMRT to tighten the maintenance regime further so as to reduce noise levels caused by uneven wheels and tracks during the running of the trains. But, again, let me caution that this will also mean more works that need to be done in the middle of the night.

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We are currently testing the benefits of noise barriers at two specific locations. One is at the new viaduct at Jurong East Station where certain stretches come as close as 15 metres to HDB flats. Those noise barriers that we introduced helped reduce noise by about 5 decibels, to keep levels at around the same as before the implementation of the Jurong East Modification Project (JEMP).

The second site is at Bishan MRT. The noise levels there tend to be higher because of what is known as the "trumpet effect" of the portal, which amplifies noise when the train emerges from a tunnel to an elevated track. The implementation of the noise barriers at this location is targeted to be completed by around the middle of this year.

We are proceeding to do further trials at three other locations to assess the effectiveness as well as the cost of noise barriers at locations that have elevated noise levels and distinct viaduct designs. These trials, together with the results of the noise measurement study that I talked about earlier will help LTA develop a cost-effective implementation plan to mitigate railway noise at different locations. We target to share the preliminary plan around the third quarter of this year.

The LTA is also looking into the installation of permanent noise sensors at selected locations to monitor the noise levels generated by passing trains. This will help LTA to quickly zoom in if noise levels increase and ascertain if maintenance work is required.

Ultimately, in land-scarce Singapore, running more trains and for longer hours do come with some trade-offs. And I appreciate Members' and especially the residents' patience and understanding in this regard, as we work together to find a sensible approach to deal with this railway noise issue.

Mr Alex Yam asked about the benefits of Distance Fares that we have introduced so far. It is not meaningful to do an analysis of the fare savings benefit beyond October 2011 due to the fare adjustment in that year, so I will use data prior to this period. Data from August 2011 showed that the number of commuters who benefited from Distance Fares continued to increase more than a year after its implementation. 72% of all commuters saw weekly fare savings, and this is higher than the 63% that we originally projected in 2009. The savings that they enjoy amount to an average of 67 cents weekly against what we projected at 48 cents.

Several Members – Er Dr Lee Bee Wah, Mr Liang Eng Hwa, Ms Jessica Tan, Mr Baey Yam Keng, Mr Cedric Foo, Mr Alex Yam and Mr Yee Jenn Jong, I have noted all their names down – had asked for fare concessions to be extended to the Polytechnic students, while Mr Baey Yam Keng and Mr Yee Jenn Jong mentioned the disabled, and Mr Baey Yam Keng mentioned Public Assistance (PA) recipients. I have taken careful note of what they said.

Sir, when I first joined the Ministry, I said that I was most sympathetic to the senior citizens and their desire for full-day concessions. So, I thank the PTC and the operators for giving due consideration to this hint when they extended senior citizen concession hours as part of the 2011 Fare Revision Exercise. I am still reminded by my senior residents today who have benefitted from this tremendously, especially for those who need to commute in the morning hours by public transport to go to work.

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Now that senior citizens have been granted their full-day concessions, the next groups that I am sympathetic to are the disabled and the Polytechnic students. And I think for the Public Assistance recipients, many of them actually already come under the category of senior citizens and for others, we have other measures to target our help to them, especially through the public transport vouchers. So, the two groups that I am most sympathetic to are the disabled and the Polytechnic students. But, again, I urge Members to be patient as not all of these requests can be addressed immediately or entirely within a single Fare Revision Exercise.

Mr Baey Yam Keng asked a very useful specific question on the role of the PTC. PTC is now the authority to require the PTOs to give concessions in situations when there is a fare adjustment. The PTC can do so by requiring the operators to comply with the condition for concession before they are granted the fare increase. This was done for senior citizens in last year's fare adjustment. However, PTC obviously needs to also bear in mind the impact on fares, especially adult fares, which are cross-subsidising the revenue loss from the concessionary fares. For this reason, the PTC, while sympathetic to all these requests for concessions cannot accede to all of them immediately or entirely within a single fare adjustment exercise. But I know that when future fare revisions take place, the PTC, which is acutely aware of the different requests for concessions, will work with the operators to give careful consideration to all these appeals. Such concessions will not be given out in 2012. I shook my head when many Members made their appeals, as concessions will not be given out in 2012 because there will be no fare increase and no fare revision exercise this year.

The current fare formula is due for review this year for implementation in 2013. I intend to appoint PTC member, Mr Richard Magnus, to head the Committee for the review. He has just joined the PTC recently, and Mr Magnus will bring a new pair of eyes and a fresh mind to the task. His Review Committee will seek views widely, study the possible options and propose improvements to the framework for the fare review exercise, including the price cap formula that we will adopt.

Sir, the outcome of the review should be a framework that continues to achieve a good balance between affordable public transport fares and sustainable public transport operations and which continues to ensure productivity and efficiency. I look forward to the Committee completing its work within a year.

While this review is on-going, we should not rush to implement this year's fare adjustment, even though we recognise that the operators are facing significant cost pressures, especially on the bus side. Hence, I discussed this matter with PTC Chairman, Mr Gerard Ee, and he has agreed to my suggestion that we suspend this year's fare adjustment exercise. Instead, the new fare formula, which will be ready in 2013, could take into consideration the fact that fare adjustments were not made in 2012. So, no fare revisions, no increases this year and we will also await further future revisions in order for the concessions to be considered in due course.

Any extended discussion on fares inevitably leads to a discussion on whether our current model for public transport continues to be relevant. Some have argued that since Government is injecting $1.1 billion into commercially-run entities to run the BSEP over the next 10 years, why not simply nationalise public transport services instead? Actually, such thinking mixes up two somewhat different issues. One is the amount of subsidy that the Government should be putting into the public transport system. And the other is whether the operators should be state-owned non-profit entities or commercially-oriented companies. I think I have dealt with the first issue earlier. I will now touch briefly on the second, on whether the operators should be state-owned non-profit entities of commercially-oriented companies.

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Our current model leaves the operations of trains and buses to commercial entities, as we believe the long-term public interest is best served this way. The profit incentive drives the operators towards higher efficiency and productivity, which keeps costs as low as possible. These productivity gains and cost savings are then passed on to commuters in the form of lower fare increases, as we have seen in our system. Otherwise, if the system is inefficiently-run, the public will ultimately pay for the higher operating costs, either through higher fares, or greater Government subsidies.

If we look at comparable examples around the world, we find that, in general, the most efficiently-run public transport services are provided by commercially-driven entities, such as the MTR in Hong Kong. And, increasingly, cities like Melbourne have also privatised their public transport industry to improve efficiency and productivity. The advantage of privatisation is actually well documented in the experience of London Buses. Let me share this with Members. London Buses was privatised in 1985. Between 1985 and 1996, the price per vehicle kilometre dropped 45%, while costs per passenger trip fell by nearly a third. This is even as ridership and reliability of the system both increased. Private contracting led to lower costs and about 10 years on from when the bus reforms were first introduced in 1985, London saw a 70% decrease in subsidies.

Even as we use commercial entities to run operations, it is important for Government to take control in key areas – to plan for rail lines and bus routes, to ensure a firm regulatory mechanism for fares, to specify service levels for rail and bus service, and to decide on timely capacity injection to meet ridership growth. We amended the Road Traffic Act in 2010, passed it in Parliament, to implement a new rail financing framework. Previously, the Government undertook the planning and development of our rail network, while the operator owned and operated rail operating assets. One of the key features of the new rail framework is that the Government will take over the ownership of operating assets and make the decisions on the timing of asset procurement and capacity enhancement. This enables us to ensure that sufficient capacity is brought in to meet projected ridership growth in a timely fashion. The new financing framework also facilitates greater contestability within the rail sector, spurring the operators to deliver better service levels.

4.30 pm

Changing the industry structure is a major undertaking. The new rail model is more complicated, and we have not rushed to implement this across the network. We took the first step last year with the appointment of SBST as the new operator for the Downtown Line which is the first of the lines to be placed under the new rail model. For the existing lines, we will explore the transition to the new financing framework, together with the operators, subject to mutual agreement. Given that they are public-listed companies, we are mindful that such decisions would need to be carefully considered.

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We will need to similarly re-look at the bus financing framework and decide what aspects of the current model for the bus industry need to be adjusted, including how best to introduce contestability, which will be a key element of the evolving transport model. The key outcome that we should aim for is a model that supports an efficient, well-integrated, commuter-centric bus-rail system with affordable fares. This requires constant refinements to our existing model to ensure that it keeps pace with our local context, especially as the arrival of new rail lines over the next decade will significantly alter the public transport landscape.

Finally, next year, we will reach the five-year mark of the Land Transport Master Plan (LTMP). It is timely for us to review and update this Master Plan to give due consideration to some of the emerging challenges that we may face with regard to the public transport framework, how we will intend to overcome them, including outlining the next steps in the evolution of our transport model. This updated Land Transport Master Plan, which we target to release next year, will map out the key initiatives to take us forward for the next 10-15 years of our land transport journey.

The Chairman: Mr Cedric Foo, please take both your cuts together.

Taxis

Mr Cedric Foo Chee Keng: Thank you, Sir. My first cut covers taxis. The taxi sector is a de-regulated market, and the taxi operators are free to set their own fares. However, we cannot ignore the fact that ComfortDelGro has a big share of the taxi market, with over 50% of the market share, and also its most recent decision to increase fares was quickly followed by all the other taxi companies, albeit with minor differences. Given that the taxi market is not regulated, it is important that the sector is freely-competed and efficient. Fares should indeed be subject to free market forces. I would like to ask the Minister if he felt that the market efficiency of the taxi sector is free and open and whether or not there are other measures we can introduce to make for a freer and more efficient taxi sector.

Secondly, I would be grateful if the Minister can give us an update on the outcomes of the recent fare hikes? How has quality of service and taxi drivers' income improved? And have the various surcharges that were introduced brought about the desired effects of inducing more supply to the market, especially during the peak periods?

Sir, thirdly, we used to have taxi-sharing scheme in Singapore. This obviously has the advantage of higher asset utilisation and also for passengers individually when they share a cab, paying less for the journey than they would otherwise if they were to use a dedicated taxi. Would the Minister consider re-introducing such a scheme perhaps, with two queuing lanes – one for those commuters who are prepared to share taxis, and another for those who want dedicated taxis?

Disabled Commuters

Sir, my next cut is on disabled commuters. During the Budget debate this year, the Finance Minister talked about the possibility of transport vouchers for disabled commuters. I would like to ask the Minister, if indeed such proposals are being considered and also to share with us the statistics regarding the usage of public transport, whether by bus, trains or taxis, by disabled Singaporeans. How does he see as being the best way to help disabled commuters get around in Singapore, whether it is dedicated system like taxis or the public system like buses and trains? The transport vouchers would be especially important for disabled Singaporeans who need to use taxis to commute to and from hospitals.

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Taxi Services

Mr Ang Wei Neng: Mr Chairman, Sir, I declare my interest as I am a Vice President at SBS Transit Ltd, which is a subsidiary of ComfortDelgro Ltd.

With the de-regulation of the taxi industry, we have seen the number of taxis increasing steadily over the years to more than 27,000 taxis today. This means that Singapore has about 5.2 taxis for every 1,000 residents which is one of the highest number of taxis per capita among the major cities around the world. From my understanding, the figure for Sydney is 1.4, New York is 1.6, Shanghai is 2.1 and London is 2.6, which is half of the number of Singapore in terms of taxis per capita. Nonetheless, many Singaporeans still complain that we have insufficient taxis during peak hours and on rainy days.

Our taxi drivers are independent business owners. As illustrated by a Chinese saying, “东家不打, 打西家” which means that taxi drivers are free to cross over to another taxi company when they are not happy with their existing taxi company, especially when it unilaterally imposes conditions that they do not like. Could the Minister share his plan on how to improve the taxi availability during the peak hours?

Mr Gan Thiam Poh: Mr Chairman, Sir, I appeal to the Ministry to reconsider its current position on taxis as private transportation. Taxis are necessary for passengers with mobility issues due to their health conditions or age. The disabled, the sick, pregnant women and the elderly will rely on taxis to get to their destinations or to "spring" to their destination. In fact, we should make taxi services so affordable that Singaporean car owners are motivated to sell their cars to rid themselves of the costs and trouble of keeping and maintaining them. Most people who are sick should be able to take a taxi and limit the spread of germs. Remember how we had to track down a number of cases of SARS through their taxi journeys in 2003? Imagine if they had taken the MRT or buses instead! In addition, there are always the occasions of personal and family emergencies where taxi services are indispensable. Without a doubt, taxis are an important component in our public transport system, providing an essential service to the public which buses and the MRT cannot. If taxi drivers are properly trained and monitored, as a group, they can help improve our driving culture and road safety, goals which are difficult to achieve with individual drivers. Would the Ministry please consider increasing the number of taxi services while reducing the number of private cars correspondingly, and update us on the measure to improve the frequency and service levels of taxis?

The Chairman: Mr Seng Han Thong, please take your three cuts together.

Utilisation of Taxi Vehicles

Mr Seng Han Thong: Yes, Sir. First, utilisation of taxi vehicles. Mr Chairman, the taxi industry was liberalised in 2004. And since then, the number of registered taxis on the road has increased from about 20,000 plus to the current 27,000. So, over the last eight years, we have seen the increase of about 7,000 taxis on the road. It is estimated that about 30% of the 27,000 taxis are operating on one-man operation (OMO). This means that the current fleet of taxis is under-utilised to serve the commuting needs of the public. So, we should review the statutory obligation of the taxi companies; shift the focus from hiring out their taxis to one that they need to ensure full utilisation of every taxi they hire out.

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To support this enhanced statutory obligation of taxi companies, I urge the Government to provide strong incentives to help taxi companies have the necessary capability to monitor who are driving their taxis and how their fleet of taxis are utilised. We should have a comprehensive system to match reliable relief taxi drivers to their principal hirers. This way, I believe, most one-man operated (OMO) taxis hirers would welcome it as they would find it easier to find suitable relief drivers to lighten the burden of their daily operating cost. More fully utilised taxis would also mean that the supply of taxi service would be higher throughout the day to fulfil the demand for taxi service, without the need to put more taxis on the roads. By making taxi companies more productive in supplying taxi service, it would benefit both the taxi drivers and the public commuters.

Special Tax for Euro V Cars

Next, Sir, special tax for Euro V cars. Sir, the Government has reduced the annual special tax paid by the private diesel car owners. The message to the private car owners is clear: please convert to use Euro V compliant diesel car. If the policy objective is to reduce carbon emission by diesel powered cars, the Government should send the same message to the heavy users of diesel powered cars, that is, taxi companies. The same special tax incentive should apply to Euro V compliant cars which are registered as taxis. This would make our taxis greener and, most importantly, also lower the annual operating cost of taxi drivers who are paying for all the taxes imposed on taxis through their daily taxi rentals. In short, taxi should also enjoy the 70% reduction in the special tax. This will reduce the operating cost of taxi drivers as higher tax means higher rental to them.

Easing of CBD Rules

Finally, Sir, easing of CBD rules. Sir, LTA has relaxed the taxi pick-up and drop-off hours within CBD area in line with the full day bus lane operation hours. This is indeed the first step in the right direction after the CBD rules were implemented in 2008. I would like to suggest to LTA to consider easing the rules further by allowing taxi to "pick-up and drop off" passenger on Saturday in CBD.

As we know, most offices in CBD areas operate on a five days' work week, so when you travel in and out of CBD on Saturday, most would notice that buses and MRT are also less crowded and road traffic are light and smooth, different from weekdays congested condition. Given that the public transport system, in particular, buses with less travelling frequency due to lower ridership on Saturday, it is timely for LTA to consider relaxing the CBD rules on Saturday to allow taxi to pick up its passengers from anywhere within the CBD areas, besides the driveways of buildings. This would make it convenient for weekend shoppers and passengers to hail or get down from a taxi at their nearest point of destination.

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Potential Role of Taxi Drivers

Ms Tin Pei Ling: Sir, again, I am heartened and thankful that the Government has been putting in so much effort and is committed to developing the long-term and community-based care, especially so for Singapore, which is facing a silver tsunami or otherwise known as the "Super Seniors", as coined by Dr Chia, whereby by 2030, one in five Singaporeans will be aged 65 years and above. Therefore, I would like to ask the Minister if there are plans to gear up the public transport sector to move in tandem with the developments of the healthcare sector. This is to ensure that our transport system is ready to provide the necessary support for transporting our elderly to medical facilities for their medical consultations. While I understand that, currently, there are already taxi companies providing dedicated transportation services to those who have mobility issues, I think the Government could consider going a step further to equipping more taxi drivers with the necessary incentives, knowledge and skills in assisting the transportation of elderly or persons with mobility issues, especially those who are wheelchair-bound.

4.45 pm

Vehicle Quota System Improvements

Mr Gerald Giam Yean Song: Mr Chairman, the Vehicle Quota System (VQS) exists to limit Singapore's vehicle population growth rate. This is necessary because of Singapore's limited land area and growing population. The VQS is managed through the issuance of a limited number of COEs each year. There are currently, five categories of COEs of which Categories A and B are for private cars. Category A is for taxis and small cars below 1,600 cc and Category B is for larger cars above 1,600 cc.

Sir, many working families with young children or elderly parents seek to own a car, not for a status symbol but as a utility to help them cope with their busy schedules and multiple responsibilities. There have been concerns expressed by Singaporeans in newspapers and online that the inclusion of taxis in COE Category A could have an effect of pushing up the quota premiums for this category. This is because the private car owners have to compete with taxi companies for a limited number of COEs. In addition, buyers of these smaller cars are often less well-off than large car buyers. The Ministry of Transport has said previously that taxi's bid for COEs in Category A in recognition of the fact that they are a part of the public transport spectrum albeit at the higher end. Could the Minister explain why taxis are in Category A which is for smaller cars and not Category B which is for larger cars even though many taxis, like the Hyundai Sonata, in fact, have engines larger than 1,600 cc.

Sir, in 2002, there were 378,706 private cars distributed among 35% of local households. By 2008, the vehicle population had risen by 26% to 476,634, but the proportion of households which own cars only grew by about 3%. Does this suggest that the private car population is becoming more concentrated in a certain segment of the population? Could the Ministry look into ways to adjust the way the COEs are allocated so that families with children are not competing directly with individuals and companies who are able to afford to place higher bids for their COEs?

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Carbon Emission-based Vehicle Scheme

Mr Seng Han Thong: Sir, it was announced in this year's Budget that a new scheme called Carbon Emissions-based Vehicle Scheme (CEVS) will be implemented next year to replace the current Green Vehicle Rebate for cars and taxis. So, may I ask the Minister what is the expected impact to the motor industry in general and to the taxi industry in particular?

Revised Vehicle Tax Regime

Mr Nicholas Fang (Nominated Member): Mr Chairman, I am just elaborating on Mr Seng's preceding question. The plans to replace the Green Vehicle Rebate (GVR) Scheme with the new Carbon Emissions-based Vehicle Scheme (CEVS) is aimed at promoting what has been touted as cleaner new diesel technologies.

The slashing of the Special Tax for diesel vehicles that comply with Euro V emissions standards by 70% with effect from January 2013 is also aimed at promoting the use of new diesel technologies that are considered cleaner in a carbon sense.

Now, these measures are laudable, but it bears noting that focusing on carbon emissions, and the diesel vehicles that help to lower such emissions, is only part of the overall equation when it comes to safeguarding the quality of our air. Simply narrowing the focus to carbon emissions neglects other pollutants such as particulate matter and nitrogen oxides.

Our research has shown that an increase in the percentage of Euro V diesel-powered cars in passenger cars, in particular, will result in reductions in carbon emissions, but also increases in particulates, nitrogen oxides and hydrocarbon emissions. Particulates have become a matter of concern across many Asian cities. In Beijing and Hong Kong, for example, there has been sharp debates surrounding PM2.5 – which is fine particles that are 2.5 micrometres in diameter – especially since both cities have been choking in smog in recent years. PM2.5 is considered more hazardous as these finer particles can penetrate the lungs and other organs more deeply when inhaled.

In Singapore, there have been calls for the National Environment Agency to provide more timely data on PM2.5 levels. And even though we have been monitoring PM2.5 levels since 1998, our Pollutant Standards Index (PSI) currently still cites PM10 levels – which are larger particles 10 micrometres across – on a more regular basis. It is heartening to hear the Minister for the Environment and Water Resources said yesterday that more data on PM2.5 would be made available for the public on a regular basis.

Recent studies have shown that exposure to PM2.5 and other pollutants can actually cause respiratory ailments, increase risk of strokes, heart attacks and even cognitive deterioration or premature ageing.

Here, in Singapore, more and more people are enjoying outdoor activities. In the past three weeks alone, we have had two biathlons, an urban obstacle race, the OCBC Cycle Singapore event and a duathlon, all taking place in the open air. While we currently enjoy superior air compared to some of our neighbours, I do not think we can afford to be complacent.

In 2010, Singapore had a PM2.5 level of 17 micrograms per cubic metre, which was above the World Health Organization's aspirational guideline of 10 micrograms as well as the Environment and Water Resources Ministry's goal of reaching 12 micrograms by 2020. Again, it was reassuring to hear the Minister's update earlier that we have met the interim WHO target, but, as he pointed out, there is still much to do.

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The solution does not lie in phasing out diesels completely, of course. Diesels work best in large and heavy vehicles as well as for higher speeds and longer distances, such as buses – which we will soon see more of on Singapore roads. What is needed is the right balance between diesels, petrol and hybrid vehicles that will result in reductions in both carbon and other emissions. And a pollution surcharge on diesel passenger vehicle based on annual fuel usage could keep in check any substantial increase in their numbers. Exceptions could be given to commercial heavy vehicles most suited for diesel.

Residents' Parking in Private Estates

Ms Sylvia Lim (Aljunied): Sir, it is quite common in private estates for households to have multiple cars, especially where adult children continue to live with their parents. In certain housing estates, roads are marked to disallow roadside parking. This could be the case where the roads are close to HDB estates or where the roads may be used by larger vehicles for access to deliver services. However, such markings pose daily problems for families where their home compound does not cater for any car parking or is insufficient to cater for the number of cars owned by the household. These residents have been issued summonses by LTA for parking outside their homes.

I must record the constructive attitude of LTA in trying to solve specific issues concerning residents parking in my constituency. In one instance, LTA studied the situation with an open mind and agreed to change road markings to allow parking on one side of the road. However, I believe this issue of residents being summoned is not uncommon in other estates as well. Is LTA looking at a more systematic solution to the problem, for instance, could certain roads be designated for residents' parking only?

The Chairman: Mr Lim Biow Chuan, please take both your cuts together.

Illegal Parking along Roads

Mr Lim Biow Chuan (Mountbatten): Sir, whenever there is a popular eating outlet located along a main road, somehow their customers would park illegally along the road. This is very dangerous because pedestrians trying to cross the road and motorists trying to exit from side roads find their view of sight blocked by the illegally parked cars. An example of this would be along Tanjong Katong Road where there are many popular eating outlets. Some of these car owners would even park illegally along other side roads, thus blocking home owners from getting in or out of their homes.

I had asked LTA for more enforcement but with limited success because the traffic warden is not there 24 hours. Could I ask LTA to consider installing cameras along these roads and tapping on technology to issue summons to illegally parked cars? This way, the driver knows that the affected road is under constant surveillance and would not risk parking illegally.

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Sir, where there are public amenities nearby like sports stadiums or public car parks, could we not allow the car parks to be free after 5.00 pm and on weekends so as to encourage motorists to park properly rather than illegally?

ERP – Nicoll Highway

Next cut, Sir, on ERP – Nicoll Highway. Sir, ERP was introduced to regulate traffic and I accept that we need to have ERP on some roads so that there is less congestion during working days. However, on the Nicoll Highway on Saturdays, the traffic there is clear most of the time. I had over a few Saturdays driven along Nicoll Highway all the way to Shenton Way just to have a feel of the actual traffic conditions. My experience is that traffic flow is smooth on the various occasions that I had driven there. Hence, Sir, I can understand the frustration of my residents of having to pay ERP on Saturdays when, in fact, traffic is clear on the road.

Sir, we do not have ERP on Sundays and, yet, we do not have major traffic snarls. I urge MOT not to micro-manage the traffic situation on Saturdays. Allow some imperfection because motorists can always choose to take public transport or they can choose to be caught in traffic congestions on weekends if there are traffic congestions. I appeal to LTA to cease the ERP on Saturdays for Nicoll Highway. In that way, LTA can save the money of shifting the ERP gantry.

Saturday ERP

Mr Liang Eng Hwa (Holland-Bukit Timah): Sir, I do understand that ERP is necessary to manage our road traffic demands, especially during peak hours on weekdays. However, if you have driven along Collyer Quay towards Esplanade Drive on Saturday afternoons, you cannot help but feel puzzled as to why ERP gantries are in operation there. There are clearly very few road users there on Saturdays and there is no traffic demand to manage at all. In fact, it does feel like the roads are being under-utilised. And the situation is the same in some locations like Nicoll Highway that Mr Lim Biow Chuan had mentioned.

I understand that the gantries are there as a part of the cordoning strategies deployed by LTA to manage traffic at Bugis, Bras Basah and in the city centre locations. I suggest that LTA do a review and ascertain if Saturday's ERP for these roads is still necessary and whether we need the cordoning strategies on Saturday. Perhaps, we can switch off some of these on Saturdays, have a trial and see whether it affects the whole traffic flow at all.

The Chairman: Mr Seah Kian Peng, would you care to complete the geographic region of ERP on weekends? [ Laughter. ]

Weekend ERP in CBD and Shopping District

Mr Seah Kian Peng (Marine Parade): Mr Chairman, in November last year, the question of weekend Electronic Road Pricing (ERP) charges in the Central Business District (CBD) and shopping districts was raised. Indeed, Mr Liang Eng Hwa, Mr Lim Biow Chuan and myself, we called attention to this issue. The Ministry's reply then was that they would look into it, adding that this is unlikely to be well received by businesses.

Since then, I have engaged three associations for their feedback. The three associations are Singapore Retailers Association, Orchard Road Business Association and Marina Bay Business Association. They all did their respective survey amongst their members and with stakeholders. The results: a resounding "yes" to remove ERP charges on Saturday – a view, I must say, shared by a very, very significant majority.

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Weekends are non-working days and there are clearly no office crowds then, so implementing ERP on these days certainly, as what Mr Liang had said, seem puzzling. From the surveys, the most common reason cited for the removal is that this would encourage more shoppers into the precinct and benefit the retailers – not a cost to the business, the businesses love it. So, it is a win-win situation. As one of them told me, and I quote, "any great shopping street in the world is crowded. Crowds attract crowd. This kind of congestion and crowd is a positive problem as opposed to the negative image of ERP."

While the worry of traffic congestion might be there, and we are not sure to what extent is that worry valid. So, I propose – as what Mr Liang too, earlier – that a pilot trial be conducted to switch off the ERP on Saturdays in these districts and monitor the situation. I am quietly, in fact, I am pretty confident that this switching off can be a permanent one. It can be a win-win-win not just for businesses, but for motorists and shoppers alike. I hope the Minister will consider this.

Cycling

Dr Janil Puthucheary (Pasir Ris-Punggol): Mr Chairman, Sir, cycling is fast gaining popularity in Singapore. I am sure the ERP has nothing to do with that. More cycling paths and facilities are being built, cycling groups are growing in number and mass cycling events are attracting thousands of participants. Sir, I am heartened that many more Singaporeans are taking up cycling as a sport, as a leisure activity or as a mode of daily transport. Cycling has many benefits and regular cycling will significantly reduce the risk of cardiovascular diseases. I am glad that the Government is investing in resources to promote cycling. However, I feel that there may be some gaps.

I would like to begin with the issue of cycling as a form of commuting. Our roads are getting more congested as it has been recently described, and as we grow our population at some point in the future we will have to stop increasing the number of cars. The growth in our population cannot be matched by a similar growth in the number of cars. It is unfeasible for reasons of space, congestion and the effects on the environment. The Government has correctly identified a need to encourage more people to move towards public transport. Yet, there remains a need for personal transport, and an increasing number of people are turning to cycling to fill this gap. Sometimes to get exercise along with their commute, sometimes to take advantage of the flexibility it provides, and sometimes for the sheer enjoyment of it. Cycling is personal transport, there is an emotive component. Can we look ahead 20 or 25 years and see that an increase in cycling infrastructure now will not only respond to a current need, as it will also frame the mindset and expectations of our society for the next generation?

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Our park connector network is a fantastic initiative as it provides residents with connections to different parks and leisure activities in Singapore. But could the network be used to address a need for utilitarian personal transport? I realise, of course, that the Park Connector network is under NParks, which is under MND, and so MOT would have some difficulty at looking at the routes to consider the obstacles to them becoming part of an alternative cycle commuting network which, conveniently, brings me to my next point.

Cycling crosses across a number of Ministries and bodies none of whom see it as their priority. LTA, and hence MOT, looks at cycling on the roads. NParks, and hence MND, looks at the Park Connectors. SPF, and hence MHA, are responsible for the safety and enforcement issues. Sport cycling, presumably, SSC and hence MCYS and then, in terms of planning, URA, HDB and the Town Councils for integrating cycling with other amenities, facilities and access points. For the integration with public transport, again LTA gets involved together with the PTOs. Nobody wants to completely own and deal with cycling. Suggestions for improving cycling infrastructure are usually met with a response indicating which other Ministry really should get involved. Whose KPI is it? Whatever the arguments of the merits of cycling, an increasing number of people are actively engaging in cycle commuting, and this sector is not adequately overseen.

Sir, I would like to propose that we have a regulatory authority to oversee and advocate for cycling as a commuter modality, one with heft and weight. One that can take matters across Ministries and statutory boards to solve problems for the benefit of all, because poorly designed cycling infrastructure affects pedestrians and drivers as much as cyclists, because people will continue to cycle, and increasingly so.

There has been an assumption amongst many that in Singapore it is too hot and too humid to cycle, especially over more than a very short distance to the nearest MRT station. This is clearly wrong. If you go down to Kallang, Geylang or Redhill, you will see many of the "uncles" in their long pants and t-shirts cycling with ease. If you look at the foreign workers, they do not require high-tech lycra shorts and expensive cycle shoes, and yet they manage to commute quite effectively, rarely even breaking into a sweat. If you look at the number of cyclists in our neighbouring cities around South East Asia, cities that share our weather conditions are full of cyclists. Just look at the cyclists on our roads. It is all a matter of expectation and conditioning.

If we accept that this is a viable modality of personal transport that will become increasingly important as car ownership becomes less accessible, I would like to ask the Minister whether he will consider subsidising or supporting bike sharing programmes? The argument to wait for a critical mass of cyclists first does not quite bear weight because cities like Barcelona and London saw an increase in the number of trips made by bicycle after the introduction of bike sharing programmes. The introduction of a bike sharing programme can work to offload some of the pressure that our public transport system is under.

There have been calls for cycle lanes to be established to improve the on-road safety of cyclists. In discussing this, we first have to understand that cyclists are required to ride on the road as they are banned from pavements, except in certain cycling towns. One argument against bicycle lanes is that we are land-scarce. It is hard to understand how London and the Island of Manhattan, two of the most dense and congested cities in the world can effectively implement bicycle lanes to good effect, but we cannot. However, in lieu of bicycle lanes I have an alternative suggestion.

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The Highway Code already requires that cars overtaking a bicycle do so with a 1.5-metre clearance to the right of the bicycle, assuming that the cyclist is in the left-most lane which is where he should be. Judging this 1.5-metre clearance can be difficult. Why do we not make it easy for drivers to comply with the existing law by painting a line down the left-most lane, 1.7 metres in from the kerb? This is cheap, uses no extra land, does not require any new legislation and, most importantly, does not affect the flow of traffic, as there are already cyclists in that lane and the cars currently already need to overtake them. We would simply be making it easy for all concerned to do the right thing and obey the law.

One of the attractions of this suggestion to me is that it emphasises that the road, just like our island, is a shared space, and we all need to share it graciously. Cyclists, just like drivers, need to follow the Highway Code. In closing, Sir, I would also like to ask the Minister if he would consider increasing awareness and the requirements for cycle helmets to improve safety of cyclists.

The Chairman: Mr Ong Teng Koon is not in the House. Mr Lui Tuck Yew.

Mr Lui Tuck Yew: Sir, our land transport system depends on a good public transport system as well as an efficient road system. Both contribute to our quality of life and economic vibrancy.

Ms Jessica Tan was concerned over the ability of our roads to cope with the increased travel demand posed by a growing population, especially around the Changi-Simei area. We are aware of the need to improve and expand our road infrastructure, even as we continue to promote the use of public transport. This is because roads cater to many users – private cars, taxis, buses and commercial vehicles as well as motorcycles and yes, bicycles, too! We will carry out improvements judiciously so as to balance between the need to maintain an efficient road system, shorten travel times and relief from traffic jams, and the desire to preserve our living environment. Balancing all these different factors together. We will also continue to leverage on technology to optimise traffic flows. Specifically on the Changi-Simei area, I believe LTA has been in touch with Ms Jessica Tan last November to share some of their plans, not all of which will be implemented immediately, but together with the construction of Downtown Line 3. Plans like new roads, expansion of existing roads, and so on.

We all know that road growth will have to slow given our land constraints. This will require adjustments on the part of commuters in terms of how and when they choose to travel. Our policies to manage the ownership and usage of vehicles will also remain very important.

Let me first touch on several points raised by Mr Gerald Giam. He proposed to restructure the COE bidding system such that Singaporeans with families will have a better chance to secure COEs and also to consider whether taxis should bid in Category B rather than Category A. Let me deal with the latter issue first.

Taxis in Category A are really a concession. If we were to have taxis bid in Category B – which is entirely possible – the fact is that because of the higher COEs, the rentals for taxis will also go up, and how that impacts the taxi drivers who are renting taxis will also have to be carefully considered. So, it is, indeed, a concession that has been given in order that the rentals can be kept low.

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Coming back to the allocation of COEs – it is basically done using an open bidding mechanism. Any potential car buyer is able to participate freely to bid for the right to register a vehicle – less so to deal with any social policies, but an instrument to control ownership and the growth of the car population. So, the proposal to shift it in favour of families may indeed sound attractive, but the implementation is actually not a straightforward matter. We know that people, different families have different needs. The issue of who is deserving of a COE is inherently a subjective one.

For example, a single with aged parents may regard a car as a necessity to ferry his aged parents to their medical appointments. But is he more deserving than a young family with a newborn? Or with two children, or with three young children? How about single-parent families? How about individuals not yet married living together with their families as increasingly more of them do so because they are marrying later? It would be quite onerous to further burden the COE system with deciding who is more deserving or which family is more deserving. Our key thrust is to continuously improve our public transport system so that more people, with families or otherwise, will consider it a choice option. This is the more sustainable option in the longer run.

But we do understand that our public transport system, no matter how efficient, can never fully meet every mobility need. So we will have to have an efficient taxi system, and to complement that with more avenues for occasional access to cars, such as through car-sharing arrangements.

The trinity of Mr Liang Eng Hwa, Mr Seah Kian Peng and Mr Lim Biow Chuan has asked for the removal of ERP on Saturdays, especially on certain roads leading to the CBD where traffic may be more smooth-flowing. Overall, ERP has been a useful tool in managing traffic congestion. We are, however, prepared to fine-tune the system where there is room to do so. Members may recall that LTA announced several such adjustments in late 2011. These include the shortening of the evening ERP operating hours of the gantries along the northbound CTE and southbound Singapore River Line. The Nicoll Highway gantry, which forms part of the Bugis-Marina Centre cordon, will also be relocated later this year. Thereafter, motorists will be able to access the East Coast Parkway and route back to Shenton Way if they wish without paying ERP charges on Saturdays, while those who enter the Bugis-Marina Centre cordon will continue to pay ERP.

The effect on traffic patterns is a key factor in making any adjustments. In the case of the CTE, we observed heavier traffic flow after 8 pm, which is the new ERP cut-off time. Fortunately, the recent widening of the CTE has helped to moderate the impact of increased traffic on travel speeds. However, there is very limited scope to widen roads in the city centre. Any surge in traffic volumes would significantly impact travel speeds. This is why we have adopted the cordon concept for the CBD area, as there is only so much traffic that we can tolerate within the CBD if we want to keep it relatively free of congestion. This applies also to Saturdays and let me explain why. Leaving one road leading to the cordon that we are interested in unpriced would simply lead to a surge in traffic entering the cordoned area and creating congestion within, for example, the Bugis area.

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Orchard Road is used by two groups of commuters. One, those going into Orchard Road – shopping, meals, leisure, and so on. And the other using it as a thoroughfare to connect to the Bras Basah area. After we introduced ERP at Orchard Road in 2005, we saw no discernible variation in traffic bound for Orchard Road, but the proportion of those using Orchard Road as thoroughfare decreased from 35% to about 20%. So, roughly the same number of vehicles went into the area, but a lot less using it as a thoroughfare. And, hence, more of these commuters, who are driving, are using it to enter and to be in Orchard Road itself. Our concern is how that would change if we were to make wholesale adjustments to the ERP at Orchard Road.

My view is that a wholesale lifting of ERP on Saturdays would not be ideal. We would revert to the congestion we experienced prior to the introduction of ERP. However, I am prepared to examine if there is scope to consider some reduction in the ERP operating hours on Saturdays, just like what we did to the CTE. Because we would preserve the principle of offering some choice to motorists – smoother-flowing traffic during ERP operating hours, and possibly more congestion outside of those hours. We are doing that study, and LTA will announce the outcome of this review when it is ready.

Mr Lim Biow Chuan and Ms Sylvia Lim have both touched on the issue of illegal parking. Indeed, there are some hotspots, such as near popular eateries, with higher incidence of illegal parking that affects traffic flow in the area. The suggestion to offer free parking in nearby car parks would really depend on the facility owners who may or may not welcome those who park there without the intention to patronise the facilities. However, I suspect that generally, convenience and not pricing would be the key consideration. But the larger issue is whether we should take it upon ourselves to provide free parking nearby just because there is an illegal parking problem – the right and proper thing to do is that the driver simply has to pay to park in a proper parking lot.

The issue of parking on roads within private estates is quite a complex one. Some residents park their cars outside their houses. The way LTA approaches it is that it adopts a consultative enforcement approach for such situations. Where residents are prepared to exercise some tolerance and cooperation, LTA normally does not restrict parking unless it impedes the safe and smooth flow of traffic. Where necessary, LTA works with the grassroots leaders and residents to come to a reasonable parking restriction arrangement. Not everyone, obviously, will be fully satisfied but, where there are no over-riding policy considerations, the views of the majority of residents ought to be given greater weight.

5.15 pm

In places where strict enforcement is necessary, LTA will consider use of technology such as close-circuit television (CCTV) camera systems for greater operational efficiency and effectiveness. We have recently embarked on these trials and the results will enable LTA to better assess the feasibility of deploying such systems on a larger scale.

Sir, let me now move on to the carbon emissions-based vehicle system. The land transport sector is a major emitter of carbon, accounting for about 19% of our total emissions, the second highest after the industry sector. The sector, therefore, has an important role to play in our drive to deal with climate change. Cars and taxis account for roughly about half of the total land transport emissions. LTA has been studying a replacement for the current Green Vehicle Rebate (GVR) scheme, which has been in place since 2001. This is due, in part, to the modest take-up for the GVR, because less than 2% of our total car and taxi population is incentivised under the current scheme, partly because the scheme is limited to specific engine technology types.

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The LTA has canvassed widely for views and suggestions, ranging from a public e-consultation conducted together with the National Climate Change Secretariat, as well as discussions with interested industry stakeholders and members of the public, to gather ideas on how to more effectively influence people towards cleaner, low-emission models.

As the Minister for Finance announced, we will introduce a new Carbon Emissions-based Vehicle Scheme (CEVS). This will replace the current scheme for cars and taxis in January 2013. Unlike the previous GVR scheme, the new CEVS will adopt a broader, outcome-based approach that considers whole-of-vehicle innovations in fuel efficiency. This is because improvements in fuel efficiency can be achieved through many different ways, whether in the design of the engine, the transmission system, the use of materials to reduce weight or friction losses, or through energy recovery braking systems.

Hence, as shown on the slide [ A slide was shown to hon Members ], under the CEVS, all new and imported used cars, including taxi models, will be banded into three broad categories based on their CO 2 emissions per kilometre (CO 2 /km) performance as derived from standardised test cycles. Low-emission models will be in the incentive category and given rebates off their Additional Registration Fee (ARF). There will be four levels of CEVS rebates, from $5,000 up to $20,000, depending on the emission band of the model, subject to a minimum ARF payable of $5,000. High-emission models will incur a registration surcharge between $5,000 and $20,000. In between, there will be a "neutral" category of car and taxi models.

This is more commonly known as a "fee-bate" scheme and it draws reference from similar schemes which have been implemented in other countries. By widening the price differential between low-emission models and high-emission ones, the scheme will help to accelerate the switch towards low-emission cars.

Taxis generally clock much higher mileage than cars. Therefore, the CEVS "fee-bate" amounts given to them have been set at 50% higher, to shift our taxi fleet towards low-emission models, and likewise the surcharge will be 50% higher if they choose to pay for the high-emission models.

Mr Seng Han Thong asked about the expected impact of the CEVS. Currently, about 60% of cars purchased, using last year's data, fall under the neutral band. The remaining 40% is equally distributed between the rebate and surcharge bands. I expect that there will be an impact as the intent is to effect some change in buying behaviour, although it is going to be difficult to accurately forecast the impact as this ultimately depends on consumer behaviour. I know most Members are very interested in this slide and the next slide to follow, because this tells you the models that are under the rebate, and the next slide will tell you the models that are under the neutral as well as the surcharge.

But let me continue. Our expectation is that from 20%, some 30% to 40% of all new cars will qualify for CEVS rebates. Likewise, we hope fewer car buyers will choose the high-emission models. Our objective is not to raise money through the introduction of the CEVS – let me be very clear about that. Our preliminary estimate is that the CEVS will cost the Government about $34 million a year, more than double the total annual incentives that have been given out under the previous scheme.

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Sir, I would like to assure Mr Seng that the categories of cars that would be subject to payment of surcharge would actually be the high-end models, and there are going to be enough family-friendly MPV models that are not subject to surcharges. I am also sure the distributors will also respond to these price signals after we announce the details of the CEVS. On this slide [ A slide was shown to hon Members ], (b) is the neutral band and (c) will be the surcharge band, including the Ferraris and Bentleys. There are many car models in the neutral band, including the bigger cars like BMW, Mercedes and Nissan.

We recognise that the CEVS is a significant policy change. Therefore, we will implement the rebates first, starting in January 2013, with the surcharges applicable from July 2013. This will give consumers and the industry additional time to adjust to having to pay surcharges for carbon-intensive models. The CEVS structure that I have outlined will be in place for two years until the end of 2014. We will then review the scheme and examine the impact on motorists' purchasing decision, advances in vehicle design and technology as well as the progress of Singapore's overall carbon mitigation plan.

For commercial vehicles, buses and motorcycles, we will extend the current GVR scheme by another two years until the end of 2014. And we will use this additional time to review how we can better encourage the adoption of green models in these vehicle categories.

The Finance Minister also announced that the special diesel tax rate for Euro V-compliant diesel cars will be lowered from the current $1.25 per cc to $0.40 per cc, because of their significant improvement in particulate matter (PM) emissions. This will take effect from 1 January next year. This tax revision is a timely adjustment that will help to broaden the variety of low carbon emissions models available in Singapore.

Besides using price signals, information dissemination and education are important in shaping behaviour. LTA will take over the administration of the Fuel Economy Labelling Scheme (FELS) from the National Environment Agency. The new FELS label will contain additional information such as the model's carbon emissions, and its CEVS banding. LTA will also set up a new FELS online database and online fuel cost calculator, so that consumers can easily access such information and make comparisons of annual fuel savings across different models. We welcome suggestions on how the proposed label design can be further improved.

Mr Nicholas Fang expressed concerns that the various tax changes do not take into account the emissions of other pollutants, such as PM and nitrous oxides (NOx). I would like to assure him that the Government is mindful of the importance of managing these other types of pollutants and is indeed keeping a close watch on the best practices adopted by other countries. The diesel tax reduction and CEVS rebates only apply to Euro V cars, which have significantly lower PM and NOx emissions compared to models of earlier emission standards. All the 550 buses that we are purchasing under the Bus Services Enhancement Programme (BSEP) will be required to meet the Euro V standard, ahead of MEWR's 2014 requirement. LTA will release further details on the CEVS later so that we can be more updated on what will happen.

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Sir, let me move on to taxis. A number of Members have spoken on this subject matter. As Mr Gan Thiam Poh has pointed out, taxis provide commuters with a personalised door-to-door service. In doing so, they bridge the gap between cars and mass public transport and play an important role in meeting our diverse transport needs.

Mr Cedric Foo, first of all, expressed an interest in a taxi sharing scheme, whether it could revived because this was something that was disbanded in 2001 due to a lack of interest. We are prepared to try again if there is sufficient demand for us to do so. He also expressed concern that the taxi industry is dominated by a few major players. The setting of fares and the supply of taxis were deregulated in 1998 and 2003 respectively, to inject greater competition within the taxi industry. Market forces determine the supply and pricing of taxi services that best meet their demand.

Compared to before deregulation, commuters can now choose from seven taxi companies – previously, it was only three. Competition within the industry has also led to a decline in the market share of the largest player, ComfortDelgro – it was 86% in 2003 and it is now down to about 58%. And for competitive reasons, all the companies have to think carefully about the interests of the commuters and about their drivers before they initiate any fare changes.

Mr Foo, Mr Gan and Dr Neo expressed concern about the affordability of taxi fares for the disabled and the needy. I understand their concerns. The way to address this in a de-regulated market is really through providing financial assistance to the deserving cases. Persons with disabilities may apply to the Centre for Enabled Living for taxi fare subsidy to cover trips to work or school. LTA actually works together with the Centre for Enabled Living to operate this scheme. It is a tiered subsidy given out based on the per capita income of the family. The amount of help that a beneficiary receives is really dependent on his or her household income level and circumstances of the family. Some taxi companies have also, as part of their corporate social responsibility, introduced programmes to provide free or subsidised taxi trips for the needy. These measures are over and above the financial assistance that Government provides to the low income for basic living expenses through the ComCare Fund. And, of course, we know what MCYS works together with VWOs, for example, the Handicap Welfare Association as well as Caring Fleet to provide such services, although I understand that because of resource constraints, these are not available on Sundays and public holidays.

Both Mr Gan and Mr Foo are of the view that the quality of taxi service requires improvement, and I agree. The LTA has carried out a comprehensive review and will raise the Quality of Service (QoS) standards for taxi services. The LTA will also introduce a number of changes to the Taxi Operator Licence (TOL). Let me briefly run through some of the key changes.

Based on the feedback received, the LTA has identified the waiting time for taxis and reliability in securing taxi call bookings as the two attributes that most require service improvements. The QoS standards for the key steps in the taxi call booking will therefore be tightened. As shown in the slide, we will raise the standards for the "Call Answer Rate", the "Waiting Time to Answer Call", the "Cater Rate", which actually measures the likelihood of you being assigned a taxi after the call gets through; and, finally, the "Waiting Time for Taxi to Arrive". This raising of standards will improve the overall experience for commuters when they call-book a taxi.

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LTA will also extend the monitoring period for call booking performance. For weekday evenings, this will be extended to 12 midnight, and we will also cover weekends and public holidays between 5.00 pm and 12 midnight.

5.30 pm

While TOL prescribes that all taxi companies are required to provide call booking service, it does not stipulate the minimum number of taxis that are able to handle call bookings within each fleet. Going forward, LTA will require taxi operators to equip their entire fleet so they can identify taxis within the neighbourhood of a caller and assign call-booking jobs to taxis in the vicinity. The LTA will also require taxi operators to equip their fleet with a centrally-controlled "On-Call" display to minimise the misuse of "On-Call" taxi signs. To ensure that individual taxi operators have sufficient critical mass to provide an adequate level of service to commuters, the minimum fleet size requirement will be increased from 400 taxis to 800 taxis.

The revised QoS standards will take effect from 1 October 2012. The revised TOL conditions will apply immediately to new taxi operators who wish to enter the market. And to provide time to adjust, the existing operators will be required to meet the revised requirements when they renew their TOL.

Mr Seng Han Thong and Mr Ang Wei Neng pointed out that there is room for taxi companies to increase the availability of their fleets so that commuters will have easier access to taxi service when they need it. I fully agree. From 2006 to last year, the taxi fleet grew by about 20%. The kilometres run by taxis remained the same. The utilisation of the fleet is something that we need to pay more attention to. I have asked LTA to study the feasibility of regulating taxi companies to have a certain minimum availability for their fleets, particularly during peak hours when availability is crucial. LTA will also study Mr Seng's suggestion for taxi companies to better match hirers with relief drivers to facilitate more two-shift taxis as well as other possible options. We expect the study to be completed later this year.

Mr Seng Han Thong had two other suggestions – very good ones – related to the taxi industry. The special tax for diesel cars was previously set at a relatively high rate because of concerns over the pollutive effect, especially that of PM emissions. We are referring to diesel cars. The Euro V diesel cars have significantly lower PM emissions, comparable to petrol cars. And therefore, we decided to reduce the special tax for Euro V diesel cars so that it is roughly equivalent to the annual fuel tax paid by an equivalent petrol car. However, the treatment that we are now according to Euro V diesel cars is the treatment that we have given to taxis all these years; because the taxis have a much higher mileage, approximately averaging 150,000 km per year when we looked at it then. We set the special tax for the taxis at $5,100, which actually is a slight discount from what it would be if we had set it at full level, but that is how we arrived at the scheme for the taxis similar to what we are adopting for the Euro V diesel cars today. And that is why we did not make any change to the special tax for taxis. So, the current special tax rate of $5,100 for taxis is simply the equivalent of the petrol tax payable for the high annual mileage that taxis chalk up.

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Mr Seng also suggested that LTA consider further easing the CBD Taxi Rule restriction hours. In response to the feedback from the National Taxi Association, we had further shortened the restriction hours to align them with the operating hours for full day bus lanes and we removed the Vocational Licence Points System demerit points for violations from 1 March 2012. We want to allow these changes to stabilise but we will be prepared to consider further reductions if they are indeed possible.

Mr Cedric Foo also asked about how the recent fare increases have affected waiting time as well as the revenues for the drivers. When we compared – and now several months have passed although the situation, I would say, is not fully stabilised – the data that we have comparing before and after show that the revenue for the drivers have gone up somewhere between 4% and 6%. Waiting time, whether is it the CBD area, at the fringe of the CBD or outside the CBD area, has actually improved quite a bit.

Mr Cedric Foo suggested that we ought to consider whether there is a different way to meet the needs of the disabled community through private transport measures. We recognise that members of the disabled community actually do want the option of using public transport just like other Singaporeans. And we want to make Singapore an inclusive society. So, LTA and the public transport operators have been working together to make our system more accessible to wheelchair users, the elderly and the less mobile. I think this approach will also stand us in good stead to cater to our ageing population, which is something that Ms Tin Pei Ling has noted.

We recognise that persons with disabilities can have unique travelling needs, as described in the Enabling Masterplan that was just released recently. Taxis play an important role in fulfilling these needs, something that is noted by Dr Lily Neo, Mr Cedric Foo, Mr Gan Thiam Poh, among others. We have been working with MCYS, taxi operators and other stakeholders to see how best to cater to this demand moving forward. And I believe MCYS will touch on this during their COS on Friday.

Ms Tin also suggested that the Government help to expand the current pool of taxi drivers who are so-called medical chaperones to cater to our ageing population. We have been partnering the taxi industry to support the skills development of taxi drivers. The medical chaperone course conducted by the Singapore Taxi Academy is one such example. It certified 172 taxi drivers as medical chaperones since its inception in 2006. While STA has discontinued this scheme due to a lack of demand, we are prepared to consider this together with the Singapore Workforce Development Agency if there is enough interest to do so.

Let me now turn to cycling. Dr Janil has spoken very passionately and eloquently on this matter. He, amongst others, asked us to consider whether we can introduce on-road cycling lanes. He also suggested, I think, a painted visual guide on the existing left-most lane for motorists to provide a 1.5-metre clearance when passing cyclists.

Experience in other cities suggests that demarcating on-road cycling lanes might in fact give both cyclists and motorists a false sense of security, which can lead to an increase in accidents involving cyclists. In fact, I was a little bit surprised on this because I asked LTA to go, run through the studies that were done, look at their data. And interestingly enough for a number of the cities that introduced this demarcation back in the 1980s subsequently reported an increase in the number of accidents; and one of the reasons that they alluded to was that it gave both parties a false sense of security.

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What we are doing, under our National Cycling Plan, is, as first priority, to facilitate cycling for intra-town travel and for connectivity to major transport nodes. Weighing the various pros and cons, the provision of dedicated off-road cycling paths proves to be the safer and more land-efficient option while achieving our purpose of facilitating intra-town cycling.

We started rolling out the "Cycling Town" initiative in 2009; and I noticed it was very actively championed by Mr Teo Ser Luck . So far, seven towns have been identified as "Cycling Towns". To date, 6.4 km of dedicated off-road cycling paths have been completed in these towns. And by 2014, not too long from now, cyclists can look forward to at least 50 km, close to eight times more than what we have today, of intra-town cycling paths as well as another 16 km at the Marina Bay area.

But we are not stopping there. In mature estates such as the East Coast and Jurong Lake, LTA is working with HDB under the Remaking Our Heartland plans to incorporate connectivity for cyclists. New HDB towns will also be planned with basic cycling infrastructure provisions. Dr Janil has rightly pointed out that our extensive Park Connector Network can offer cyclists, who go beyond intra-town commutes, an alternate cycling network. And this is indeed being looked into. We do not work in isolation, certainly, and I know that LTA works closely with NParks to have these cycling paths built by LTA linked up with those built by NParks in their park connectors. It is an integrated approach. This has taken us beyond the localised "Cycling Town" initiative towards a broader National Cycling Plan, which will see an extensive cycling network islandwide being developed over the longer term. But full implementation obviously will be some years away and it will take time for the infrastructure to be rolled out.

And Dr Janil also suggested bicycle sharing schemes similar to several other cities: We are certainly open to the idea; we will explore its feasibility and actively facilitate if there are interested private operators who want to come in on this endeavour.

Under the National Cycling Plan, LTA aims to increase the number of bicycle parking racks at MRT stations and bus interchanges. Last year, it announced that it would roll out the first batch of additional bicycle parking racks at 10 MRT stations. These 1,600 additional bicycle parking racks will be in place by this September.

They are designed to allow cyclists to lock their bikes securely and with adequate lighting. We encourage cyclists to heed the Police's advice to use a U-lock or one with an alarm feature to deter bicycle thieves, something that I know the cyclists are concerned with.

I am also glad to share that the LTA has plans to install additional bicycle racks at another 10 MRT stations. The LTA will continue to monitor demand at our transport nodes and work with agencies to secure land to provide additional racks, where necessary.

Dr Janil asked whether we would consider having a single regulatory authority for cycling. I think the issue is less about having a single regulatory authority for cycling, but more of whether it is possible and desirable, at this stage of our cycling development, to have a single set of cycling regulations and plans across the whole island. While LTA provides the infrastructure such as cycling paths and bicycle racks at transport nodes, and the Traffic Police oversees the enforcement regime, ultimately, it is community involvement that really is the key success factor from what we have seen so far in cycling towns. The community is involved in planning the cycling paths, and they are also mindful to balance the concerns of other residents by encouraging their cyclists to adopt safe cycling habits. This means that the local communities can decide how fast cycling initiatives should be rolled out and where, and what would be the acceptable practices and trade-offs between cyclists and other members of the community.

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Dr Janil also advocated the use of cycling helmets. The Traffic Police has taken the approach to promote the use of helmets through education, as mandating their use through legislation may not necessarily be that effective. Cycling interest and advocacy groups can also partner LTA and the Traffic Police to encourage the use of helmets in the cycling community. But it is something that I personally would actually actively encourage cyclists to do so.

Besides the promotion of the use of helmets, there are other public education efforts undertaken by LTA, the Traffic Police as well as interest groups like Safe Cycling Task Force. One key initiative is the publication of an "Intra-Town Cycling" Handbook, which will serve as a reference on good cycling etiquette and share safety tips for intra-town cycling. I note that the LTA and the Traffic Police, beyond what they have done in education, have also stepped up their enforcement efforts against errant cyclists with the help of the local community to make cycling a safer activity for all concerned.

Finally, I think we recognise that our limited land space means that mutual understanding and courtesy between cyclists and other road users is really all the more important. And working together is an on-going process. By doing so, as a community, and through improving our infrastructure, our continuing efforts on education and enforcement, we can create an environment where cyclists, pedestrians, and motorists can co-exist safely.

5.45 pm

Aviation Hub

Dr Lily Neo: Sir, Asia's aviation industry is thriving and passenger volumes in this region are expected to increase. Changi Airport already handled 4.24 million passengers in the first month of this year alone. What are the measures in place to take advantage of this expansion and to ensure the relevance of Singapore as a global hub? Is MOT taking medium and long-term outlook to maintain the world-class standard of Changi airport?

The growth in the number of flights had resulted in busier skies and more air traffic delays in the last one year or so.

Are Terminals 1, 2 and 3 meeting the expected standard with increased passenger load? What are the plans to maintain Changi's position as a leading aviation hub?

Statistics show that the largest growth area for the aviation industry currently is in low cost carriers, we need to efficiently capture this market. I am glad that MOT has announced to upgrade the Budget Terminal and it is going to be called Terminal 4. I hope in the planning for this replacement, priority is given to the capacity, services and image in order to capitalise on the rapid growth in the low-cost carrier sector.

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When the plan for a budget terminal was announced in 2003, low-cost carriers accounted for approximately 11.5% of the total global airplane seats. By 2011, the figure stood at 24.3%. Closer to home, low-cost carriers accounted for approximately 10% of Changi Airport's total flight when the Budget Terminal was opened in 2006. This has grown to 28.6% in 2011, a mere five years later and it is getting crowded at the Budget Terminal. I hope this time we can get better postulation on the growth trend in this sector for Terminal 4.

Making the Terminal 4 attractive to low-cost carriers is essential if Changi Airport wants to seize the growth opportunity in the low-cost carrier industry. Terminals 1 to 3 may well be prohibitively expensive to certain budget carriers and if Terminal 4 cannot position itself as a viable alternative then the low-cost carriers may simply decide to use other airports as their hub.

When one steps into the present Budget Terminal, the contrast between the somewhat dated look of the Budget Terminal and the sophisticated, timeless look of Terminals 1 to 3 was immediately apparent. There is no reason why it should deviate from the general image that the other Terminals portray. Flying budget is no longer just for those who cannot afford full-service airlines but also becoming more and more relevant to the average traveller who will expect more from a Singaporean airport. Terminal 4 too will need to move with the times. It was reported that aerobridges would not be made available at Terminal 4. I feel this facility should be made optional so that carriers who prefer them can opt for them. Passengers certainly prefer it, especially on rainy days, which is not all that uncommon in Singapore.

On my last topic on daily parking rate in an open-air car park in the Budget Terminal. It is almost three times higher than that in the covered multi-storey car park in Terminal 2. And I hope MOT will correct this anomaly at the new Terminal 4.

Mr Charles Chong (Joo Chiat): Mr Chairman, I thank you for allowing me to join this debate. I would also like to thank Dr Lily Neo for saying a lot things which I wanted to say. Sir, in 2011, Changi Airport handled 46.5 million passengers and 302,000 flights, an increase of 10.7% and 14.5% respectively over the previous year. In addition, 1.87 million tonnes of cargo were handled in 2011, an increase of 2.8% over the previous year. Changi Airport is now the seventh busiest international airport in the world and serves more than 100 international airlines flying to 210 cities worldwide. But this comes at a cost.

As anyone who flies frequently from Changi Airport will tell you, it has been quite common to find yourself sitting in your plane well past its departure time, waiting for your flight to receive clearance for take-off. This is frustrating for travellers and it is a departure from the efficiency one normally expects from a Singaporean institution. Crucially, this might be one of the last glimpses of Singapore a visitor might experience; and it is not a great way for one to end a visit here. I would be grateful if the Minister could let us know if there has, indeed, over the years been an increase in air traffic control delays at Changi Airport. And, if there have been such delays caused by air traffic congestion, what steps are being taken to reduce these delays? I do not think the ERP gantries would work in this case.

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I also note that the Civil Aviation Authority of Singapore has recently implemented more efficient use of two runways for take-offs and landings. However, while there is a third runway at Changi Airport, this is used solely by the RSAF for military aircraft, and it is not linked to the passenger terminal buildings. The third runway has been in existence for some years already and it is still not available for use by civilian aircraft.

Given the pressures on the two other runways, could the Minister let us know when it is intended for taxi ways to be constructed to link the third runway to the passenger terminal buildings to enable the third runway to be used by civilian aircraft, and thereby reducing the load on the other two runways, making for more pleasant departure experience from Changi Airport?

I also note the recent announcements by the Changi Airport Group that the Budget Terminal will be closing this September to make way for the new Terminal 4. Now low-cost carriers have taken off in a big way in Singapore and many passengers have found travelling on low-cost carriers to be a viable alternative compared to travelling with full-service carriers especially on the shorter routes. The plans for the new Terminal 4 include more amenities for passengers which are a good thing but I am concerned that this would come at a greater cost to travellers who choose low-cost carriers precisely because the fees are lower; who, in exchange are happy to live with limited facilities currently available at the Budget Terminal.

Could the Minister elaborate as to what sorts of fees and taxes will be charged at the new Terminal 4? And how will this be compared to the current fees and taxes being charged at the Budget Terminal? And with the temporary re-location of airlines to Terminal 2, will there be an economic impact to travellers travelling with those airlines?

I also note that the Budget Terminal handled 4.6 million passengers in 2011. It has a capacity of 7 million passengers a year. It appears that there is still significant amount of headroom in that figure. Given that the Budget Terminal is only five years old, could the Minister please clarify why he feels that it is now the right time to demolish the Budget Terminal in the light of its relative youth, as well as the fact that it is well below its passenger handling capacity at the moment?

Mr Cedric Foo Chee Keng: Sir, I would like to add to what Mr Charles Chong and Dr Lily Neo talked about on aviation. Changi Airport has enjoyed its busiest month in December last year. And I would like to ask the Minister if he sees the airport projecting to continue to enjoy such strong performance, years ahead? But more importantly, who do the Minister see as competing air hubs? It has to be noted that Dubai – for example, has been, by many, many counts whether it is passenger arrivals, whether it is connectivity to cities – has been doing very well recently. I would like to tap the Minister's thinking about who we are pitched against, and how we may succeed and do better?

Secondly, I would like to ask the Minister about Air Services Agreements (ASAs) that he intends to enter into this year, and how would they add to the vibrancy of Changi and the airlines that are based here?

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Another point I would like to add is the separation between the regulatory authority and the business side of Changi Airport, the Changi Airport Group and the Civil Aviation Authority of Singapore. This has been carried out; an update would be very helpful.

[Mr Deputy Speaker (Mr Charles Chong) in the Chair]

Harbour-craft Industry and Tax Issues

Mr Teo Siong Seng (Nominated Member): Mr Chairman, Sir, good afternoon. Before I start, I want to declare that I am the President of the Singapore Chinese Chamber of Commerce & Industry, Chairman of the Board and Governing Council of the Singapore Maritime Institute, and MD of Pacific International Lines. In my speech today, I would like to touch on four subjects.

Firstly, setting up of an agency to facilitate inter-government and private sector co-operation. In my Parliamentary speech last Tuesday, I called for the Government to set up an over-arching agency to oversee the smooth introduction of policies which cuts across several Government Ministries, to address issues faced by business affected by such policies. Let me share with you an example of cross-agency collaboration which I found useful.

The Singapore Maritime Institute (SMI) was formed last year as a joint effort by the Maritime and Port Authority of Singapore (MPA), the Agency for Science, Technology and Research (A STAR) and the Economic Development Board (EDB) in partnership with local institutes of Higher Learning. These agencies are from different Ministries and could have pursued their interests independently but instead, the MPA has pledged $200 million towards this initiative with another $150 million by A STAR and EDB as announced by Deputy Prime Minister Tharman Shanmugaratham in his parliamentary speech on 17 February.

They have come together to leverage on each others' strengths, to pursue a common vision of growing Singapore as a maritime knowledge hub, to enhance Singapore's overall competitiveness as a leading maritime centre. In the process, we are also able to fulfil other objectives such as strengthening our research capabilities and grooming of manpower. The maritime industry has been very receptive to this initiative.

Secondly, on foreign worker dependency ratio and its impact on the harbour-craft industry. Last year, Singapore maintained its position as the world's busiest port by vessel arrival tonnage with a record high of 2.12 billion gross tonnes (GT), or 10.4% increase from the previous year. We also remained as the world's top bunkering port, with record bunker sales of 43.15 million tonnes, an increase by 5.6% over 2010. This is quite an accomplishment, especially when our harbour-craft fleet only comprises 300 tug boats and 270 bunker tankers to escort vessel arrivals and refuel them in Singapore's port waters and anchorages. On a daily basis, they service more than 1,000 vessels in our port, playing a vital role in bringing economic benefits, while ensuring maritime safety in our waters.

The bulk of the harbour-craft crew are trained foreign seafarers who have undergone years of training to carry out complex shipping operations on our tug boats and bunker tankers. This training is in line with international best practices and cannot be reduced without compromising safety standards. I would like to add that the tug boats and bunker tankers that serve our port are already heavily-automated with the minimum number of crew needed for safe operations. Our harbour-craft crew also work shifts in a physically and mentally demanding environment on 24x7 basis. Hence, I can understand why such jobs may not appeal to many locals even though the pay is high. Promoting and encouraging Singaporean school leavers to embark on a seafaring career is an ongoing joint effort by the shipping industry, unions and Government agencies but the take-up rate has never been too impressive.

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We are aware that some who have undergone seafaring courses end up working onshore and even in non maritime related industries. Thus, I urge the Government to re-look and be more flexible at certain sectors that are unable to meet the dependency ratio ceiling despite their best efforts. They will be hampered in their businesses without foreign skilled labour.

Thirdly, expanding the scope of MSI-AIS scheme: removal of withholding tax on interest payments for container leasing. I am happy to note that the Maritime Sector Incentive-Maritime Leasing (Container) Award (MSI-MLC) has been enhanced. Container leasing companies are now granted automatic withholding tax exemption arising from loans taken to finance qualifying containers and intermodal equipment. Other than container lessors, container shipping companies also take loans to finance purchase of their containers. However, they are excluded from enjoying this enhancement.

I would like to propose that the MSI-AIS scheme be further enhanced to allow loans taken to finance purchase of containers by container shipping companies, to also qualify for the automatic withholding tax exemption for foreign loans on their containers.

Last but not least, removal of withholding tax on interest payments for foreign loans on ships. In last year's Budget Statement, the Minister had announced that qualifying payments made in respect of qualifying foreign loans taken to finance the purchase or construction of both Singapore-flagged and foreign-flagged ships would be granted automatic withholding tax (WHT) exemption. This is a good initiative. However, we would like this extended beyond 31 May 2016.

In conclusion, our shipping industry is currently going through a very difficult period. Especially for shipping lines in the container, bulk and tanker sectors, the headwinds are even stronger than the 2008/2009 downturn. I would like to urge the Government to heed our industry's concerns, understand our problems and to address them, so that together, we can sail through this rough weather like we have done so many times before, and further strengthen Singapore's status as an International Maritime Centre.

Maritime Manpower Master Plan

Mr Ang Hin Kee (Ang Mo Kio): Mr Chairman, there is no coincidence that today the three persons that are speaking on maritime are seated together – Mr Teo, myself and Ms Mary Liew. But we have quite different takes, or at least with what Mr Teo has mentioned; but the same problem with regard to the shortage of manpower in the industry.

6.00 pm

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I am heartened to know that there are plans to transform Singapore into a leading international maritime centre. For us to remain well placed to capture the potential and future growth, I believe to be able to do so, it is imperative for us to develop a strategic plan to build our own maritime workforce, comprising a core pool of Singaporeans who are proud of their jobs, who have access into good jobs, so that we can also safeguard our national interests.

May I, therefore, suggest that the Maritime and Port Authority of Singapore (MPA) take steps to engage the relevant stakeholders to map out a maritime manpower master plan for the industry? We should involve MOM, WDA, ITEs, Polytechnics, employers, unions and associations, so that everyone can take ownership in the design, development and implementation of such a master plan. We can and should together identify ahead of time what a future-ready workforce for the maritime industry should comprise; what are the competencies and skills required? And what is the number of workers needed ahead of time? Do we therefore have the sufficient training capacity and the types of trainers needed to train, for example, people in the harbour-craft industry? Similarly, what is the timeline MPA needs to set in place so that we can develop a pool of Singaporean core for the maritime industry?

With such a master plan, I believe we can help companies attract local workforce and such manpower needs and training should not be an "afterthought". MPA needs to plan ahead of time to prevent a manpower shortage in this industry. Our growth as an international maritime centre should not be hampered as a result of a shortage of skilled local workforce. We want Singaporeans to be able to take advantage of the nation's growth in the maritime industry. But, more importantly, we want Singaporeans to have a headstart. For those who are not in the industry, they can gain access to join the industry. For those who are already working in the industry, they can grow into new areas and acquire new skills. If and when we have a detailed and clearly mapped out manpower masterplan, we can prepare Singaporeans on what to expect in the maritime trade. It will also send strong signals to everyone that the industry is serious to offer good careers, promising prospects, good salaries and upgrading opportunities.

There are many deeply-skilled jobs that require Singaporeans to fill. Mr Teo mentioned earlier that they are paid very well in the harbour-craft and various other types of jobs in the maritime industry. Many low-skilled jobs are also being converted to higher-skilled and better-paying ones. Many of such jobs are competency-driven rather than by academic qualifications. I hope the MPA can provide information about the industry and let the structured career progression pathways be made known to everyone, that is, the students and job seekers, so that those who are contemplating the choice of courses in schools can consider this industry. And those who are in a job but looking for a change in career, can consider maritime as a career option. For instance, MPA can work with the ITEs and Polytechnics to ensure that the supply from the pre-employment training (PET) route is adequate, and that they should make a conscious effort to find out why students who take up this course eventually do not make a career out of the same industry. We must make every effort to make sure that the graduates in this course stay in the industry.

It is also apparent that the PET route alone is not able to provide a sufficient pool of ready workers needed for the industry. Can MPA consider tapping from the Continuing Education and Training (CET) route, ie, the existing workforce? Take advantage of other well-trained Singaporeans who may not know of a good industry, good career, that is available here. Look at various ways to attract people to do job conversion and switch to the maritime trade through attractive and well-funded conversion programmes, apprenticeship and Place-and-Train programmes. Provide jobseekers easy access to join the industry with a strong focus on competencies, rather than purely on academic qualifications. Can MPA also harness existing training resources and expand current expertise? Put in place the appropriate trainers, facilities and funding schemes to grow this industry and eventually, make sure that manpower needs and training are not seen as an "afterthought".

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Maritime Manpower Development

Ms Mary Liew (Nominated Member): Sir, although we sit very closely together, I can tell you that we are "same-same" but different. First and foremost, I would like to thank the Ministry of Transport (MOT) and the Maritime and Port Authority of Singapore (MPA) in moulding Singapore into an international maritime hub. The maritime industry has contributed over 7% of our national GDP. With the MOT and MPA's efforts, there are more than 5,000 maritime companies and more than 4,000 Singapore-flagged ships, which are ranked among the top10 fleets in the world. And this has created relatively well-paid jobs in the maritime industry. I understand that today, there are about 170,000 personnel employed ashore and at sea, and they constitute about 6% of our national workforce of some 3.2 million. Sir, how many of these 170,000 personnel employed are Singaporeans? Presently, there is an employment ratio being practised in the Singapore harbour. However, on the ocean-going vessels, no such ratio exists.

Before I go further, Sir, I would like to declare my interest. I am the Executive Secretary of the Singapore Maritime Officers' Union (SMOU) and a Director of Wavelink Maritime Institute Pte Ltd, a training provider. Allow me to highlight what I meant by well-paying jobs.

Firstly, the Habour Craft Port Limit. Just now, Mr Teo Siong Seng mentioned that it offers a well-paid job. I understand from our members that wages can range from S$3,000 to S$6,000 per month, depending on their ranking onboard the ship. Secondly, for ocean-going ships, an entry-level Third Officer can earn an average of S$3,800 per month. A sea Captain can earn up to S$10,000 per month. However, for specialised vessels, a Captain can earn as high as S$19,000 to S$25,000 per month. With wages that are much higher than the existing national median wage, should we be doing more to encourage Singaporeans to pursue a sea career?

In recent years, it is very encouraging to note that there are more young Singaporeans with good GCE "O" level results coming forward to apply for Direct Admissions into the Diploma of Nautical Studies and Diploma of Marine Engineering Programmes offered by the Singapore Maritime Academy (SMA) at the Singapore Polytechnic. On average, about 180 potential seafaring officers are trained annually in SMA. Of this number, I understand that over 90% are Singaporeans yearning for a job that pays higher wages. Sir, the SMA has the capacity to train more young Singaporeans for this promising and rewarding sea career. However, they are not able to do so because they find it challenging to secure training berths onboard ships for the required 12 months of sea-time that the cadets will have to complete. This is despite the fact that we have more than 4,000 Singapore-flagged commercial ships.

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Is this shortage of available cadet training berths onboard commercial ships for our young Singaporeans a reason for them to deprive our youth from better jobs and better wages? A career at sea does not confine one to spending almost an entire lifetime at sea. The many colleagues whom I work with very closely are former sea-going officers as well. The shore-based career opportunities in the maritime industry are just as wide. Many from amongst the top shipping management in the maritime sector were once sailing as nautical or engineering officers at sea. They are also earning no less than what they used to earn at sea.

I would like to applaud the MPA for the collaborative initiative with WDA, e2i and harbour-craft employers, for introducing the 21-month Certificate of Competency (COC) for Special Limits (ships that are sailing within Singapore water). We should have started earlier, but it is better late than never. This is an example of a positive initiative that has trained Singaporeans with secondary school education or "N" level equivalent for a well-paying job in our harbour.

Another similar initiative, but with a tripartite element, is the Tripartite Nautical Training Award (TNTA), which was introduced in 2009 as a pilot Place-and-Train programme administered by e2i, funded by WDA and a small portion from the Singapore Maritime Officers' Union, and supported by Singapore Shipping Association, which at that time was led by the then-President, Mr Teo Siong Seng, seated beside me here, and 11 different shipping employers. To date, we have trained some 56 Singaporeans for ocean-going ships sailing worldwide and currently 31 are still out there at sea.

Sir, TNTA illustrates how constructive tripartism can serve the industry, create well-paying jobs for working adult Singaporeans with "N" level as well as a minimum requirement and yet provide a good career path. Many of them have already completed their National Service. It also gives the opportunity of a promising alternative career to working adult Singaporeans to succeed and earn better wages to have a better life for their families. I understand that this is a very tough job, but it can be rewarding. Perhaps, if this same spirit of tripartism is adopted by the entire shipping industry, the bottleneck may be cleared. More employers can make available training berths on their ocean-going commercial vessels and more Singaporeans can have the opportunity of a sea career.

Sir, Singapore being an international maritime hub, I feel that it is important for us to maintain a core base of Singaporeans in the shipping industry. I echo the same view of Mr Ang Hin Kee, and I would like to ask the Minister: (i) What is the Government's projection of the long-term maritime manpower needs in Singapore? (ii) What are the Ministry of Transport's plans to develop Singaporeans for maritime jobs for both shore-based and sea-based? (iii) If persuasion fails, would the Minister consider introducing some form of incentives for shipping companies to provide training berths for Singaporean cadets on board Singapore-flagged ships? and (iv) Would the Minister also consider setting up tripartite initiatives to promote the employment of Singaporeans in the maritime sector?

The Minister of State for Transport (Mrs Josephine Teo): Mr Chairman, first, let me thank the two different trinities for their interest in the development of our aviation and maritime sectors. I will address them in that order.

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Sir, Singapore thrives by being a global city, connecting ideas, people and goods across the region and the world. Aviation is a vital enabler of our global connectivity, which helps many other sectors, such as financial services, manufacturing, and tourism to flourish. Aviation is, in fact, a very diverse sector, comprising airlines, airport, aerospace and aviation services. These different activities provide exciting and rewarding jobs for more than 40,000 people.

Mr Cedric Foo and Mr Charles Chong asked about the performance and prospects of our aviation sector. Aviation did well in 2011. Our air hub, Changi Airport, had a good year. Many airlines operating at Changi were affected by the unfortunate natural calamities elsewhere, including the Tohoku earthquake in Japan, and the flooding in Thailand. Airlines were also affected by weaker sentiments and economic uncertainty in Europe and the US. Despite these challenges, Changi recorded 10.7% growth in the number of passengers handled in 2011. Mr Charles Chong had shared some of these numbers. We have a new high of 46.5 million passengers handled. This is more than double the global growth rate of 5.1% for the year. Air freight volumes also rose by 2.8% to 1.87 million tonnes, compared to 0.7% globally. Reflecting the higher levels of business, aircraft movements at Changi grew 14.5% in 2011, exceeding 300,000 movements for the first time.

Mr Cedric Foo has asked about the change in structure, where we now have the Changi Airport Group (CAG) and the Civil Aviation Authority of Singapore (CAAS). The creation of CAG has allowed it to focus on airport operations and for CAAS to focus on air transport regulation as well as development. So far, this arrangement has worked well, as shown in the growth figures. CAG, in fact, now has greater flexibility to innovate, such as to introduce schemes that will attract and retain airlines.

The outlook for air transport continues to be challenging. Besides concerns over the global economy, further hikes in fuel prices could dampen the performance of airlines. As a result, we expect our air hub to continue to grow this year, but at a slower pace.

Even then, as Dr Lily Neo has advised, we must effectively cater for future growth, both in the short term, and over a longer time-horizon.

6.15 pm

As Members have highlighted, the record traffic of the past year has led to delays in aircraft arrivals and departures. This has occurred when Changi's runways and taxiways are heavily utilised during peak periods. There are seasonal fluctuations but, on average, about one in 20 aircraft departures at Changi faced some delay in 2011. To upkeep the service excellence expected of Changi, CAAS and CAG aim to do better.

A range of new measures has been put in place by a taskforce led by CAAS and CAG. For example, within safe parameters, the interval between departing aircraft has been reduced. More planes can now use the runway within the same time period.

We have seen improvements as a result of these measures. During peak periods, runway and taxiway operations are smoother. Departure delays have decreased in January compared to November and December 2011, even with the surge in travel over the Lunar New Year. The taskforce is monitoring the situation and will make further enhancements to minimise delays. I am pleased to let Mr Chong know that ERP gantries are not one of the measures we are contemplating.

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Sir, besides efficiency in air traffic operations, we are continuously improving Changi's terminal buildings. We monitor closely a range of service indicators to ensure that service standards meet travellers' expectations of Changi. I am pleased to assure Dr Neo that in spite of the higher passenger loads, the standards continue to be met.

The upgrading at Terminal 1, which started in 2008, will be completed later this year. This will provide travellers with better facilities for baggage claim, and more spacious waiting areas, among other improvements.

Terminal 1, being Changi's first terminal, was originally designed to handle a larger proportion of connecting travellers who do not leave the transit area. However, as Singapore's attractiveness as a destination grows, more travellers are making stopovers instead of just using Changi as a transit point. We can, therefore, expect public areas, such as the meet and greet halls to become more heavily used.

To cater to the changing profile of travellers, Changi will embark on the Terminal 1 Expansion Project. The open air car park between Terminal 1 and Changi's iconic control tower will be redeveloped into a multi-use complex. This new complex will be integrated with the existing building, and will increase Terminal 1's public areas, pick-up driveways, and car park spaces. With this expansion, Terminal 1's handling capacity will increase from 21 million to 24 million passengers per annum.

Beyond capacity expansion, Terminal 1's accessibility to the MRT station will also be improved. In addition, the new complex will have dedicated facilities to support fly-cruise and fly-coach initiatives, which are important options to a rising number of travellers. More retail spaces and traveller amenities will be provided to enhance the overall experience of airport users. The Terminal 1 expansion project requires detailed and careful planning. CAG will provide more updates in due course.

As was recently announced, Changi's Budget Terminal will be redeveloped into a new "Terminal 4". When completed, Terminal 4 will be able to handle 16 million passengers per annum, more than double the capacity of the existing Budget Terminal. In terms of facilities, CAG has indicated that Terminal 4, like the present Budget Terminal, will not have aerobridges. This is to keep open the option of a no-frills model which some low-cost carriers (LCCs) prefer.

Mr Charles Chong has asked what will happen to the fees and taxes. It is a little too early to say right now because the new Terminal 4 is scheduled to be completed in 2017. But there will have to be some sort of pricing differential maintained between Terminal 4 and Terminals 1, 2 and 3 because of the different services that are available at these terminals.

The new Terminal 4 is an opportune investment for Changi to tap on the growth of LCCs. LCCs are a growing and an increasingly diverse segment of the air transport industry. Today, some LCCs adopt the classic model of short-haul, point-to-point and no-frills operations, while others now fly long-haul, offer transfer services, and even business class options. LCC travellers are equally diverse, and include even business travellers as well. Dr Neo will be pleased to know that these travellers will enjoy increased comfort and ambience, as well as more parking spaces at the new Terminal 4.

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Together with full service carriers, LCCs have boosted Changi's connectivity. They now offer services to 50 cities in 16 countries. In fact, several of Changi's city links are served solely by LCCs. These include Yogyakarta, Shantou, Krabi, and Tiruchirapalli in India. We expect more LCCs to offer services to new destinations from Changi. For example, Scoot, a subsidiary of Singapore Airlines, will start long-haul services to Australia's Gold Coast later this year.

The number of passengers using LCCs at Changi has grown dramatically at the rate of 35% per year over the past five years. As a result, LCCs now take up a 25% share of Changi's total passenger volume, compared to just 7.7% in 2006, when the Budget Terminal first opened. By way of comparison, LCCs make up 30%-35% of total passenger volumes in more mature markets, such as the US and Europe, whereas compared to what is at Changi today, it is 25%.

As the Asian air travel market matures, and more people travel, LCCs are expected to grow in importance. Therefore, gearing Changi for LCCs is gearing Changi for growth. I hope that also addresses Mr Charles Chong's question on why it was that the Budget Terminal, being a relatively youthful terminal still has to be torn down and redeveloped. It is really because the growth potential is vast and we think that it makes better sense for it to be redeveloped to cater to that growth potential.

Altogether, the expanded Terminal 1 and the new Terminal 4 will raise Changi's overall capacity from the present 73 million to 85 million passengers per annum, a 16% increase in capacity. For an air hub to thrive, capacity and connectivity growth must go hand in hand. Besides physical expansion, we need to further liberalise air services agreements with other countries, a point which was noted by Mr Cedric Foo. This strategy of securing more air rights is vital to growing our air connectivity and strengthening our air hub.

A good example of the benefits arising from this strategy is the progressive liberalisation of Singapore's air services with China, which has allowed airlines of both countries to seize market opportunities and cater to growing demand. The liberalised air rights regime between Singapore and China took effect in 2005. In the six years that followed to 2011, passenger traffic between our two countries has grown by 50%.

Singapore's policy of liberalisation has reaped dividends. Just 10 years ago, Changi was linked to 139 cities in 50 countries. Today, with a wider network of air services agreements, Changi is linked to 211 cities in 62 countries around the globe.

Mr Cedric Foo asked where else are we seeking to have air services liberalisation. Actually, in the ASEAN region, our immediate neighbours are one area of priority, and this is because we are very keen to see the implementation of the intra-ASEAN open skies agreements which have already been signed.

Sir, air hub connectivity is a key enabler of our globalised economy. It helps Singapore attract and anchor multinationals and top talents. It enables our home-grown enterprises to tap opportunities and markets worldwide. On a personal level, connectivity enriches the lives and broadens the perspectives of Singaporeans. We will continue to champion air liberalisation and the growth of connectivity, to the benefit of Singapore.

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Let me now share with Members some noteworthy developments amongst airports, which is also Mr Foo's question on which airports are we looking at. Several leading air hubs are upping their game and taking a long-term view on capacity building. To our north, Kuala Lumpur International Airport is building KLIA2, a much larger LCC facility with a capacity of 45 million passengers per annum. KLIA2 is designed to facilitate transfers between LCC and full service flights.

Meanwhile, Korea has bold ambitions to position Incheon International Airport as the gateway to Northeast Asia, a region comprising China, Japan and Korea. It is also developing an "Air City", an island 10 times the size of Ang Mo Kio, with residential, industrial and commercial zones, including a casino, hotels and conference facilities. Such "airport city" developments are emerging as a key strategy for air hub competitiveness.

Meanwhile, Dubai Airport − Mr Foo also mentioned this − whose volumes were only half that of Changi a decade ago, now handles more passengers than Changi does each year. It is still aggressively expanding, and will open a dedicated A380 concourse later this year. This will be a world first.

At the same time, the Hong Kong International Airport has announced its Master Plan 2030 which involves building a third runway to meet future needs. In fact, Hong Kong has successfully extended its reach beyond its traditional catchment areas for passengers. Using coach and ferry, travellers at Hong Kong International Airport can connect to and from more than 100 cities in the Pearl River Delta. The airport is, therefore, tapping a hinterland of 120 million people, far greater than the seven million living in Hong Kong itself. With these sea and land links, the airport has captured an additional four million passengers, or close to 10% of its passenger traffic, in 2011. Within the next two decades, all these airports that I have mentioned are likely to grow capacities and be able to handle 100 million or more passengers each year.

For Singapore to maintain its position as a vibrant global city, Changi must work hard to stay ahead. Changi was first conceived in 1975. The first flight at Changi took off in 1981. It took another 27 years for Changi to reach its present capacity and scale, with the opening of Terminal 3 in 2008. For Changi to meet Singapore's needs well into the future, we have to start planning now.

2011 marked a century of aviation in Singapore. To guide Changi's growth over the next quarter century, and take it to the next major milestone, the Ministry of Transport will set up the Changi 2036 Steering Committee. The Committee will provide strategic direction for the future development of Changi Airport. It will be a multi-agency committee, comprising members from eight Government agencies and the airport operator, CAG.

The Committee's key deliverable will be to develop a Concept Plan that addresses key issues such as: (i) the timeline and development of a new passenger terminal; (ii) measures to augment Changi's infrastructure, in particular, the civilian use of Changi's third runway; and (iii) the phasing of development for related infrastructure, facilities and transport links to support Changi's future growth. The Committee expects to consult relevant stakeholders, such as airlines, airport service-providers and aviation industry players. The Changi 2036 Steering Committee is MOT's key initiative to position our air hub strongly for the future. We aim to present our recommendations within a year.

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Sir, from aviation, let me now turn to the maritime sector. I thank Mr Teo Siong Seng, Mr Ang Hin Kee and Ms Mary Liew for their comments and suggestions. Let me first update Members on the performance of the Singapore maritime sector in 2011.

6.30 pm

The Port of Singapore did well last year. Container throughput grew over 5% to reach 29.9 million TEUs – just a little above the previous highest level in 2008 before the financial crisis. Our annual vessel arrival tonnage grew 10% to reach 2.1 billion gross tonnes – doubling in just seven years. We also remain the world's top bunkering port with a 5% increase in annual bunker sales last year.

The port is part of a larger ecosystem. It needs shipping lines and operators to generate cargo volumes. They, in turn, need shipbrokers to arrange business deals, shipping banks to provide financing, maritime lawyers to oversee transactions, and many other supporting services. In other words, the maritime sector is more than just the port. It is an entire ecosystem of sea- and shore-based activities that offers many exciting career opportunities. Growing this ecosystem is an important part of our vision to make Singapore a leading International Maritime Centre.

Our International Maritime Centre is making good progress. Today, there are over 120 international shipping groups in Singapore compared to about 30 groups 10 years ago. We are widely recognised as having one of the highest concentrations of shipping groups, covering the full spectrum of activities, from container, tanker and bulk shipping to the offshore energy sector. Established players like the Swire Group, the NYK Group and the AP Moller-Maersk Group have set up their regional headquarters here to be at the heart of the Asian growth story. Similarly, in the area of maritime law and arbitration, there are now over 30 law firms with maritime practice in Singapore, compared to about 20 in 2003.

Our marine insurance sector has also grown nicely. When Lloyd's of London, which is recognised as the world's leading specialist insurance market maker, first set up its Singapore office in 2003, there were only two Lloyd's syndicates involved in underwriting marine insurance. Today, there are 18 of such syndicates.

Our maritime cluster is now a healthy ecosystem with more than 5,000 companies contributing some 7% to Singapore's GDP. As Mr Teo Siong Seng has pointed out, with the addition of the Singapore Maritime Institute, we are further building up Singapore as a maritime knowledge hub. I am also confident that Mr Teo, as the first Chairman of the Institute, can bring together Government, industry and academia to strengthen maritime education and catalyse maritime research and development in Singapore.

There is certainly more that we can do to strengthen our IMC. One area is ship finance. The number of banks in Singapore with shipping portfolios has grown from 15 in 2003 to more than 25 today. We believe there is further scope to narrow the gap with other leading maritime centres, especially in terms of ship financing options and specialised expertise. Another area for development is our freight derivative market, which provides industry with more risk management tools. The Maritime and Port Authority (MPA) of Singapore is actively following up on these areas.

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Sir, even taking into account the cyclical nature of the shipping business, the last few years have been exceptionally volatile. During the boom years of 2003 to 2008 when freight rates and volumes were high, many shipping companies ordered new vessels, most of which have started coming on-stream just as global trade is softening. These factors, coupled with rising fuel prices, are squeezing the margins of shipping companies. Many shipping lines have either reported or are expecting heavy losses. As shipping is the key driver of our maritime cluster, we expect growth for the cluster to be slower in the next one to two years.

It is unclear how soon the industry will recover, but shipping lines are already taking steps to stay lean and tide over the current difficult period. Major lines like MSC, Hapag Lloyd, NYK and our own APL are forming new alliances and consolidating shipping routes. Others are also finding ways to streamline operations and enhance productivity.

I would like to assure Mr Teo that the Singapore Government takes a long-term view of the maritime industry and will continue to provide a consistent, pro-business environment so that maritime companies can confidently implement their strategic plans, using Singapore as their base.

To further strengthen Singapore's status as an International Maritime Centre (IMC), the Government adopts a three-pronged approach: First, we will invest in infrastructure ahead of demand; second, we will sharpen our policies and schemes to meet changing needs; and, third, we will grow a core of local talent to support the future growth of our maritime industry.

Let me start with infrastructure. Despite the current uncertainties in the shipping market, we are pressing ahead with the expansion of Phases 3 and 4 of the Pasir Panjang Terminals to cater for future growth in container volumes. When completed and fully operational, the new berths will add about 50% more capacity to the Singapore Port. At the same time, we will continue to dredge and deepen the main approaches to our port to accommodate the mega vessels that will soon be calling here.

Our second prong is to ensure that our policies and assistance schemes for maritime companies remain relevant. To refine these schemes, we hold regular consultations with industry. For example, to provide greater upfront tax certainty, we have included tax exemption for vessel disposal gains for qualifying ship operators and lessors under the Maritime Sector Incentive. In addition, to help reduce business costs for ship charterers in Singapore, we have granted withholding tax (WHT) exemption of charter fee payments to non-residents.

To promote the growth of container leasing in Singapore, we have also refined our Maritime Leasing (Container) award to make it more business-friendly, including the extension of automatic withholding tax exemption for interest payments to container lessors.

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Mr Teo suggested for consistency, allowing container shipping companies not in the leasing business to enjoy automatic withholding tax exemption on interest payments. MPA will work with MOF to study this suggestion.

Sir, let me now move on to the third prong on developing local maritime talent, a subject Ms Mary Liew, Mr Ang Hin Kee and Mr Teo all spoke about.

For Singapore to develop as an International Maritime Centre, it is critical that we grow and maintain a core of local talent to support the many maritime businesses here. I fully agree with Mr Ang that it cannot be "an afterthought". Let me explain why we believe people are important to our goal of becoming a leading IMC.

The global nature of shipping requires people with an international outlook, and who can adapt to diverse cultures and markets. This is true of a broad spectrum of roles in the business. At its heart, the maritime industry is also a relationship-based business. More often than not, deals are secured through trusted personal contacts. These are precisely the qualities that maritime companies find and value in Singaporeans.

While infrastructure and policies can also be built up by our competitors, quality human capital provides our IMC with a more lasting and valuable competitive advantage. Our challenge, therefore, is to ensure a steady pipeline of locals entering the maritime sector and that the sector is able to attract and retain a fair share of local talent.

Today, of the more than 170,000 people employed in the maritime sector, about 75,000 are locals compared to around 50,000 locals 10 years ago. However, maritime manpower needs have grown faster than our local pool can provide, much like in other sectors of the economy. We see this as an opportunity for us to invest in growing the local pipeline and to enable more Singaporeans to take advantage of the good careers available in maritime, a point which Ms Mary Liew shared.

This is why MPA, as champion of the maritime sector, has worked closely with unions, industry and educational institutions to put in place a comprehensive manpower development framework. The key objectives of this framework are to, firstly, attract and retain a core of Singaporeans to the maritime sector; secondly, continuously develop and upgrade their skills and competencies; and, thirdly, encourage maritime companies to invest in their human capital.

I should add that our approach is to recognise the difference between seafaring and shore-based careers. A seafaring career requires specialised skills and experience, which can be built up through an internationally-mandated roadmap. The lifestyles of seafarers are also different – not 9-to-5. In fact, it is more like 24x7. It can involve several days or weeks at sea and sometimes even months at sea before getting to spend concentrated time with family. Therefore, our developmental programmes must help potential seafarers adapt to these special requirements.

But we also recognise that seafarers have opportunities for good career progression, regardless of the point of entry. An entry-level harbour-craft steersman can be promoted to helmsman and be upgraded to work on vessels operating in waters around Singapore − in other words, not just the harbour but the waters around Singapore, which is a wider geographical span. Thereafter, he can be further upgraded to work on larger harbour bunker tankers and eventually be a Captain. So, we are talking about larger responsibilities, bigger vessels and, of course, higher pay. If a seafarer wants to transit to a shore-based career, his seafaring experience is also an advantage.

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Mr Ang pointed out the need for multiple entry points and not being too focussed on academic qualifications. This is indeed the case. Take, for example, Patrick Chua. That is the picture of Patrick looking very smart [ A slide was shown to hon Members ]. After his "N" levels, Patrick worked variously in the Navy, as a salesman and even at his mother's hawker stall. In 2009, at the age of 38, he joined the pioneer batch of the harbour-craft steersman "Place-and-Train" programme. His first qualification came after three months on-the-job training at sea and an oral test. The first test was an oral test, not a written test. It was really his three months on-the-job training at sea that helped him to qualify. Over the next 12 months, he clocked enough sea time and experience, and he also passed further tests to be a qualified helmsman, which is bigger responsibility, earning a monthly salary of more than $2,500. This was significantly higher than what he was previously drawing before he took up the course. Patrick can move higher up the career ladder by taking up bridging courses and gaining more experience at sea.

Twenty-four-year-old Mohammad Helmi Bin Kamsani took a different path to become a seafarer. After his "O" levels and National Service, Helmi was awarded a scholarship for diploma studies at the Singapore Maritime Academy. Apart from course fees, the scholarship provided him a monthly allowance plus a guaranteed position with his sponsor shipping company ‒ APL. Helmi graduated in March last year and is now serving as Third Officer on board a merchant vessel. The exciting part comes now. In about six years, when Helmi is just around 30 years old, it is very likely that he will be commanding a ship. This could easily be an asset worth over US$100 million, carrying a crew of around 30 people. Helmi is building up the necessary experience and will need further certification, but being a ship Captain will be well within his reach.

I should add that both Patrick and Helmi benefited from joint programmes between MPA and tripartite partners. In Patrick's case, the "Place-and-Train" programme was developed with the Workforce Development Agency (WDA) and the Employment and Employability Institute (e2i). In Helmi's case, it was the Seafaring Alternative€¦An Investment for Life (SAIL) Scholarship and this was co-funded by the Singapore Maritime Officers' Union (SMOU), the Singapore Organisation of Seamen (SOS) and shipping companies.

Some Members would be pleased to know that to target youths like Helmi, MPA together with the industry launched the MaritimeONE platform to raise awareness of maritime careers through outreach activities. In addition, our students can pursue specialist degree and diploma courses at NTU, NUS, Singapore Polytechnic and Ngee Ann Polytechnic, leading to both seafaring and shore-based careers. Students in other degree and diploma courses can also take up maritime modules. Last year, some 1,000 students were enrolled in these programmes.

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During their vacation, these students can be attached to maritime companies. This helps the students develop a deeper appreciation of the industry, and provides companies with potential candidates for recruitment.

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Ms Liew asked if the lack of training berths for cadets is a constraint on the Singapore Maritime Academy (SMA) training more seafarers. I would like to assure her that MPA will step in to ensure shipping groups help local cadets gain operational experience at sea, so that it is not a constraint.

Mr Teo points out that a qualified seafarer cannot be easily substituted. We agree. Specifically, he highlights the concerns of harbour-craft operators in managing higher foreign worker levies. I hear him. MPA will review its training programmes to attract more local seafarers to help the harbour-craft operators. We aim to provide an update within three months.

Let me now touch briefly on another important target of maritime manpower development – shore-based professionals. Given the changing nature of the industry, our maritime professionals must continuously upgrade their knowledge and deepen their skills. To support their efforts, MPA and its industry partners have introduced new training programmes to meet industry needs.

One example is the Maritime Law and Practice programme, offered by the University of Southampton. This is quite an iconic training programme for maritime law and we brought it to Singapore. Another programme that has created quite a buzz in the local maritime scene is the P&I Insurance and Loss Prevention Course offered by the North of England P&I Club. You may ask, what is the North of England P&I Club? For the benefit of other Members, the North of England P&I Club is a very well established cooperative among shipping companies. These are all very prestigious programmes that we are very pleased to have been able to bring into Singapore. These courses enable maritime professionals to raise their skills to internationally-recognised standards. There are also other courses that help PMEs from other sectors pick up relevant skills to make a career switch into the maritime sector. MPA and its partners will continue to widen the reach of these programmes, and identify other opportunities to facilitate more PMEs entering the maritime sector.

To complement MPA's efforts to attract and develop talent, we need maritime companies to also invest in human capital development. This is why MPA set up the $50 million Maritime Cluster Fund for Manpower Development. This Fund can be used by maritime companies to support staff development efforts. One such company that has benefited is local shipbroking firm, Eastport Maritime, an SME that employs about 60 people in Singapore. It received funding to support and send an Assistant Manager, Sharon Teo, to its Shanghai office in 2009 to broaden her industry knowledge and sharpen her business skills. Sharon joined Eastport immediately after graduating and she has no seafaring experience. Sharon was subsequently promoted and currently leads the company's Research & Analysis Department. Since 2008, the Maritime Cluster Fund has benefited over 5,500 maritime professionals, like Sharon, from more than 1,200 companies.

Sir, I have shared our three core strategies in growing Singapore as an International Maritime Centre, and explained in greater detail how we are responding to the challenge of building a core of local maritime talent. There is more to be done for which we look forward to Members' support.

Sir, both the maritime and the aviation sectors are important pillars of Singapore's economy. They not only contribute directly to our growth, but also connect Singapore to the rest of the world and serve as critical enablers for many other business activities. We have done well as global air and sea hubs. The Government will work with our tripartite partners to build on these strong foundations and invest in new infrastructure, capabilities and people to sustain their future growth.

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The Chairman: Do Members have any clarifications? Mr Cedric Foo.

Mr Cedric Foo Chee Keng: I would like to thank the Minister and Minister of State for their replies. On the point of public transport fare structure, the Minister mentioned that between 2006 and 2011, the public transport fares actually only rose by 0.3%, cumulatively. That is correct. So, it is not annually but cumulatively − only 0.3%, whereas fuel and wages rose by 20-odd percent or 30-odd percent. I think that presupposes that the starting point in 2006, the returns with which PTOs were enjoying at 2006 was a fair and risk commensurate one. It is only if you start from that position can you then say that because revenue rises more slowly than costs, the PTOs have to be compensated. But I checked the numbers. I think in 2006, the two public transport operators' return on invested capital was about 12% to 15%. And even in 2011, after the fact that revenue has risen more slowly than their costs of operations, their returns, in my view, are still fair and reasonable. I would like to ask the Minister what, in his view, is a fair return for companies like these, and what kind of levels of returns would be considered reasonable?

Mr Lui Tuck Yew: Mr Chairman, I thank Mr Cedric Foo for the clarification. Indeed, that was one of the factors that the Public Transport Council took into account over the years, when they looked at the amount of fare increase to award or, in some instances, actually to bring about a reduction in the fares because of economic considerations.

I think we tend to try and compare the transport companies to the utility companies and, therefore, it would be right to say that while it is declining, and it has declined over the years, the ROTA for these companies are on the relatively high side. Part of the reason for this is because of the way we have structured rail financing in the past, which allows the companies to operate assets and derive revenue from these assets, without them being on their books, meaning that they remain on the books of the LTA. Because in the licence agreement that was derived back in the nineties, the operators only need to buy over the assets after a certain point in time, hence, what has happened is that they enjoy the use of these assets in the meantime while the assets are not yet on their books. This is a situation that increasingly, going forward, will be different from what it is today because they do have to buy over the assets.

The other reason why it will be different, also going forward, is because of the rail financing framework and the amended Act was passed in 2010, which actually changes what it is today from the Government being the planner and developer and the PTOs being the owner and operator, to the Government being the planner, developer and owner and the operators being the operator.

Mr Cedric Foo Chee Keng: Only the operator?

Mr Lui Tuck Yew: Only the operator. That is a fair point. So, we introduced that with the Downtown Line that was put through a competitive tender process last year. Part of this process is that instead of them only buying over the assets after a certain period of time, as in the past, it is for them now to pay a licence charge comprising a fixed as well as a variable component on an annual basis, so that we no longer have a situation where the assets are being used but are not yet on their books until a much later period of time.

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The Chairman: Mr Cedric Foo, you have another clarification.

Mr Cedric Foo Chee Keng: Thank you, Mr Chairman. There is a formula which addresses the fact that operators are leasing in or paying royalty charge, as opposed to owning the assets and, that is, return on invested capital. This formula does not appear in the current fare structure and I take pains to talk about this because the formula will be reviewed and, as the Minister said, the Committee will be chaired by Mr Richard Magnus. So, a discussion on this would be very helpful.

All in all, the return on invested capital as opposed to the ROTA that has been used in the formula in the past, as a check, has been quite good actually. They were moderating in the teens and, even in 2009, the returns on invested capital of both the operators were not affected by the global financial crisis, and it reflects the underlying low risks which such companies were operating in. My question for the Minister is relating to the point that he talked about – asset ownership. In response to my question on the funding of the buses, could he clarify, for the 550 buses that the Government will provide, would the Government continue to own these assets and would it then lease these assets to the PTOs, or would it actually sell the assets to the PTOs?

Mr Lui Tuck Yew: On this point on the fare formula and whether it should be ROTA or ROIC, I think that is something that the Committee can look into, in light of the work that they will do to come up with a new fare formula that will be applicable in 2013. Today, ROTA is used as a check. I think he is familiar with the formula. It takes into consideration inflation, it takes into consideration wages, but there is a productivity extraction that we get from the operators in order to incentivise them to become more productive.

The second point on the funding of the buses. This is a programme that will run for 10 years. So, the buses will be owned by the operators and, after 10 years, if we do not continue with the programme, there are two options. One is that they return the buses to the Government or they will buy over the buses at their residual value. That is the way it is structured.

Mr Seah Kian Peng: I thank the Minister for his response to my point about Saturday ERP charges in the Orchard Road shopping district and the CBD. He said that he is prepared to, and I quote him, "fine-tune the system" and that he will make a decision pending the outcome of a LTA report. Well, I hope it is not a fine-tuning but a major tuning. My first clarification is: when is this LTA report due? Obviously, given the prospect of a slowing economy, I think the earlier we can come to a decision, it will be good for all the businesses in the areas that I mentioned earlier.

The second point is this. I hope that when he considers the options, the options should include the one which I mentioned, that is, a pilot phase. I want to stress, a pilot phase to remove this for a period of time. If it does not achieve the results – but I think it will − then by all means, we go back to the current system. When we do that, I am equally sure that the key associations that I spoke to − the Singapore Retailers' Association, the Marina Bay Business Association and the Orchard Road Business Association − they and their members will fully understand. So, I hope the Minister can address this.

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Mr Lui Tuck Yew: I thank Mr Seah for that clarification and I fully understand the perspective that he is sharing. As to when the study by LTA is due, it is a matter of a few months. So, I do expect them to look at it carefully and to conclude their study very soon. I hear his point about a pilot to remove it completely. Indeed, it may be, so that the merchants would fully support this. I am mindful that there are a variety of users and a variety of perspectives that we need to take into consideration, rather than allow one perspective to determine exactly what it is that we may want to do. I want to make sure that we are also taking on board other perspectives as well. Hence, when I said that I am not in favour of a wholesale removal of the ERP, it is because of my concern of us reverting to the period of congestion that we experienced prior to 2005 in the Orchard Road area.

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As I shared with the House, while, after the introduction of ERP in 2005, we did not see any significant variation in the vehicles in the Orchard Road area, there was a significant drop in those who used it as a thoroughfare connecting to the Bras Basah area. I am mindful of not reverting to a situation where we increase congestion levels significantly because people, who are using it as a thoroughfare, will come in and congest with those who may, otherwise, be coming in for shopping and recreational purposes. My preference is to make sure that whatever we do, we preserve the element of choice. ERP-free hours where there is possibly more congestion and motorists who want to use it during those hours can choose to do so, and hours with ERP in operation where those who are prepared to pay a certain price, will do so.

Orchard Road is a high-end area. It is where your Prada, Hermes and some other brand names open shops. Yes, there are low-end retailers but, by and large, if you look at the rejuvenation of Orchard Road and kinds of restaurants and all that, how significantly would $1 or $2 ERP weigh in the decision of somebody who chooses to drive in and pay the parking charges in Orchard Road? This is something that needs to be looked at carefully. As I said, I am prepared to look at how we can fine-tune, whether slightly or significantly, but I want to preserve the element of choice for the motorists as well.

Dr Lim Wee Kiak: Mr Chairman, Sir, I think a few Members, including myself, have been talking about this "Green COE" for the last few years. I am very happy that the Finance Minister announced the carbon-emission based system and I am very happy to see the categories A, B, C that you have labelled. Why not re-categorise the entire COE system based on the current categories now ‒ A, B and C? And that would obtain immediate buy-in from the public because you will have fixed numbers in Category A, fixed numbers in Category B and fixed numbers in Category C. And let the market forces decide whether they want to go green. And, definitely, you have a fixed number. Can the Minister elaborate?

Mr Lui Tuck Yew: I think that would entail quite a significant shift in a COE system that is always contentious but, over time, people have become used to it. I do not preclude the possibility that we will make further tweaks to the COE system, should they prove necessary.

Dr Janil Puthucheary: Thank you, Sir, I would like to ask the Minister about the CEVS system. Is there an intention to include motorcycles in that type of approach? I know they may not contribute a large amount to our total pollution and consumption but, in terms of signalling, the idea that someone should choose a low-emission, a low carbon-based form of transport, as far as possible, I wonder whether that will be considered.

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If I may move to cycling again, I just wanted to clarify a few points with the Minister. I do appreciate the work of the Ministries and the agencies. I think Singapore is one of the most amenable cities to cycling but I am in the minority in that view. With respect to the studies that he quoted about the safety issues with cycling lanes, I wonder if there is some confusion about what I am suggesting. My understanding from the examples cited was that those were studies where there is a separation of traffic, so there is a specific cycling lane and a specific car lane which leads to this false sense of security because the car can swerve one way and the cyclist can swerve another way. That is not what I am suggesting. I am suggesting measures to help people share the existing lanes better and so the false sense of security should not happen.

The other reason for potential decrease in safety in the studies, if these studies are right that I believe he cited, where there are separated lanes, is the Bernoulli principle where a very rapidly moving vehicle causes a pressure wave which can unbalance the cyclist. So that again, it only happens where you have a separation of flow because the traffic in the right-hand lane continues at high speed and the cyclist is affected. That is not what I am suggesting because here the cyclists have to be overtaken by the car and so, in this case, any change in safety from the Bernoulli effect would actually be improved by the increased clearance.

Mr Lui Tuck Yew: I thank Dr Janil for that clarification. Indeed, we are talking about markings on the lanes rather than a segregated lane. Those studies in the 1980s, and which we are very happy to share with the Member, referred to what has been done in European cities where they actually mark out a line, a visual guide on the same road space rather than segregated lane. I found it very interesting that the accident rates went up so I asked LTA to further explain this to me. One of the reasons, in fact, I think that the studies themselves cited was that, there was what they thought the complacency factor. Today, you will find that by and large, motorists do give quite a wide berth to the cyclists. As wide a berth as we can. With a visual marking, one may think that as long as I keep to that visual marking, I have given 1.5 metres and I have done what is necessary. For experienced cyclists, that 1.5 metres may well be sufficient. But where you have somebody who is relatively inexperienced and wobbles a little bit, actually it might end up a little bit more dangerous. So, that is part of what they explained to me: why in the European experiments, it actually resulted in more accidents. We will be happy to share some of that with the Member and to see what we can do further together.

On motorcycles, we will think about this, going forward, just as we do for commercial vehicles and so on. Our focus is really to, over this period of time, in the immediate priority, focus on cars and taxis and to get – because they are 50% of the emissions ‒ to get them off on this new CEVS scheme.

Er Dr Lee Bee Wah: Thank you, Sir, I have two clarifications. First, I would like to know how long the Ministry would take in order to roll out the 40 new bus routes that Minister mentioned just now. This is so that my residents will know how long that they have to suffer. Second clarification is about the 550 new buses. I would like to ask Minister whether there was any other alternative or option being explored, for example, give all these new buses to the third operator or even to NTUC. And if yes, I would like to know what are the pros and cons and why the decision was made this way.

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Mr Lui Tuck Yew: Thank you very much, Er Dr Lee Bee Wah. For the programme that we talk about under the BSEP, basically, it is going to be over the next five years, doing what the operators did in 20 years. So, we compressed that into a five-year programme – 800 buses. There are competing priorities: one, the existing routes that we need to improve. Routes parallel to the MRT lines that people have been asking for, and which we will do during the morning peaks, as well as the other new routes that I mentioned. Seventy percent of those buses are going to be brought in within the next three years, by end 2014. So, 70% of what we hope to do is going to be done within the next three years. The priority is to improve the existing routes, feeders as well as trunks, what I have talked about. It does not mean that we are neglecting the new routes, they will be done, but they are also going to be progressively rolled out over five years. I know more Members will lobby me even harder; it has already begun. I will listen to you but, as I mentioned, it has got to be phased in over time.

On the 550 buses, we studied what were the other options, including whether a third operator could be brought in to do this. The challenge is such and let me explain it. We have 300 buses that are going to augment the existing routes, better frequencies, more capacity and so on. We have 260 routes today. We believe that about half of them will require augmentation in one form or another. So, you are essentially adding, maybe, a couple of buses to each route to complement what the operators are themselves putting in today. It is actually very difficult for a new operator to come in and try to merge the one or two additional buses for each route with what the current operators are doing. It is very difficult. And so those buses, you really have to pass them on to the current operators, SMRT and SBST, to bring about improvements in the bus services.

For the other 250 buses that will go towards serving the new routes, these will be geographically dispersed because there are needs in many areas. There are 87 of you here, and all of you would want to try and ask for something for your own constituencies and GRCs, and I see that, too. This means that you have 250 buses that are geographically dispersed throughout the country, in all likelihood. The difficulty is what do you do for the depots and parking? If you disperse them, it means that your overheads of running multiple depots and bus parks are going to be high. If you concentrate it, it means that you have a lot of dead mileage because you have got to deploy the buses to the start points and bring them back. There is, inherently, a difficulty in exploring a third operator to run these routes. What we want to do is to make sure that the bus financials are fundamentally sound. We will look at parcelling out packages of routes that we can put out for competitive tendering and that is the longer term intention of the Ministry.

Mr Ang Hin Kee: I would like to ask the Minister this: earlier, he mentioned that there will be three locations in the third quarter that he would install sound barriers. First, what are the three locations? And if a decision has not been made as to which are the three locations – I have made reference to places, such as the Ang Mo Kio MRT Station, which is neighbouring Bishan – could he also consider those as options to deploy sound barriers?

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Mr Lui Tuck Yew: Okay, the three locations are at Tampines, Jurong East and Toh Guan. They are different from what we have done today. So, I just use Toh Guan as an example. In Toh Guan, you actually have tracks that are merging and diverging. And that is quite different from what we have done in the Jurong East Modification Programme where the sound barriers are just by the side of the track as well as at Bishan Station where it is a portal that is coming out from the underground into the open and there is a trumpeting effect. So we are choosing these three additional locations in order to experiment with different configurations, recognising also that, in certain instances, the cost of the larger area that we have to cover is going to be more significant than what we have done so far. I hear your point about Ang Mo Kio. I will ask LTA to get in touch with you to better understand your situation. But as it stands now, this is what they are planning to do.

The Chairman: Hon Members, we have eight Members indicating they wish to speak but we will run out of time at 7.20 pm, so, please keep your clarifications short. Dr Lily Neo.

Dr Lily Neo: Thank you, Mr Chairman. At last I have caught your eye. Sir, I like to seek clarification from Minister on the transport fees hike. Minister earlier said that and I quote, "Rising costs pressures for PTOs are inevitable". May I ask the Minister how does he reassure commuters on their concerns on transport fare hike? I asked earlier in my speech whether PTOs will be allowed to resort to increasing transport fares for their profitability, should they prove to be inefficient or unproductive. And Minister said that MOT would scrutinise PTOs closely but Minister also said that ‒

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The Chairman: Dr Neo, if you do not keep it short, you may have a difficulty catching my eye again.

Dr Lily Neo: I would not catch your eye any more tonight, Sir. Thank you very much. Minister also said that internal matters, when he referred to wages or remuneration, are for PTOs themselves to deal with. Therefore, I am not convinced for I am concerned how PTOs are going to have any say on private entities and, therefore, have any control on future transport fare hikes, despite the $1.1 billion funding by the Government.

Mr Lui Tuck Yew: Basically, the $1.1 billion is ring-fenced for the 550 buses. So, the $1.1 billion is not going to be used in any way for their existing 4,000 buses, nor for the 250 buses that they will bring in on their own. The operations of that are for the PTOs to deal with. $1.1 billion is strictly for the 550 buses.

On transport fare hikes, which was the Member's other point, how do we deal with it? Well, if you know, there is a formula, you apply the formula and PTC exercises judgement on whether to give the full extent of what the formula allows to the operators. Certainly, I believe in the last five years, they have not done so.

Now, in accordance with the point that was raised by Mr Baey Yam Keng, the PTC also, together with the fare adjustment, directs the PTOs on the concessions that could be given to the different bodies that are asking for concessions.

On fares, we keep a very close eye on the affordability, and affordability, we look at the second quintile, from 21st percentile to the 40th percentile of households, and how much of their household income is spent on transport. If you look at it, in part, because the transport fares have cumulatively increased by 0.3% from 2006 to 2011, the percentage of household income for that 2nd quintile spent on transport has gone down from more than 5% to now, the last, I believe, it was 3.7% of household income. That is some indicator of the affordability of transport fares.

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Certainly, for individuals or families that have specific needs, we also give out transport vouchers, and, indeed, there were 200,000 transport vouchers that were made available as part of last year's fare increase. In fact, we went out for two exercises to give out the vouchers because the first exercise, we gave out 100,000 vouchers and so we went out for the second exercise after the fare increase was introduced.

The Chairman: Mr Lui, I think we have run out of time. Mr Cedric Foo, would you like to withdraw your amendment?

Mr Cedric Foo Chee Keng: Mr Chairman, Sir, I want to thank the Minister of State and the Minister for their patience and for accompanying us on this very interesting journey – land, sea and air. I beg leave to withdraw the amendments.

Amendment, by leave, withdrawn.

The sum of $540,126,100 for Head W ordered to stand part of the Main Estimates.

The sum of $5,026,801,300 for Head W ordered to stand part of the Development Estimates.