ELECTRONIC ROAD PRICING CHARGES

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ELECTRONIC ROAD PRICING CHARGES:

(Freeze increases): 4.

Mr Lim Biow Chuan asked the Minister for Transport whether he will consider a freeze on further increases in ERP charges until the cost of living for the average Singaporean is more stable.

5.

Dr Lam Pin Min asked the Minister for Transport if his Ministry will defer the erection of additional ERP gantries and further ERP rate increases in view of the escalating fuel prices which may have already deterred some drivers from driving or caused them to switch to public transport.

The Minister for Transport (Mr Raymond Lim Siang Keat): Sir, may I take Question Nos. 4 and 5 together because they are related?

Mr Speaker: Yes.

Mr Raymond Lim Siang Keat: Sir, the purpose of Electronic Road Pricing (ERP) is to manage congestion on our roads. ERP is imposed or its rates raised only when traffic demand increases to cause the speed on the road to fall below the

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optimal speed threshold. For expressways, this is 45 kph, and for arterial roads, it is 20 kph.

Many people assume that if we do not make changes to the ERP system, our roads will continue to remain smooth flowing. This is not true. If we freeze ERP charges, the congestion does not go away but simply builds up on our roads. Nor is it true that if we freeze ERP charges, there are no costs incurred by motorists. The costs are there except that it is hidden in the form of time lost and extra fuel consumed being stuck in traffic. At a time of economic stress, it is important that we ensure that our economy remains vibrant and productive. One critical way to ensure this is to act decisively to prevent our roads from being gridlocked.

There have also been concerns on the impact of the ERP changes on the cost of living. In conjunction with the changes in the ERP system, the Government has reduced road taxes by 15%. The increase in ERP revenue is estimated at $70 million against $110 million from the road tax reduction. This means that drivers as a whole are not worse off despite the higher ERP charges. Indeed, only 24% of drivers incur ERP charges daily, and the majority who do not pay ERP would be better off as a result of the 15% road tax reduction.

LTA will continue to monitor the road traffic conditions closely. If, as Dr Lam said, drivers choose to drive less, whether due to high fuel prices or public transport improvements and the traffic speeds improve, the Government will be happy to collect less ERP revenue.

Mr Lim Biow Chuan (Marine Parade): Sir, I want to thank the Minister for clarifying the role of ERP in managing traffic congestion. Sir, given the current high fuel prices and utility charges and the high cost of living, would the Minister not consider not just traffic speed but also

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these factors in determining any increase in ERP charges?

Sir, I would also like to ask the Minister whether he would consider further improvements in public transport before allowing ERP charges to increase.

Mr Raymond Lim Siang Keat: How do high fuel prices and public transport improvements impact on the ERP system? Now, the ERP system is a dynamic system. It is not a static system. The ERP rate is a function of the demand for driving on congested roads during peak hours. If the demand for driving falls materially, because of high fuel prices or public transport improvements or both factors, then the ERP rates will either stay as they are or actually go down.

A good example of this would be the April 7th gantries. When LTA announced this in January this year, it was based on speed data in December 2007. But after the January announcements, there were significant changes in driving behaviour. So, if you look at the actual half-hour slots that LTA announced for April 7th, it was less than half compared to what was originally anticipated in January. It is a dynamic situation. It is a function of the demand for driving.

Dr Lam Pin Min: I would like to ask the Minister whether LTA has studied the effect of escalating fuel prices which have increased by almost 100% over the past year on the road traffic congestion problem and the mode of travel pattern of Singaporeans, especially those who own private vehicles. And if indeed the traffic condition has improved, should the Ministry not withhold the ERP increases for the time being?

Mr Raymond Lim Siang Keat: My answer to Dr Lam's question is actually the same as the one I had given to Mr Lim. ERP rates are a function of the demand for driving. If, like he said, the high fuel prices have affected driving

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behaviour and therefore, traffic speeds have improved, this would be reflected in the ERP rates. Depending on the extent in which traffic speeds improved, the rates stay as they are or they may actually come down.