SELECT COMMITTEE REPORT ON LAND TRANSPORTATION POLICY (Motion)

Debate resumed.

Dr Augustine H.H. Tan (Whampoa): Mr Speaker, Sir, I rise to support the motion of Dr Hong Hai.

After listening to some of the speakers, particularly the last two, Dr Lee Siew-Choh and Mr Chng Hee Kok, I am just wondering how many Members have read the Report in toto and also how many have even read the recommendations listed in the Report. Or have they merely read the Straits Times or the Lianhe Zaobao? Dr Lee Siew-Choh complained a lot about the congestion in Singapore by cars. He has come a long way from being Chairman of the Barisan Sosialis. I am just wondering if the Barisan had taken power in Singapore and been in power all these years, whether there would be any congestion at all. Would Singapore be like Moscow or one of the Eastern European countries where there are only a few Ladas around and certainly no congestion to speak of? He says it is because of the PAP's successful economic policies and rising incomes. Well, a few years ago, we had a severe recession and it was through the strong efforts of the Government led by the Minister for Trade and Industry that got us out of that recession and we have had very strong growth for the last three or four years. Perhaps, Sir, Dr Lee is asking that the Minister engineer another recession and keep Singapore in a perpetual recession. That is one way to solve the car population problem.

Sir, the car ownership problem is one that has certainly generated tremendous emotions in Singaporeans and that is well reflected in this House. It is unfortunate that this is so, because the land transport problem of Singapore is more than just car ownership or even car usage. Even Dr Lee Siew-Choh, a man who is supposed to be a socialist or one-time socialist, spent 99% of his speech on car ownership and usage. He has become very bourgeois indeed.

What we need to do is to look at our land transport in toto. As the Committee looked at what has been done in Singapore in terms of various measures to promote land transport policy, we have been heartened to find that we have provided a very modern system of transportation with various modes available to the public and certainly an outstanding means of transportation via the MRT. It is the total system of transportation that has not only kept pace with our economic development but has also facilitated it. Let us not forget that in a well functioning economy, people and goods must be able to move efficiently in terms of time and cost, and congestion conversely increases the cost to producers and to consumers in terms of both time and cost. At the same time, we have been able to enable more and more people to own their own cars. In fact, the rate of increase in car ownership, as pointed out by Dr Hong Hai, has far exceeded the rate of population growth.

We need to keep the total perspective in view, because if we focus only on car ownership and usage measures, we will miss out on what is necessary for our future economic development. There are half a million vehicles on the road and less than half of those are represented by motor cars. The rest are commercial vehicles. We must make room for commercial vehicles. We must devise a system that will enable commercial vehicles to function efficiently in Singapore in addition to cars. And not only commercial vehicles that move goods but commercial vehicles that move people, like buses and the MRT, and commercial vehicles that move both goods and people, like taxis. I think we should pay attention to each one of these categories.

The question is: will we be able to accommodate a similar rate of growth of all kinds of vehicles in the future without severe congestion? This House has focused on car ownership because that is something which affects a rising proportion of the population, especially the young and upwardly mobile portion of the population, people who reach middle-class status.

Sir, the point is that the car is the most convenient form of transportation and, in addition, it is an important status symbol so that with rising incomes more people aspire to own them. But there are at least two implications that arise out of these rising aspirations. No. 1: If we are to accommodate the rising aspirations, more land and more resources must be allocated to roads and to the expansion of roads. It is a social choice that Singaporeans must make. There is a cost to be paid for more roads. Secondly, more congestion will result even if more roads are built. There is always a physical limit to the actual number of cars given the number of roads. Unless, therefore, a rationing measure is introduced, severe congestion will result.

Government could, as some Members are advocating, allow car ownership to increase freely without restraint. The result would be severe congestion for everybody. Of course, if the congestion gets severe enough, this in itself will serve to limit the growth of car population.

I am always amused when people refer to London or to other big centres like Munich and big cities like New York City and so on, and they try to draw parallels for us, saying, "Look, they can accommodate a lot of car owners without congestion because people leave their cars at home and then commute to work." That sounds very good until one realises that Singapore is not like New York City or London. Singapore is a city state. Where is the country side? Where is the hinterland? Where is the open space where we can take our cars for a weekend enjoyment?

It is unrealistic to expect that people will buy cars for the purpose of keeping them in the garage, polishing them every so often, admiring them every now and again, purely for the sake of a status symbol. People buy cars to use them. And I am not convinced that improving feeder services, good as the idea is, is going to persuade many car owners to give up using their cars to go to their place of work, for the simple reason that you need not only a feeder service to get to the MRT station but you need a feeder service from the MRT station at the other end to get to your place of work. And more than that, many people need their cars in the course of their daily work to go from one appointment to another. So let us be realistic. We cannot allow car ownership to increase freely without hindrance and hoping that usage measures by themselves alone will achieve the result.

Sir, the present system has worked well up to now. But there are inadequacies which are becoming more and more obvious. The first one is that the ARF is based on a percentage basis and the Government would have to keep on increasing this percentage in the future if it hopes to use it as a car ownership restraint measure and this will distort the buyers' preferences even more than it has already. If we look at the car prices, we now have a wide range and what we have seen is a substitution of better quality cars for inferior quality cars. I never thought I would live to see Ladas on the roads of Singapore, or even Skodas.

An hon. Member: Why?

Dr Augustine Tan: Because if you know these cars, they are rather antiquated in terms of their mechanisms and inferior in terms of their features.

The ARF system has led us to substitute poor quality cars for better quality cars on our roads. Secondly, the ARF system is already an implicit quota system, whether one sees it or not, whether one admits it or not, because at the back of the Ministry of Communications and Information's mind, there has to be a limited rate of growth in terms of car ownership and therefore every few years the ARF is adjusted upwards and the market has been expecting this from some time last year. That is why there was all the speculation.

Furthermore, the present system has got some very irksome measures which are quite unnecessary, for example, having to increase road taxes and petrol taxes from time to time. A quota system makes it unnecessary to increase road taxes and petrol taxes. In fact, both can be decreased, if necessary or if desired, without increasing car ownership.

Will the quota system raise prices? I think that is something at the back of everybody's mind. The answer is yes if the ARF is not lowered and quota holders are required to pay the ARF. If you take the chart presented by Dr Hong Hai, on the left hand side, you will see that the quota holder has to pay the ARF. But the price will only go up if the ARF is not lowered. But he recommended the ARF to be lowered simultaneously when a quota is introduced. That could lead actually to a lowering of new car prices.

An alternative to his suggestion is to allow the quota holder to pay PARF rather than ARF. In other words, just like a scrap car owner pays the PARF rather than the ARF, so a quota holder can be allowed to pay PARF rather than ARF. But it is a matter of choice and it is quite simple for the Ministry of Communications and Information to engineer the quota to either result in a net increase in prices, stationary prices or even to lower prices. And if I were the Minister I would teach the speculators a lesson by making such a generous quota in the first place and lowering new car prices in the process.

The speculation and the windfall gains are already there in the present system. Dr Hong Hai mentioned that some time last year the market was anticipating an increase in ARF and therefore used car prices were going up and scrap car prices were going up. Immediately after the Select Committee tabled its Report earlier this month, the scrap car prices went up in anticipation of a restrictive quota that will raise new car prices subsequently.

Windfall gains. I am surprised that some MPs think that owning a car is an investment. It was just a quirk of the market in the last few years because of the Yen and the Mark appreciation that gave a temporary increase or windfall gain to some people who own Mercedes-Benzes and such expensive cars. It was due to the Yen appreciation and the Mark appreciation. But the ARF itself only slows down the rate of depreciation. A car is a depreciating asset. A car is not an investment. So do not rush off to buy a new car in the hope of making a profit. You are more likely to lose than to gain. And you only gain if the exchange rate moves in your favour.

What about the objection that the quota system will endow people who get the quota to have a perpetual right to own a car? That is not inherent in the quota. It is inherent in the PARF. Eliminate the PARF and you eliminate this problem altogether. The reason why the Committee advocated the PARF was, firstly, to be fair to all the present car owners who were promised the PARF when they bought their new cars, and Government must honour its commitment. Secondly, we recommended PARF even for new cars after the quota is introduced in order to encourage a younger car population on the road.

We happen to recommend for new cars a sliding scale from five years onwards. People do not have to scrap their cars. Even now they do not have to scrap their cars after 10 years. They can continue to keep their cars, but there is an incentive for them to scrap if they wanted to. And the people who buy these cars need not scrap them, they can export them if they refurbish them. So I think the matter must be put in perspective.

The question of bidding, I believe, that is a matter for the Ministry to sort out how exactly the process is to be done, but it can be done in a very orderly way. People who want to buy cars do not have to actually go and bid. The dealers will do all the job and, I believe, that the dealers between themselves will even out whatever price fluctuations there may be. You simply go to any car dealer and say, "I want to buy a new car." And you have a choice. A scrap car costs so much of this capacity, a quota licence costs this much. Take your pick. And I believe it will be predictable within a month or so, if that is the time within which a quota is allocated.

What about usage measures? Some MPs believe that we can rely upon usage measures alone without ownership measures. Well, if you increase usage cost exorbitantly, of course you will limit car ownership at the same time. But you are hitting out at all the 250,000 car owners simultaneously, and to what purpose? If only to get rid of the marginal car owner, there are better ways and less costly ways of doing so.

Measures like the ERP. What does the ERP actually do? First of all, bear in mind that ERP, if Government adopts it, will take about five years to implement. So it is five years down the road. We need something in between. What does the ERP do? It simply charges you for using certain stretches of roads. What it does to the system of transportation is that it will divert traffic to other roads and instead of congestion in one place, it will be spread out to other roads. So if you can imagine that you allow free car ownership, imagine if you could pack cars bumper to bumper all along expressways, along every road in Singapore, that will be the maximum number of cars you can put on the roads, but they cannot move.

So usage measures cannot prevent that kind of congestion. It is the same for ALS. It merely diverts traffic, space-wise and time-wise. You do not believe me, just try to drive into the city area after 7 o'clock and you will see tremendous congestion. We have merely postponed the congestion from about 5 to 7, to from 7 o'clock onwards. And also the ring roads get affected in the meantime.

Dr Lee Siew-Choh asked about whether surveys should not be done for some of these measures like ALS. If he had read the Committee's Report carefully, he would have noticed the submission by the PWD which has been monitoring the system. Surveys have been taken and surveys are still being taken.

Mr Speaker, Sir, I recommend that Members read the Report in toto and consider our proposals very carefully before they dismiss any of them.

Mr Leong Horn Kee (Thomson): Mr Speaker, Sir, land transportation is a very critical part of the physical infrastructure of a city. We all depend on road transportation for everyday activities, whether they are social, recreational or business. Hence, we need to maintain an efficient road transportation system in Singapore. System that really works.

The Report by the Select Committee has articulated the main issues very well. I must commend the Chairman and the Members for a well thought-out and well-prepared Report. Unlike the comments made by some other Members, I do appreciate the good Report put up by the Committee.

In general, I agree with the main thrusts of the Report. In particular, I am in agreement with the need to impose both ownership as well as usage restraint measures. In addition, usage restraint measures must also be supplemented or compensated by the provision of better, more affordable and more convenient public transportation; ie, further improvement in our bus services and MRT lines. This is a very crucial point indeed.

However, Sir, on the proposed quota system, I would like to reserve my judgment, purely because the final details of the implementation of this quota system have not been clear yet. Like other Members, I would like to voice a concern that the quota system should not be biased towards the better off or the rich.

The Report is silent about this point. But from what I heard from the Chairman's speech, Dr Hong Hai, he seems to suggest that there should only be one class of quota. That means there is no allocation of quotas between different capacities of cars. This is a point that I do not feel very comfortable about. I believe that the idea of having one class of quota would drive up prices, because those who can afford better cars naturally can afford to bid higher prices. Therefore, the average price of the quotas would be definitely higher. This bidding process, therefore, will drive up the whole cost of owning a car, which should also make it probably out of reach for the ordinary people.

This quota system then becomes very inequitable. Many people, such as salesmen, small merchants, shopkeepers and fledging entrepreneurs will need private cars to get around. Hence, they too should have access to a share of the quota. Extra care therefore should be taken to ensure that the quota system, if implemented, does not cause an increased cost in the ownership of cars, whereby the roads would become only the private playground or freeways of the rich.

I would like to suggest that if the quota system is being seriously considered by the Government, it should look into the sub-classification of the quota. The quota can then be allocated to different capacities of vehicles. For example, we can have four classes: those below 1,000 cc; those from 1,000 to 1,600 cc; those from 1,600 to 2,000 cc; and then those from 2,000 cc and above. In this manner, at least if there is a quota in place, the pricing of the quotas will not be biased towards those who can afford more expensive cars, and therefore you will see more flashy, more expensive cars on the road. The road should be accessible and used by all classes of people.

On this note, I therefore suggest that the Government seriously consider how the scheme should be implemented before they implement the quota system.

Dr Vasoo: Mr Speaker, Sir, I support most of the recommendations proposed by the Select Committee on Road Transportation Policy. However, I am not really persuaded by the arguments put forward by my parliamentary colleagues who have advocated the car quota system. I am not convinced for a number of reasons.

Firstly, we must not forget that there are about 35% of our population who are between 18 years and below 35. And with rising aspirations and increasing affluence, this group of people are likely to assert demand on the car market. Hence, the car system will be overheated and prices are likely to be exorbitant.

Sir, the quota system aims at how we can control car population growth. The quota syatem limits the number of cars to be made available on the road. It does not in a way solve the problems of usage and congestion. You may control the number of cars but by rampant driving around and other factors affecting, it will generate congestions too. So to think of the quota as a mere solution to wht whole problem may not be realistic. What one should look at is the implementation of immediate measures and whether we have exhausted all possible measures in term of curbing road usage and relieve road congestions.

Sir, I am not in support of this proposal to implement the car quota system. This proposal may on the surface appear attractive but it does not solve the car usage problem. The quota system sticks out like a sore thumb. It produces more negative consequences rather than relieve congestions on our roads. The proposal will make some happy and many frustrated in meeting one's need for a car. It does not make sense as it would set us back. We will be attacking the symptom rather than the cause of increasing congestions of our roads.

Sir, the car quota proposal will create a number of problems. Firstly, there will be serious price distortions in the market for new and used cars. Black marketing and excessive profiteering will arise as competition for licence to purchase new cars increases. Both buyers and sellers of new cars will not be subjected to rational market behaviour. Members have suggested that the market is going to be corrected by rational behaviour. But I think in this issue, the market is never rational at all to some extent by pricing. Because there are a lot of reasons why people want to acquire cars. And unless we can appreciate these desires, it is really not possible through rational policies to deal with some of these desires.

Secondly, the hopes of young professionals to acquire cars for transportation will be dashed. They will have to pay more for owning a car in future. They will feel that they are discriminated. In the long run, they will be frustrated as their middle class aspirations to some extent is dampened.

Thirdly, people will tend to keep their cars longer as future car prices are likely to be very high. And we may see an increase in the number of older cars on the road. As a result, the overall car population will increase and road congestions will remain a problem.

Fourthly, the quota will certainly penalise the new entrants into the car ownership as it is seen as less equitable. Unless an equitable system of balloting is devised, new entrants into car ownership will have to pay a high premium. May I suggest, Sir, the HDB style of balloting system be implemented in this case. This is because everybody who needs a car would get an access. This will be an equitable approach to working out a solution for those who really need a car.

Sir, we have been rated to have the best transportation system in the world. Road congestion is still tolerable. Until its implications are fully studied, there is no serious urgency to implement the quota system. We must first implement as many measures as possible to reduce car usage. We can introduce measures such as providing more car parks around MRT stations with parking rebates. This has not been fully explored and I think that in many new towns, we can provide car parks with a better rebate system.

We may also introduce a step increase in road tax for cars over 10 years. This would be one solution to get old cars off the road. People who tend to keep older cars for a longer period of time would be deterred. this could reduce frequent breakdowns and congestions on our roads. Further increase in parking charges in the city area could be looked into because the charges are still not high enough to deter people from getting into the CBD areas.

Sir, there are two other immediate measures which I think may produce results and these need to be explored. We have been talking, discussing and implementing schemes which are centered on disincentives. Why do we not talk of incentive schemes? I wish to propose that rebate on road tax be considered for people who prefer not to drive into the CBD area, or if they drive less into the CBD area. A rebate system could be considered and worked out.

Before the ERP is introduced, one could possibly look at road tax rebate system. We could always look at tamper-proof mileage meter. The Government has introduced a law regarding half-tank rule. The Government could perhaps try to look at tamper-proof mileage meter. Most cars are inspected at the ROV once in three years. People could be allowed to record their mileage and after a while they could be assessed at ROV when they send their cars for inspection. If they are using less mileage, give them a rebate. That could probably be one incentive that we could explore. I suggest that these incentive schemes be looked into critically so that we need not have to introduce the quota system at this stage we should examine whether these are feasible steps to curb road usage.

Sir, I urge the Government not to accept the proposal to introduce the car quota system until it is assessed that our car usage measures have proved to be really ineffective. We still have a lead time to first try out other recommendations proposed by the Committee. So I hope that the Government would study the proposal on the quota system seriously before it is introduced. 4.04 pm

Mr Lew Syn Pau (Tanglin): Mr Speaker, Sir, first of all, I would like to congratulate the Select Committee headed by Dr Hong Hai for doing a good job of getting widespread views from the public on our land transportation policies. After considering the written submissions and oral evidence of the Committee, the Committee has also made some recommendations. I would like to take this opportunity to comment on some of these recommendations.

The most significant and also most controversial recommendation is that of using a quota system to control the increase in the private car population. Let me say from the outset that I recognise the need to keep our roads free from severe congestion so that the movement of people and goods would be free and efficient. The number of vehicles on the roads must therefore be controlled. There are basically two ways of doing this. Firstly, by raising the price of vehicles through higher taxes and then letting market demand determine the final number. Secondly, controlling the numbers through the quota system and letting market demand determine the price. From an objective and unemotional point of view, I agree that the quota system is the most effective as it addresses the basic problem of numbers squarely. I consider the Committee's recommendation to change from the pricing system to the quota system as radical but bold and worthy of serious consideration.

The quota on private vehicles can be economically allocated in several ways. The one suggested by the Committee is that of bidding for licences through tenders conducted at regular intervals. It can also be done through balloting, as suggested by some of my parliamentary colleagues, on a first-come-first-served registration system or a mix of both, bidding and balloting.

The greatest concern of the middle and lower-middle income class who aspire to be car owners is that the bidding system would push prices up so high that only the upper middle and the very rich people would be able to afford. Another fear is that dealers and other speculators may come together and corner the market leading to profiteering and high prices.

I do not support the balloting of quota for cars. We should leave that to the issue of shares in the share market. Neither do I support the first-come-first-served registration system. Both systems cause distortions to the market as they do not make the buyers and users of scarce commodities pay the market price for them. This means that the demand for them will continue to increase and a black market for private cars will be established.

I support the allocation of quota by bidding for licences through tenders. Bidders should also pay the actual prices bid, not the lowest or the average successful tender price. In this way, aspiring car owners would submit serious bids.

However, I do not support the recommendation that the Government permit the purchase of new cars by allowing the scrapping of a used car eligible for PARF. This is tantamount to giving every used car on the road, now eligible for PARF, not only concessionary replacement prices but also a licence in perpetuity. A car not eligible for PARF now will get neither privilege. This is inequitable not only from the point of view of the non-PARF car owners but also first-time car owners.

I would like to suggest that the Government addresses this equity problem by divorcing car licences from scrap cars. All those wanting to buy new cars must buy a licence valid only for the life-span of the car. So those with a scrap car can then pay the PARF prices. Those without will have to pay the ARF prices.

The PARF system should continue in order to encourage owners to keep their cars new. However, I do not think it is necessary to have a sliding PARF from year 5 onwards. This will give rise to an unnecessary loss of foreign exchange. Most cars which are well maintained can last 10 years without much serious mechanical problems. Vehicle inspections can be made more stringent and frequent, if necessary, to ensure this.

I would also like to support the recommendation that ARF be reduced at the introduction of the quota system. Thereafter no further adjustment is necessary as the licence price will move up or down depending on the quota set. There should also be just one type of licence for all cars. The Government should best leave to the market to decide what size of cars people wish to buy. The ARF system already makes it much more expensive to buy big cars.

Having one type of licence and one price means the scrap car should not be used as a substitute for a licence. Otherwise the scrap car prices of different engine capacities will collapse overnight to that of just one common price, that of the price of the licence.

Some of my colleagues have mentioned that the Government should divide the licences into categories according to the size of the engine of the car. I do not see any reason for this. Because if a person does not get a licence in the big category, this person will move down to the lower category and bid a higher price and so eventually the same situation will occur. The person who is willing to pay more will still get a licence to buy a car but he will end up buying a smaller car, and that is the only thing that would happen.

The Government should also set the quota on a yearly basis, taking into consideration the number of cars that have been scrapped. Licences should go with the car and not the owner, and should only be transferable upon transfer of ownership of the car. No hoarding of licences would therefore be possible. Successful tenderers of licences must be given a reasonable time frame of, say, six months to purchase a vehicle.

In summary, the quota system should be simple but still addresses the equity issues confronting existing car owners and first-time buyers. With the introduction of a quota system for private vehicles, the public transportation system must be improved so that commuters can still enjoy a comfortable, convenient and efficient mode of travel. A lot has been done and is still being done by the public transport providers to achieve this. However, the Government should assist by improving the infrastructure for public transportation. I would like to suggest that to expedite the integration of public transportation, covered walkways be built to connect MRT stations and bus interchanges, bus stops and taxi stands. All bus stops and taxi stands should eventually be sheltered so that waiting for buses or taxis in our harsh climate becomes much more tolerable.

In order to encourage people to leave their cars at home, feeder services must be made convenient and affordable to the residents. It is unlikely that individual private operators would be able to run them viably. I would suggest that feeder services be made part of the MRT bus integration network so that those who do not own cars or those who do, but wish to leave their cars at home on weekdays would have a comfortable and convenient alternative to use.

The Committee has been silent on the issue of company or "Q" registered cars and rental cars. In my view, company cars are really private cars and should be subject to the quota system. After tender- ing for the licence, the owner will have to pay the ARF and the cost of company registration as in the present system. Rental cars are public vehicles as they are available to members of the public. However, because of the availability of long-term leases, this makes them good substitutes for private cars. So not subjecting them to the quota will provide a loophole which may be exploited.

With these comments, Mr Speaker, Sir, I support the Motion.

Dr John Chen Seow Phun (Hong Kah GRC): Mr Speaker, Sir, our land transport policy has always been committed to keeping our roads relatively free of congestion. Most of us agree with that. The problem is, how do we maintain this policy and at the same time try to accommodate the rising aspirations of Singaporeans to own cars? We recognise the call for and the possibility of allowing a good proportion of the population to own cars as long as they restrain their usage. However, how do we arrive at that desired stage? We may get to that stage by either of two ways. The first is to have no further ownership restraint, as advocated by Mr Heng Chiang Meng and Mr Chng Hee Kok, and try to discourage usage by increasing its operating costs, and improving the attractiveness of the public transport system. But in view of our present circumstances of car growth and the strong desire of Singaporeans to own cars, and also the types of measures that are available to us to effectively discourage usage of cars, not just at the CBD but also at the ring roads, highways and certain other congested areas, to take the first approach is to invite trouble.

Mr Heng suggested increasing operating costs, such as road tax, petrol tax, ALS fee, etc. before the ERP comes on stream. He feels that these interim measures of increasing the operating costs can curb car usage and therefore buy us time until the ERP is available. But, Sir, let us look at the measures he suggested. Road tax is, first of all, not selective in that everybody, whether he uses the car or not, will be charged road tax. Secondly, road tax is actually an ownership restraint measure. When I buy a car I will do my calculations. If I buy on hire-purchase, I will calculate how much I have to pay each month and road tax will be part of it. So road tax is an ownership restraint measure. Road tax will probably have to be increased by a substantial amount before it can also have an effect.

What about petrol tax? Petrol tax again is not selective because it does not differentiate whether or not it has caused congestion. Also, Members know that we have the problem of the half-tank law which means that it will aggravate this problem if we increase substantially our petrol tax.

ALS fee. At the moment, without the computerised ALS or the ERP, we can only do it at the CBD. What about places in the ring roads, on the highways and other congested areas?

ERP, according to our understanding, will take four to five years before it may come on stream. In other words, we are still uncertain whether ERP is workable. At the end of the day, we may find that the ERP is either not technically feasible or administratively workable. Sir, if we were to take no ownership restraint at all, very soon our traffic congestion may deteriorate to an extent that it is unbearable.

Sir, the second approach, which is a more judicious one, in my view, is to implement an ownership restraint mechanism straightaway which will ensure a predictable and adjustable growth rate of cars. And as additional usage measures are implemented and found to be effective and as the public transport system continues to improve and more people are attracted to it, we can then allow a higher growth rate of cars without endangering traffic conditions. Sir, in this regard, the proposed quota system fulfils this requirement better than the existing ARF scheme and should therefore be seriously considered by the Government.

Sir, the many concerns expressed by the public about the quota system have already been addressed by Dr Hong Hai and Dr Augustine Tan, fellow Members of the Select Committee, and I do not propose to repeat them again. I would like, however, to just comment on what Mr Lew Syn Pau has suggested. I am not averse to his suggestion, but I think his proposal will mean that existing car owners would in fact have to pay a higher price, compared to now, to get a new car.

Let me illustrate by giving some figures. I seek your indulgence, Sir, to allow me to bother you with figures. Supposing the ARF rate at the moment is 100% of the cost of a car and the PARF rate is 50%. Under the existing scheme, I can buy a car by paying the ARF. In other words, I pay the full 100%. If we were to implement the quota system and if we adopt the suggestion of the Select Committee by reducing the ARF to 50% of the cost of the car, that means if everything else is the same, ie, the demand and the growth, and the quota is set to the natural growth of cars at the moment, the bid price would probably be around 50%. This means that a person who buys a car without a scrap car would have to pay a total of 100%, equivalent to the pre-quota price, which is the ARF rate.

If the ARF is reduced to 50%, the PARF rate, suppose it is 50% of the ARF rate, would be 25% of the cost of the car. If a person with a scrap car has to pay the bid price, ie, he is paying another 50%, it means that he has to pay a total of 75%. But the existing practice is that if I have a scrap car I pay only 50% to obtain a new car and therefore effectively he will be paying a higher price.

When considering our recommendations, we were very careful about equity. That is why we recommended that PARF be retained because we feel that, if it is not retained, it is unfair to the existing owners. Therefore, I think his proposal, firstly, would increase substantially the cost of new cars for the existing owners and, secondly, there would be some difficulty in controlling the exact number of the net increase of cars. Under our proposed system it is straightforward. For the bidding, it is this number of cars which is the allowable growth rate. Whereas in his system it means that everybody has to bid and, therefore, we do not know at any one time how many new car purchasers are actually buying cars without a scrap car and how many are buying with a scrap car. As such, we cannot effectively determined what the quota should exactly be.

Maybe a more equitable approach, as a start, is to impose a fee, not as high as the bidding fee, on those people who use a scrap car to buy a new car and that fee can be, say, a percentage of the average bid price. This scheme is actually consistent with what we now have at the moment. At the moment, if the Government ups the ARF rate to reduce the car growth, the person who has got a scrap car, when he scraps it and purchases a new car using the PARF rate, he would have to pay a higher cost because of the increase in the ARF rate. This means that if we adopt the bidding system, then the bidding system should act like a variable ARF and the market would decide what that ARF should be. Therefore the existing car owners with a scrap car should be made to pay a portion of that variable ARF. Otherwise he will have an unfair advantage because perpetually he will just paying a fixed rate, which is the current PARF rate.

Let me now come to the evening Area Licensing Scheme. The Committee has proposed that the scheme be shortened to 6.30 pm with good reasons. From the traffic volume data submitted to us by PWD, we discovered that the traffic peaked at 6.00 o'clock. And if you look at the outbound traffic after the ALS change, after 7.00 o'clock there is no substantial increase in outbound traffic. What does it mean? It means that after 6.00 o'clock most of the workers in the CBD would already have gone home. Therefore, by shortening the ALS time to 6.30 pm, we feel that the inbound traffic will increase because more people are going in. But the outbound traffic will probably still be the same and therefore it would not delay workers from going home after work. The positive effect is that it will increase business in the area and also the evening and night life in the area.

With that, I urge the Government to consider the recommendations by the Select Committee and, in particular, to adopt the change to the evening ALS.

Mr Lew Syn Pau: Mr Speaker, Sir, may I make a point of clarification? Regarding my proposal, the PARF need not be a fixed figure. When we make everybody tender for a licence when buying a new car and when we reduce the ARF, the proportion of PARF to ARF can be reduced so that nobody actually suffers a loss in the process.

Dr Ong Chit Chung (Bukit Batok): Mr Speaker, Sir, I support the motion of Dr Hong Hai.

We should commend the Select Committee for its level-headed Report. It has done, in my opinion, good work. There are, of course, many items left untouched, eg, the status of Q-company cars and technical studies and details of implementation are yet to be worked out. But this should not detract, or distract us, from the intrinsic merits of its basic proposals.

Sir, most encouraging of all are the proposals to retain the PARF, though with modifications, and the shortening of the evening ALS from 7.00 pm to 6.30 pm. Many car owners, dealers and finance company directors probably heaved a sigh of relief and slept better with this recommendation, though they may not be out of the woods yet.

The shortening of the evening ALS will be welcomed by shopkeepers, parents and school children alike. This, in my opinion, should be implemented as soon as possible once technical studies are completed and evaluated.

I support the recommendation by the Select Committee for further improvement to the public transportation system. The Government has done the right thing to fund and construct the MRT. It should go one step further and make doubly sure that the MRT and buses are fully integrated and their usage is maximised. All MRT stations should be supported by frequent feeder bus services. Buses should be more spacious and air-conditioned. Perhaps tax incentives could be given to encourage the buses to switch to air-conditioning.

The most significant and controversial of all recommendations of the Select Com- mittee is that on the quota system. To quota or not to quota, that is the question before this House. The quota system actually involves two separate questions. First, the rationale and method for setting the quota and, secondly, the mechanism for the allocation of the set quota. I think the rationale is clear. I support the quota system in principle. Basically, there is a limit to the total number of cars on the roads in view of our land size and road capacity. It is a matter of finding the best way or a mix of measures to discourage car growth beyond a certain target or limit. The main method at the moment is to increase the taxes drastically through the ARF at undetermined times to dampen car sales. This may not work well in times of prosperity and the Government carries with it the odium of imposing heavy taxes and dashing the aspirations of many young Singaporeans or those who aspire to own cars.

The quota system will, I think, set the target car growth rate per year rationally, with the assistance of technical studies on road capacity and traffic congestion, and allow market mechanism of demand and supply to set the price of a new car licence. It will be market mechanism at work, and not the strong hand of Government that will primarily determine the price of new cars. We should let market forces decide. If the people want a car, they should pay for it. It is in line with the overall trend towards privatization and market initiative.

Once the quota system is accepted in principle, we would then have to settle the question of how the set quota is to be allocated, whether by public tender or some other mechanism of allocation. It is not possible at this stage to come to a firm conclusion without detailed studies, but open bidding appears to me to be the most practical method at the moment. However, I would urge the authorities to take into consideration the needs of the handicapped and the charity organisations in the possible allocation of such quota. Some handicapped people, for example, need a car to ferry them from place to place. We should also consider some form of differentiation for cars of high and low cc. Perhaps a standard price may be pegged at, say, 1,000 cc, and higher cc cars would then have to pay higher percentages based on this.

Sir, overall, the quota system may not be the ideal. I think it is impossible to have an ideal where we need to limit car growth and restrict car growth. But it is a better alternative. We should think about it and consider it seriously. It may work fairly well once the practical details are sorted out. 4.32 pm

Mr Chiam See Tong: Much obliged to you, Sir. Transportation is one of the necessities of life like food, shelter and clothing. Everybody needs transport to be mobile, to go about their social and economic life. Having said that, what we are discussing is a very complex and difficult issue. I think there is no one single answer to the problem. It is a very difficult problem that we are tackling.

At the moment, of course, the Government has basically used the price mechanism to solve the problem. It has put up the cost of a car, such that Singapore has now the highest car price in the world. One car here costs as much as four cars in Los Angeles. We have 45% import tax, then we have a registration fee of $1,000, 175% of ARF, and on top of that, we have to pay high road tax, car park fees, not counting the fines.

If the Government is really serious about keeping the car population down, I think it can solve the problem to a certain extent if it makes financing difficult for would-be car purchasers. I think there was a witness at the public hearing of the Select Committee on Land Transportation Policy who advocated this. I take his point. If financing were to be difficult, we can have a very substantial drop in the purchase of cars. At the moment, it is easy to get financing, even for second-hand cars. So if the Minister is really serious about keeping the car population down, he has to get the Minister for Finance to introduce a measure which will make it more difficult for people to get a car loan. Perhaps Government servants should also be discouraged from getting car loans.

What is the solution? Actually, as the Member for Tiong Bahru GRC has said, we must have total planning, and I entirely agree with him. If we really want to solve the problem, we must have total planning. I think this planning should involve not only the transport people but also property developers who take up a lot of land. I think they should pay a tax for taking up land.

We should have measures to control the movement of school children. Perhaps schools should be built close to housing estates or within walking distance. Members will note that whenever there is a holiday, the traffic also goes down. We have got about 500,000 school children using our roads during the school term. We need to decentralize our economic activities. And perhaps we should try to get the aid of modern science, using more electronic devices, like Fax. We have got electronic shopping and other modern devices which could cut down the unnecessary travel of people.

But I think the ultimate solution is really in public transportation. We should not have a Select Committee just on Transportation. We should have a special group of people just to study public transportation. I think ultimately that is the key to the solution of our problem. We cannot have every person owning a car. I think that is not possible. We must have good public transportation. Like Dr Lee Siew-Choh, I also agree very much on the recommendation to have efficient and comfortable buses.

I think there is a point about feeder services, and it should be studied at greater length. So, ultimately, if people can be encouraged, can be persuaded, and also value systems can be changed to get people to use the public transport system like in Munich and Hamburg, I think probably that is our ultimate answer. Everybody wants to own a car, and I think there is nothing wrong in owning a car. Perhaps if each family could own a car, I think it speaks well for Singapore. Why not? Singaporeans like to travel and I think they have got no way to travel except to Malaysia. And what is wrong with having a car and going to Malaysia? I think it is good for both countries. [Encik Yatiman Yusof interrupted]. Well, there will be more causeways by then.

Much has been spoken about the quota system. It is a pity that the Select Committee has not come up with more details. I think everybody is still ---

An hon. Member: You are on the Committee.

Mr Chiam See Tong: Well, it has got no details. That is really the main problem. Because unless we have got more details, I think most people will feel uneasy with a new idea. But in the long term, probably one day there will be some kind of quota system. So even if the quota system is not accepted now, I think the Committee has contributed much in the sense that it has made people aware that in fact one day ownership of cars will be a bit more difficult. The Committee has done good in that sense. And even if the recommendations are not wholly accepted, I think credit has to be given to Dr Hong Hai for making the public at large aware of this very difficult issue.

I have been in Parliament for five years. But I cannot remember any issue or any problem that has been more widely discussed as this one. We had two days of public hearings and we met the mass media. There was news over the TV. I also understand that Dr Hong Hai gave an interview, and then we had many comments. I wish that in future if other issues are so exhaustively discussed in public, I think it will make people aware of this difficult problem.

I do not agree that cars should be scrapped at five years. I think it is a terrible waste. It is just my own personal philosophy. To me, it is unthinkable to scrap a car at five years. I am using a 20-year old car. It is still going strong, and starts at the first turn of the key. Why should I scrap it? It is a national waste. Our young leaders, I think, should be made aware that our resources are not limitless. We have to conserve and to practise more economy. Although Singapore has been said to be an affluent society, but I still think we should practise thrift and be more conservative.

The PWD has highlighted 14 congested areas. Perhaps for the short-term, they should look into these 14 congested areas to see whether they could ease the traffic flow.

Also, as Dr Lee has mentioned, I think this question of overall planning of our different Government departments has been discussed before. It should be brought up. There must be coordination between each department. Even the little side-road where I live, they have been digging it up almost ritually once every year without fail. I do not know what they dig it up for. It is almost like a ritual exercise. I do not know whether it is to keep the economy going or for what reason. I am sure with overall planning, we could keep down the digging of our roads and causing unnecessary obstacles. I think the Cabinet should address this very important question of coordination of the work of different Government departments.

Mr Choo Wee Khiang: ( In Mandarin): Mr Speaker, Sir, the Land Transport Committee has made recommendations to the Government. What has attracted most people's attention has been the quota system. This system basically is to curb the car growth. Of course, such a system once implemented will cure the problem. But I hope the Government will not implement such a measure unless it is absolutely necessary. Because this will lead to people, developing a sense of loss and particularly the younger people think the measure works against them. As the details have yet to be worked out, please ensure giving the people a fair and a better opportunity so that they may purchase a car if they wish. We must not totally make car purchase out of reach of the common people.

I hope the Government will work on aiming at car usage policy rather than on setting a quota on cars. I believe this will lead to realising the objective of controlling road congestion. As to other points I share the same views and I see that our public transport system needs to be improved. Because it is only with a more complete and better public transport system that our people will change to the use of public transport more readily instead of driving their own cars into the CBD during peak hours. This will cut down on the congestion during peak hours and reduce people's use of private cars and reduce car congestion as a result. I am sure Singaporeans who have been overseas will share the same experience because when you are in Taipei, Bangkok and Hong Kong and places like that, for the same distance you may get to your destination in (r) hour in Singapore but in these cities, people often spend from one hour up to three hours just to get to where they want to go and we should put ourselves in their shoes and try and imagine what life would be like under that circumstance and in that sort of society. Perhaps people do have the ability to get used to the situation and they get used to it after a while. To me, this is a great wastage to the society and economy. Therefore I hope the people will give Government measures every support and encouragement because such a situation can easily happen in Singapore. Singapore is a tiny country. What I have query for the Minister here is that the Report presented by Dr Hong Hai and the Committee aims at the car growth that if the policy, once implemented, would it create other side effect? Would it lead to people not buying their own cars but go more for other means of transport and thus creating other traffic problems? 4.46 pm

The Minister for Communications and Information (Dr Yeo Ning Hong): Mr Speaker, Sir, I rise to join the debate on the motion standing in the name of the Chairman of the GPC on Communications and Information, Dr Hong Hai.

First of all, let me thank all the Members of Parliament for their participation in this debate and for the many suggestions that they have put forward. I would also like to thank members of the public who have engaged in this on-going discussion on land transportation.

We have been talking about land transportation ever since the early 70's. I suspect we will continue to discuss this matter for many more years to come. In particu- lar, over the last 15 months, since November 1988, the Government has encouraged the public to engage intensively in the discussion on land transportation; on how we need to manage it such that it does not become a problem for us. The public have responded enthusiastically to the Government's invitation to discuss this matter. The media has been very helpful and ahs published a lot of different points of views in the forum pages, and over television. Many other members of the public have also submitted points of views and ideas, to other discussion groups. Many community groups have also been involved. Most important of all, the Government appointed a Select Committee chaired by Dr Hong Hai to go into this matter in-depth. I would like to take this opportunity to thank Dr Hong Hai and Members of his Select Committee for doing an excellent job. Over a period of five months, they received some 71 written representations and heard oral evidence from 28 different groups.

Sir, as we encourage greater participation from the public, we must of course expect widespread points of views. This is something which we encourage and this is something that we indeed have received. With your permission, Sir, I would like to circulate a list of some of the suggestions that the Ministry has received over the past 15 months. [Copies of list circulated to Members of the House]. Sir, Members will note from the list and this is not a comprehensive list; this is only a partial list - that there are more than 75 ideas suggested on how we can manage our land transportation. If Members go through the list carefully, they will find that many ideas are at odds one with another. For example, the first proposal is to scrap PARF. The second proposal asks that we should not scrap PARF. In other words, every point of view has got its supporter and its opponents, its critics. So regardless of what we do eventually, after all the detailed discussions, there are bound to be some people who will be unhappy with Government's proposals.

Sir, I mentioned earlier that the Select Committee has done a thorough job over a period of five months. They have submitted their recommendations. The Government will consider all their recommendations seriously, all of them. I do not need to go through all the discussions that we had last year when I emphasized in the budget debate the importance of the four key features in Government's overall land transport strategy - (i) the systematic town planning; (ii) the importance of building the best possible network of roads in Singapore and managing them with all the sophisticated equipment at our disposal; (iii) the importance of giving top priority to having the best possible public transport system in Singapore, integrating the bus services together with the MRT, and extending the MRT as soon as new needs are confirmed. I have already stated that the Governmen itends to build the North-East line as soon as plans for the housing estates in the North-East sector have been finalised. And (iv) managing the growth and usage of the private vehicle propulation.

Sir, Members will also remember that last year I stressed the importance of an integrated balanced approach to managing the growth and usage of vehicles. Here, I am happy to note that the Committee shares the view of the Ministry. Let me quote from the Select Committee's Report. I quote from page 10:

'The Select Committee recognises the continued need for rigorous measures to control car ownership as the total vehicle population is the single most important determinant of congestion levels on Singapore roads.'

The Committee also said, on page 4:

'The correct way to view usage restraint is that it is a supplementary instrument to sharpen the efficacy of ownership restraint measures.'

Sir, I do not intend to draw any conclusions today. As I said earlier, the recommendations of the Committee will have to be studied in detail by the Government.

Three recommendations have attracted a lot of public interests as shown by the coverage in the mass media over the last two weeks. Indeed, the debate today very clearly showed the special interest of Members of this House, who reflect the sentiments of the public. These three measures are the evening ALS, the PARF scheme, and the quota system. I do not intend to state the Government's position before we have completed our detailed studies. To do so would be premature. But I believe it will be useful for me just to make some brief clarifications on each of these topics.

Firstly, the evening ALS. Sir, many members of the public have called for the evening ALS to be brought forward to end at 6.30 pm instead of 7.00 pm. The Committee has also made that recommendation. Unfortunately, Sir, the problem is not as simple as it appears. The complete survey data from the PWD has just come in. The Ministry is looking at it carefully. I expect an early decision on this recommendation. When the decision is taken, the detailed explanations will be given.

The PARF scheme. Sir, last year the Government gave early notice that it is engaged in a study to consider modifying the existing PARF scheme. The objective is to remove the anomaly caused by what some members of the public as well as Members of this House term "the investment effect" in the PARF scheme, namely, you can buy a car for investment and hope that new cars will become more and more expensive as a result of inflation and appreciating foreign currencies and hence minimise the overall cost of owning a car.

Sir, the Select Committee has looked into this problem in some depth and the Committee has recommended that the existing PARF be retained for cars that are presently on the road. The Committee has also called for a modified PARF scheme to take out the investment effect. Again on this matter, the Government will study the Committee's recommendation carefully, bearing in mind the Government's overall objective.

The quota system. Sir, the quota system was recommended by the Select Committee not as an alternative to usage measures, nor as an alternative to the "do-nothing" approach. As we understand it, reading the Report very carefully, the recommendation of the quota system is meant as an alternative to the present system of increasing road tax, custom duty and additional registration fee. This quota system was put forward as a more predictable, more reliable approach, to managing the overall increase of vehicles on our roads.

Over the last four hours, Members have been debating the pros and cons of the quota system. I believe the key difference between the two is really this. With the quota system, the Government would determine the number of vehicles that the roads in Singapore would be able to take without massive congestion and then the public will decide on the price to be paid. Whereas with the present system that we have, the Government decides on the increase of road tax that has got to be implemented periodically, averaging about once every other year.

Sir, some Members who are not familiar with the overall picture for the last 15 years believe that the past system, in other words, periodic and regular increases of road tax, ARF and custom duty, has not been successful. That is not true. If we take an overall view, for the last 15 years, from 1974 to 1989, with the tried and tested method of regular increases, the Government has been able to keep the overall growth rate of vehicles at the rate of 4.2% per year. And that was during the period when we were building the PIE, the ECP, the AYE and all the other major construction projects, including the flyovers. Far from the previous approach not working and not being successful, it has worked, and worked very well.

The key question that we have to decide in the first instance is this: Do we now go for a quota system or do we not, and stay with the tried and tested method? If that question is answered in the affirmative, in other words, if the answer is yes, then a lot of other issues will have to be addressed. For example, as mentioned by one of the Members earlier on, should the quota system be applied only to cars? Or should it be applied to all vehicles because, all vehicles contribute to congestion? Should goods vehicles be included? Should motor-cycles be included? Should buses be included? Are there not some buses that ought to be exempted because they provide a special public service?

Sir, another question that many members of the public have asked concerns the question of equity, equity between existing owners of vehicles and potential first-time owners, people who will be buying into the vehicle market. Is it fair to all concerned that existing owners should have that right of ownership in perpetuity? I think Mr Lew Syn Pau addressed that point. Or should we have a slightly more equitable system where, instead of having that right to ownership of a vehicle in perpetuity, have that right to ownership for a fixed period only? Whether that fixed period is for a year, two years, five years or 10 years? Which is fairer to existing owners and future first-time vehicle owners? Because, do not forget, Sir, the future owners are our younger brothers and sisters. They are going to be our children. Which is fairer?

In short, can we develop a quota system that is as efficient as possible in ensuring that we use our roads efficiently, with minimal of traffic congestion? Can we devise a quota system that is as effective as possible to contain the rapid growth of vehicles? Can we also design it in such a way that it is as equitable as possible to everyone concerned? And whatever system we devise, it should be such that it does not permit the big car owners to edge out the small car owners. There are many more other questions which will have to be addressed if we want to go for a quota system.

Sir, Singapore is our city. Singapore is our country. If we do not manage our land transport system well, then life is going to be unpleasant for all of us. We are going to waste a lot of time each day. We are going to be trapped in traffic jams, breathing in polluted air. I believe it is far better that we manage our land transport policies carefully, in such a way that our economy will not suffer, in such a way that the quality of life in Singapore will not deteriorate. Then we can truly build Singapore up as a place that is beautiful, that is pleasant to live in, a place that we and our children would truly be proud to call our home.

Mr Chay Wai Chuen (Brickworks GRC): Thank you, Mr Speaker, Sir, for allowing me to join in this debate. I wish to say that originally I found the Select Committee Report on Land Transportation Policy quite acceptable. But after listening to the debate this afternoon, I seem to find that Members of the Select Committee have got confused positions. Nonetheless, I would like to concentrate on the quota system for new cars and I feel it is basically a good measure. I also feel that several other important points need to be considered together with this package. Otherwise the outcome may not be what is desired as wrong signals are given in the market or as loopholes which exist in this Report may be exploited to the detriment of all concerned.

Our policy on cars in land transport must give a manifestly clear signal to the market that the car must be treated as a consumption good and not as an investment good. Just now, the Member for Whampoa, Dr Augustine Tan, mentioned that the consideration of a car as an investment good is purely because of the rise in the value of the Yen and the Mark. I do not think so. I think it is inherent in the PARF policy that the car has a certain element of investment good in our road transport scheme.

Our policies must be geared to make it extremely unwise and costly to purchase a car for investment consideration and that all such purchases should be only for consumption, as it should be. Unless this aim is clearly manifested, perceived and received by all, there can be all sorts of distortions to efficiency by wrong measures.

The overall objective of our land transport policy will be lost in the morass of tariffs, duties, preferential discounts, road tax, ownership cost, usage cost measures and now licence bids. Firstly, I think it is necessary to forestall the inevitable speculation in the bidding for licences. I suggest we can introduce two features. The first is to put in a currency period to the licence bid so that there is a time limit by which the licence will be operational with the car. The quota release should be constant throughout the year. Otherwise a secondary market in licences would be created for speculation.

Secondly, the licence must go with the car, not the owner, on the road. It should have a life span, say, for 10 years. The moment we make the licence perpetual, we are treating one part of the ownership of a car as an investment good which is not desirable. Here again, I wish to stress that the perpetuity of the licence has nothing inherent to do with the PARF, as pointed out by Dr Hong Hai and Dr Augustine Tan this afternoon. All existing cars on the road, when the policy is implemented, should be deemed to have a licence whose life will expire by, say, the tenth year from registration date based on our present PARF scrap car policy. At the end of this period of 10 years, the car will be scrapped and the licence will lapse.

Owning a car should not be compared to owning a house. The moment we do that, we run the risk of treating the car as an investment good which is not a desirable objective in our land transport scheme. If we allow a car licence to be perpetually given life with a new car when scrapping an old one without having to bid for a new licence to go with a new car, we will be allowing the ownership of a car licence as a birth right to be handed down from one generation to another. It would be inequitable for those who do not own cars presently.

The present proposal places the burden of the implicit tax arising from the licence bid exclusively on the new owners of cars so that the new owners are punished and the existing owners will gain. The argument that they can alternatively own a car by getting a used car does not hold water. If they do, the overall effect of the action will be to drive the second-hand car market upwards and that the outcome would still be inequitable as the existing car owners make windfall gains from the rechannelled demand. The burden of adjustment should be placed on all owners of cars, not on new entrants.

One of the most important reasons why people want to drive a car, quite apart from the available means of public transport, is the mobility status such ownership bestows. Transport economists and social scientists have accepted that when you are mobile you have arrived. In a modern society, people want mobility. The paradox of owning a car in cities is that while mobility is desired, the end result of every- body wanting it at the same time in the same area results in huge traffic bottlenecks.

The Government's policy is to ensure that our roads and expressways do not choke up so that the mobility desired will not be achieved, with the resulting economic wastage. Hence, it is crucial for us that the roads are generally free of bottlenecks by targeting the number of vehicle growth. We should make the implicit tax on owning a car equitable on all so that the joy of mobility is equally available to all, subject to a charge applied to all owners, new and existing ones. Otherwise the inequity of the existing proposal will not be acceptable.

The bid for the licence can be expressed as a percentage of the ARF price. In this way, it gives the full range of car owners, from the high-end owners to the low-end owners, equitable bidding. Alternatively, we can set a minimum bid in dollar terms to each range of size of cars based on a common percentage of the ARF price and the bid for the licences can be in dollar value above that minimum limit.

It would be wrong, I feel, following from what Dr John Chen has said just now, to suit the desired price level of the car by adjusting the ARF. For example, he was proposing that we should lower the ARF in case the licence bids go up. If we do this, we will exactly repeat the errors that Dr Hong Hai mentioned this morning. We are missing both the price and the targets and, more, we can cause a lot of uncertainty in the car finance market because then the ARF value will be fluctuating. So the proposal to let the quota system on cars impacting on to the licence bid should be decoupled from the PARF scheme. That is the best way to tackle this quota system on cars.

Finally, the Committee recommended keeping the existing PARF scheme. If the purpose of the preferential discount is to give incentives for scrapping older cars, then the Government should work out a progressive scheme so that the preferential discount applies to cars scrapped in less than 10 years beginning, for example, from the sixth year and working up to the present discount rate by the end of the tenth year. Such a scheme can be worked out and announced in advance of implementation together with the other measures to avoid uncertainty.

Finally, Mr Speaker, Sir, I wish to support the recommendations in the Report subject to the considerations mentioned. 5.15 pm

Dr John Chen Seow Phun: Point of clarification, Sir. The proposal to reduce the ARF rate at the point of introduction of the quota system is a recommendation of the Select Committee. The reason why we say that is because it will allow the market to actually determine the price of owning a car, and it could result in a reduction of price rather than it will always be more than what is the existing price.

Dr Wang Kai Yuen: Mr Speaker, Sir, to begin with, I would like to express my gratitude to the House to allow me to serve on the Select Committee on Land Transportation Policy. I have also enjoyed working with the other Members on the Select Committee, in particular Dr Hong Hai who chaired the Committee. Dr Hong Hai is a hardworking Chairman. Under his stewardship, the Committee was able to make very good headway within a very short period of time.

The Committee is unanimous in agreement with its recommendations. Of course, of these recommendations, the proposed quota system for cars is obviously the most controversial one. The Committee supports the quota system because it is the most reliable method of controlling the car population on the road. Given the recent emphasis on usage measures, I think the general public are a bit surprised that the Committee is seen to take a 90 degree turn when it proposed the quota system which is an ownership measure.

The Members of the Committee, after going through all the submissions and all the oral evidence presented, came to the conclusion that the primary mechanism for controlling traffic congestions on the road would be through ownership measures, and that usage measures will and can only serve to permit a slight increase in the car population, maintaining the same level of congestion on the road through distributing the traffic more evenly.

To expect usage measures alone to manage traffic congestions on our road is unrealistic. Moreover, when people talk about usage measures, many of them assume the existence of a comprehensive and operational ERP system. Of course, as we all know, even the most rudimentary ERP system will not be ready for at least four to five years. Even with the ERP system, the car population will still need to be controlled since there is no stopping the occurrence when car owners of Singapore all decide to go to the same place at the same time. It is already happening to a limited extent on festive seasons when a large number of Singaporeans decide to go to Malaysia at the same time.

Several of the Committee Members also started with strong preferences for usage measures as well, like other Members of the House. But as we delved into the matter deeper, we all converged to the same conclusion, ie, car ownership measures would work, and not usage measures alone. Since Committee Members are all rational, logical like everyone else, I would urge Members of the House to weigh the pros and cons of the recommendations carefully in evaluating them.

The beauty of the proposed quota system is that the number of new cars on the road can be controlled precisely. Price will then fluctuate according to demand. Of course, as the Minister has mentioned, before the quota system can be implemented, there are many issues which we must address.

Dr Hong Hai earlier distributed a diagram showing how the quota system would work, ie, one can buy a new car in two ways: bid for a licence which the Government will auction regularly, or scrap an existing car. Unfortunately, I think the diagram is a bit misleading as it conveys certain assumptions and certain implications which already lead to specu- lative activities on the car market right now.

Let me go one step further in analyzing these assumptions. If we allow an existing car to be scrapped for a new one, while it seems logical since doing so does not contribute to an increase in the car population, however, if that is true, then when the very first auction is held in future under the quota system, we will know what is the bid price for the quota. If existing car owners can buy a new car by scrapping their old cars, then it is equivalent to giving all existing car owners a windfall gain equal, if not greater than the lowest bid in the auctions. I think to many people this will be very unfair. Of course, this can be overcome by requiring all existing car owners to bid for a licence as well when the quota system is introduced, ie, only new cars registered under the quota system can be scrapped one for one. If that is the case, I do not see why people should speculate now by buying old cars. There is also really no reason for old car prices to increase since the Report was released. Even with this one-time limitation, the question of fairness still remains when an existing car can be scrapped in exchange for a new one under the quota system in a steady state.

As several Members and also the Minister have mentioned, it is equivalent to a perpetual licence. In other words, once a person obtains a licence, he gets to keep it for life. Not only that, he will be able to pass it on to his children. That would be just like buying a house in the private market. Clearly, a perpetual licence will be worth a lot of money in 10-15 years' time. Under the proposed quota system, if that is the way it will operate, if a person can afford it, it will be wise for him to lock in the market early by buying several cars as soon as the quota system is implemented so that he can keep it for his own use or to ensure that his children can be assured of driving a car.

As such, Mr Speaker, Sir, a lot of people will see the proposed quota system to be very unfair and only benefiting the rich. Quite unlike real estate investment, if a person cannot afford to live in a private property, he can live in an HDB flat. But in car ownership, either he owns a car or he does not. There is really no equivalent substitute.

An hon. Member: Motorcycle!

Dr Wang Kai Yuen: I do not think a motorcycle is an equivalent substitute for a car.

One way out is not to grant a perpetual licence under the quota system which is equivalent to saying that if a person wants to drive a new car, he or she would then have to obtain a licence by bidding for the licence every time he wants to own a new car. This modification would be equitable. Mr Lew Syn Pau has already proposed this, and I agree with him thoroughly.

The quota system, Mr Speaker, Sir, in my opinion, is a good one and should be implemented in Singapore. There are of course many details which the Committee has not touched on. Rightfully, they fall under the ambit of the MCI. If the Government accepts the recommendations, then MCI would have to study all these alternatives thoroughly before introducing the system so that it will be fair and equitable to all concerned.

Mr Speaker, Sir, I support the motion standing in the name of Dr Hong Hai.

Dr Koh Lam Son (Telok Blangah): Mr Speaker, Sir, I have read the Report and I appreciate the good work put in by the Chairman, Dr Hong Hai, and his Select Committee Members. But more importantly, I believe the public, like Mr Chiam, appreciate that this is a good exercise of the Government's commitment for dialogue, consensus building and participation in decision-making on major issues that confront the nation.

I agree with the sentiments expressed in the Report, and I detect a genuine concern to tackle the problem of excessive car growth in land-scarce Singapore. This concern cannot be but the concern of every serious-minded Singaporean. The problem of traffic congestion could become an insurmountable problem if left unchecked. But solving the problem with hastily proposed measures could generate or create further problems, perhaps more serious ones. On the various social, political and economic implications in the Report before us, I am assured by the Minister for Communications and Information that he will look into these carefully before implementing any of the recommendations put up by the Select Committee. Solving problem, yes, but at what cost, is a question none of us in this House could afford to ignore.

Sir, Singaporeans are a pragmatic lot. They will agree and even accept the need for further control measures to free our roads of traffic congestion but not at all costs. They would expect, I think, that any measures to be implemented must not be unnecessarily harsh or inequitable. The Government must be sensitive to the threshold of tolerance which is already very high.

The PARF and the Area Licensing Scheme together with the very significant improvements in our road infrastructure have given us respite from traffic congestion in the past years. But today, because of new heights of prosperity, the two schemes are becoming less effective, and it does appear that we have no choice but to come up with another major control measure.

In principle, I agree with the use of the quota system. We have practically developed to the full capacity of our road system. Any major expansion is no more possible. This must mean that there is an ultimate number of vehicles that our road system can take without causing massive congestion at any one time and at any one place. I do not know what this number is. Today the experts tell us that a 3% growth rate is acceptable. But when the ultimate number is reached, we will have to settle for zero growth rate.

The quota system will bring discipline to our total transportation policy. It pre-determines the limit of growth and gives clear directions and leeway in planning our infrastructure and localise controls to facilitate greater mobility of the people. It is a long-term measure and will have a permanent salutary effect on our traffic flow. Setting a limit to our car growth rate also means, as has been mentioned by the Minister, that the various usage restraint measures can become more effective and hopefully less painful.

So I am for it, but only in principle. The mode of implementation suggested by the Select Committee is by way of auction with a price tag. This I have apprehension. And if my instinct is anything to go by, the average car consumer may be worried of adverse consequences. The quota system will inevitably lead to a higher demand for both new and old cars. The sentiment of the market is such that even an announcement of the proposal by the Select Committee, although yet to be accepted by the Government, has already pushed the demand in the sales of cars. Even if the ARF is initially reduced to allow for the introduction of the licence fees, in the long term, due to sheer increase in demand created by restricted supply, the cost of the bidding licence will be artificially pushed up. A car consumer may be held to ransom by unscrupulous car dealers who may well form themselves into a cartel in order to raise the price of cars, both old and new.

The quota system using the auction procedure is also inequitable in that it favours the better off who are able to pay more. As the majority of Singaporeans who aspire to own cars are not necessarily the well to do, they may feel disenchanted. In other words, a car which is very often a necessary evil has now become the exclusive domain of the rich.

Finally, the quota system in an auction with a price tag may well appear to confirm the impression that the Government is using the mechanism of the quota system to generate revenue. Substance is of course more significant than appearance, but it is also true that the Government must not only do justice but appear to do justice. This is an inescapable fact of life.

So with my apprehension explained, I now wish to suggest a modified quota system. I suggest that the Government sets the quota periodically, but implementation in the balloting scheme without a price tag. The purpose of achieving the desired growth rate is unaffected, but without the infamous stink of penalty of a higher price. Consequently, it is more equitable in that every qualified ballottee stands an equal chance before the same opportunity. Whether well-off, not so well-off, you are given an opportunity to fulfil an aspiration to own a car. I am not suggesting that the balloting system is not exploitable or subject to abuse. I believe that the Select Committee is not in favour of this balloting system at least for two reasons. (1) There is a gambling element; and (2) Many non-serious buyers can also ballot and sell the licence for a profit.

Sir, although we like to pride ourselves as being absolutely rational in our ventures and actions, in the final analysis the elements of chance still play a part. In fact, it is my belief that life itself is a gamble. Going into politics is a gamble. Choosing your life partner, that too is a gamble. The balloting system has been compared by the Select Committee to the Singapore Big Sweep. But is anybody raising a hue and cry about the Singapore Big Sweep? Sir, I believe the man in the street will be more agreeable to a balloting scheme than an auction scheme.

As to non-serious buyers exploiting the system, I am sure we can look into safeguards and disincentives. For example, we can find ways to pre-qualify the ballottee. For example, he or she must own a valid driving licence, shows financial ability, place a heavy deposit, and be disqualified after one successful ballot.

Sir, like all measures, no single measure is exempt from possible exploitation. The question is, which is the less exploitable. It is a question of which is the lesser evil. If all things are regarded as necessary evils, we need to decide on which are the lesser evils.

Sir, admittedly, in as much as the Committee is faced with time constraint to come out with details of implementation, I am also suffering from the same fate, lack of time. But notwithstanding the time factor I urge this House to consider my proposal sincerely and seriously.

Dr Arthur Beng Kian Lam (Fengshan): Mr Speaker, Sir, first, I would like to say that I feel very reassured from the Minister's statement that he would study the document further and that there would be no hasty decisions, and that he would take into account Members' views and that equity would take an important part in his consideration of the future transport scene.

Sir, in the last year we have had the half-tank Bill, had the caning Bill, and today I think we have the great debate on the quota Bill. The Report of the Select Committee on Land Transportation Policy is an invaluable document. I must commend those who have taken the time to share their views with the Committee, and the Committee for its detailed study.

Sir, I would first like to highlight some of the representations which I feel are worthy of mention and of further study. I hope that the First Deputy Prime Minister would be convinced that with the good quality presentations made in this Select Committee, that there is no need for NMPs, non-elected MPs. The importance of the submissions and recommendations have been side tracked by the controversy of the quota system, and thus in the process confusing everyone, leading to the self-fulfilling prophecy of increasing car sales. This morning I was told that today one is unable to buy a scrap car and the price of second-hand cars has already gone up.

Sir, with your permission, I would like to draw attention to three papers. First, Paper No. 30. This paper has made sensible recommendations as to what our land transportation policy should emphasise on:

(a) Emphasis on restraint of car usage rather than car ownership.

(b) Control of car ownership (as the last resort) through pricing and not through the quota system.

(c) Priority for public transport and pedestrians in the central area coupled with restraint of car traffic.

(d) Maximisation of public transport accessibility to all users.

(e) Protection of the environment from the negative impact of traffic.

Sir, these are very sound principles on which to base the land transport policy and they should be studied further. This study by academicians from the Nanyang Technological Institute also emphasised that "no urban transportation system anywhere in the world is designed to be free of congestions at all times." That is, there will always be peak hour traffic congestion. This is relevant especially in our context of land scarce Singapore where optimal use must be made of all land, including land for roads. The aim emphasised is for optimal utilisation and not for "free-flowing traffic all the time in urban land transport planning." The question, of course, that needs to be addressed by Ministry officials is: what is the acceptable tolerance level? Even if we turn to bicycles, there will be peak hour bicycle traffic congestion.

The paper also addresses Car Usage. The authors note that the Electronic Road Pricing is "more equitable" than increasing charges on car ownership, petrol tax, or imposing kilometre tax." I totally agree with them on this.

Next, Sir, Paper 55. This paper, in mathematical terms, has shown that "price and cost elements exert marginal influences on car ownership as compared with other variables such as income." The authors also emphasised the importance of improving the efficiency of the public transport system. Here, I am in complete agreement with the Select Committee that the public transport system must be better improved.

Turning to Paper 59. This paper also emphasises that usage measures are better than ownership ones. The author states that "the present mix of measures for cars are heavily weighted towards discouraging ownership rather than usage." The author also stresses that "the more severe the usage measures, the greater the number of people who can own cars." I believe that the Chairman of the Select Committee has also made this statement and is in agreement with this.

Mr Speaker, Sir, the Government has always exhorted our people to work hard. Singaporeans have worked very hard in the last 25 years. In the recession of 1985, they have sacrificed much to help pull the nation out of recession. Today we are all working harder and upgrading our skills.

Sir, as Singaporeans become better educated and more affluent, the desire to be to able to choose their own life style and priorities in life becomes more important to them, especially the younger generation. Having worked hard, served the nation in national service, and reaching the stage where they have enough disposable income to set their own priorities, we in the Government must try to help them reap the rewards of their labour. Choice is very important in their life. They are, I believe, responsible and mature adults who will not make foolish choices. To many, the priorities appear to centre upon the family, ie, owning a home, starting a family, and also owning a car. Owning a car to some may be a luxury, whilst to others may be an economic necessity. I cannot disagree more with my colleague, Mr Chng Hee Kok, who calls this an incorrigible desire for car ownership. Car ownership, to some, is an important economic necessity. Car ownership is both a social and an economic desire, and not an incorrigible desire. We cannot deny the social convenience that a car provides. In summary here, the element of choice must be made for our young people and those who intend to go into the car market.

Sir, as national leaders, we owe it to our next generation to act responsibly. My belief is that the Government must now clearly chart the path upon which we will address the problem of traffic congestion to ensure that our quality of life, as mentioned by the Minister, is not compromised. The cost of car ownership and utilisation today is by no means cheap. Despite this, the aspiration to own a car has not been dampened. Why is this so? Let us recognise that this, in my opinion, will not change. But what we can change and persuade is the utilisation of cars. We must not heap cost upon cost to frustrate this desire. It will not do us any good. Let us state clearly that there is hope for all who want to own a car. But that the car must be used judiciously and responsibly so as to minimise traffic congestion.

I reiterate my belief that if the cost of car ownership is made more reasonable, this coupled with a good public transport system will convince the rational Singapore car owner that it makes sense to have a car but not to use it to add to the peak hour congestion. As I have mentioned before, if the cost of car ownership is so great that it will not make any sense to leave the car at home, then no one will use the public transport system. But if the cost of car ownership is realistic and it makes good sense to use the public transport system to offset travel, then it will be done.

Sir, I feel that the electronic road pricing is still a good alternative to car ownership restraint. I am not as pessimistic as some of the other Members and I have more faith in the Ministry of Communications and Information in that I feel that they will be able to come up with a good system of electronic road pricing. At this point of time, whilst awaiting the implementation of the ERP, we need to address ourselves to the other recommendations of the Select Committee, such as improving the feeder system and the integration of the BUS/MRT Service. Buses can be upgraded and we should take a relook into the role of taxis as an integral part of the public transport system.

Paper 25, presented by my colleague, Mr Lew Syn Pau, submitted by NTUC Comfort, deserves further thought and study. The paper has made up a case that taxis should not be treated on par with private cars and made to bear the full cost of ARF and road tax. In his submission and oral presentations, Mr Lew has explained to the Committee the difficulty of running a cost effective feeder system using taxis. If the operating cost of taxis can be reduced, then taxis can be made use as part of the feeder system as has been looked into by the Select Committee.

Enough has been said by both protagonists and antagonists to the quota system, and I will not add to it. I urge the Minister and the House to give due consideration to the other suggestions made in the submissions to the Select Committee. One cardinal principle must be borne in mind in the implementation of any transport policy, ie, all measures implemented must be equitable to all Singaporeans. We must provide them with a measure of choice and, most importantly, it must give them some hope.

Mr Speaker: Can I urge Members not to repeat points which have been made by previous speakers? Otherwise I will be forced to impose a quota on speeches. 5.45 pm

Mr Charles Chong (Sembawang GRC): Mr Speaker, Sir, thank you for giving me this opportunity to comment on the motion. You have just eliminated about four pages of my speech.

First of all, I too would like to congratulate the Select Committee for their very comprehensive Report. Some of the 71 submissions to the Committee have provided some very enlightening directions and suggestions on the various aspects of our land transportation policy. I would like to comment on the Select Committee's recommendations in the order as they appear in the Report.

Ownership Restraint

The Minister for Communications and Information has quoted the Committee as affirming the continued need for rigorous measures to control car ownership and attributed the total vehicle population as being the single most important determinant of congestion levels on our roads. However, I feel that a more important determinant of congestion levels is the proportion of car owners who do not make use of public transport to commute to and from work.

The total vehicle population need not be a critical determinant of congestion levels if the vast majority of vehicle owners use public transport for work. The Chairman of the Select Committee, if I heard him correctly, has endorsed this view. I think we should aim for a situation where it is conducive for car owners to switch to public transport without having to give up their cars. I therefore support the recommendations of the Committee on upgrading the comfort and speed of buses and the expansion of the MRT system to all major public housing estates and feeder services to the private estates. Usage Measures

Usage restraint measures, such as the ALS, have proven to be effective in reducing congestion on our roads. Conceptually, the electronic road pricing system appears to have potential as an equally effective road usage restraint measure. However, I fully agree with the Committee's recommendation that the underlying principle for usage restraint measures should not be for the sole purpose of making it economically painful to drive to work as to make it a pleasure to take a bus or MRT instead.

Quota System

I do not think that it can be disputed that the quota system is the most effective way of controlling the car population. Introduction of the quota system may make all other car ownership restraint measures obsolete. But despite the fact that it is the most effective method, we should consider whether it is the most equitable or acceptable method. The quota system will have little impact on existing car owners who already have cars to scrap in order to buy new cars. The quota system therefore would in all likelihood be considered acceptable to existing car owners.

The same, however, cannot be said, under all circumstances, for the first-time car buyer. He will not know for certain what price he may have to pay for his new car but will have to study bidding trends and quotas. To compound his uncertainty, he is not even sure if his tender will succeed. If he tenders too low, he will not get his car. If he tenders too high, he would have wasted his money. If car dealers had to tender, a similar situation of uncertainty would arise. If they tender too low, they may end up with no cars to sell for that particular month. However, it would be likely that they would tender on the high side in order to increase the chances of getting their supply. The additional costs would invariably be passed on to the consumers.

The Chairman of the Select Committee has implied that with the introduction of the quota system the Government need no longer have to guess when determining the price of new cars under the pricing system. I agree with this view as the guesswork will now have to be done by the consumer trying to guess what his competitors will be bidding.

The Select Committee has asserted that the quota system does not necessarily lead to higher or lower car prices. Theoretically, this is true. Car prices would depend basically on supply and demand. However, the current state of the economy, the high demand for new cars and the expected constraint on supply under the quota system, leave very little to the imagination as to which direction prices would go.

The Select Committee has advised car buyers to acquire some savvy in the timing of their purchases. Would-be car buyers should wait for a period of low demand before making their purchases. The figures indicate that the period of low demand normally coincides with economic recession. It is therefore my hope that we do not have too many periods of low demand.

Mr Speaker, Sir, the present system of vehicle ownership restraints, such as road tax, ARF and PARF, imperfect as it is, has proven over the years to be successful in regulating the growth of vehicles over the long term. I am glad that the Minister for Communications and Information also agrees with this view. It is also perceived by many, especially the potential first-time car buyers, as being more equitable and less restrictive than the quota system. There is price certainty before a purchase is made and anyone who is prepared to pay the posted price is assured of a car whether or not he has a scrap car. Difficulty may also arise over distribution of quota for cars with different engine capacities. If no distinction was made between high and low engine capacities, then a lower income earner aspiring to purchase a one litre car may have to tender in competition with a high income earner going for a three litre car. It would be like pitting a flyweight boxer against a heavyweight with the results being quite predictable. As mentioned by the Member for Tanglin, even if the tenders take into consideration the capacity of the car, there is nothing to stop high income earners outbidding lower income earners for lower capacity cars. Where then would it leave the lower income earners as far as car ownership is concerned?

PARF

I support the recommendations of the Select Committee on the retention of PARF. I also agree that refinements to the PARF system could be introduced. However, I too do not agree with the implication that we should encourage the scrapping of cars as early as five years if they are in still in good condition. I am not in favour of creating conditions conducive to spawning a new industry of refurbishing cars that are still in good condition. Cars that are in good condition should be left on the roads. Cars that are not in good condition are the ones that should be refurbished or removed from the roads.

The annual vehicle inspections currently accomplished on older cars provide us the opportunity to ascertain which cars meet standards we would like vehicles on our roads to achieve. Rather than vary the PARF with the age of the car, we should consider varying the PARF with the condition of the car. After all, the basic objective of the PARF scheme is to reduce the breakdown rate of cars on highways and the reduction of pollution from exhaust fumes. Both these situations are more related to the condition of the car rather than its age.

Area Licensing Scheme

I support the Select Committee's recommendation that the evening ALS should be changed to 4.30 pm till 6.30 pm. I am in complete agreement with the reasons given for this, as stated in the recommendations by the Committee.

Parking

On the issue of city parking, I would like to urge that the under-provision of parking opportunities in the city should never be used as a usage restraint measure. In cities where there are insufficient parking opportunities, illegal and indiscriminate parking has resulted, adding further to traffic congestion. In some cities in Europe, I was amazed at the ingenuity of some motorists in parking their cars. Cars are parked practically on sidewalks, on traffic roundabouts and in every conceivable and inconceivable space. In London, rather severe methods are being used against illegal parking. Cars are immobilised with wheel clamps and illegally parked cars are lifted by cranes onto trailers to be impounded. These measures have not solved their traffic congestion problems in the city.

In Singapore, even with ample parking opportunities, the level of indiscriminate parking is still unacceptable. Imagine what it would be like if there are insufficient parking lots in the city. On the subject of home parking, I agree fully with the Select Committee's statement that the pricing of car parks in HDB estates is not a car control measure. Consequently, HDB car park pricing should be determined by real estate considerations and not by traffic control objectives.

Public transportation

I am in complete agreement with the recommendations of the Select Committee on the upgrading of our bus services and the expansion of our MRT system and feeder services to cover public as well as private housing estates. I also support the recommendation that both private companies as well as bus companies be encouraged to provide feeder services in the private estates.

On the subject of bicycles, these have been effectively used in countries like Holland and in Scandinavia. But I have also seen congestion caused by bicycles in China. However, until such a time when the driving habits of some of our motorists improve significantly, I think many car owners will feel compelled to drive cars, if only for self-defence. I therefore support the recommendation on the provision of bicycle tracks that do not interfere with other traffic and that are safe to ride on.

Infrastructure

Finally, on the subject of infrastructure for road transportation, I am gratified to note that the Select Committee has recognised the rising aspirations of our population to own private cars. Many of our young people include car ownership in their vision for tomorrow. The Select Committee has endorsed the creation of self-contained regional centres as a means of alleviating traffic pressure on highways and recommended better road planning. It has also identified challenging objectives such as the construction of double deck highways and underpasses, whilst acknowledging our limitations such as lack of land area and other resources. I feel that we should not consider our many limitations as being something completely insurmountable. Consequently, we should not divert all our ingenuity and energy into finding ways to curb the growth of our car population. But rather towards the creation of a road and transportation system that can accommodate as many cars as possible without adverse consequences. Thus satisfying this rising aspiration for car ownership for as many of our people as possible.

However, in order for us to have the best possible chance for success, we would need to develop and evaluate our options carefully and to act quickly. We should not delay the implementation of long-term infrastructural improvements until the need becomes apparent. We should not take the 10 years it took us for evaluation and consultation on whether we should or should not build the MRT. Perhaps there were more urgent priorities then. However, Mr Speaker, Sir, in order for us to turn our vision for tomorrow into a reality we will have to act today.

In conclusion, although I am not in full agreement with all the Select Committee's recommendations, I strongly support the second part of the motion that urges the Government to give the Committee's recommendations (many of which in my opinion are excellent recommendations) serious consideration.

Dr Hong Hai: Mr Speaker, Sir, I would like to thank Members of the House for the great interest they have shown in the subject of our Report and for the many valuable contributions they have made to the ideas for the solution of our land transportation problem. I would also like to thank the House for having appointed Members to the Select Committee because it has given us an opportunity to learn from the public and to put our minds to some of the more pressing issues that face us.

Sir, the Members of the Select Committee are not experts in land transportation. We do not have either the technical expertise nor the resources to go in depth into every issue that was raised. We felt that was more in the province of the Ministry of Communications and Information. We did, however, learn from the views of the public and from other Members of the House in the course of our deliberations. We have tried to come up with recommendations that are broad in nature and we hope that the Ministry will consider these carefully for more detailed implementation.

In the course of the debate, it may have appeared that various Members of the Select Committee may not have been in total agreement on some of the issues. That has inevitably been the case on some questions. There were some differences of opinion. What is stated in our Select Committee's Report has been the majority view. This applies only to a few of the recommendations. I would say that there was unanimous agreement for the large majority of the recommendations. There was unanimous agreement on the recommendation of quotas. Because we were not totally agreed on every detail of implementation, and because we did not have the time to go into the details of implementation, we had withheld comment on detailed implementation. Indeed, as Members can gather from today's discussion, there are many ideas and many ways by which the quota system could be implemented. And we are very grateful that these ideas have been put forward, not so much for our consideration as a Committee, but really for the consideration of the Minister for Communications and Information.

Mr Chay has suggested that perhaps the Committee was a little bit confused in some places in that several Members had different ideas on how the quota system would fit with ARF and PARF. I agree that this is a complex issue and I do not intend today to go into these details as it would require more time than we have.

Suffice it to say that when Dr Wang suggested that the diagram was a little confusing, I should point out that the diagram is completely consistent with the Report of the Select Committee. It may be worth pointing out that in the footnote at page 6, we did mention that if the ARF is lowered at the point the quota system is introduced, it would be necessary to adjust the PARF rate so that existing owners do not have a large windfall gain.

Sir, because the quota system has drawn so much attention, there has been a tendency not to have noticed many of the recommendations that we have made which Members of the House are fully agreed with and which have a great deal of support from the public. In fact, I think the interest in the quota system has been so great that one Member of the House, Mr Chng Hee Kok, focused entirely on it and failed to read the rest of the Report, which completely agreed with all the recommendations that he made and which he said we did not. We did in fact make recommendations on the MRT, infrastructure, integration of bus and MRT services, and so forth. I thank him nevertheless for endorsing our views and recommendations.

Sir, we agree with many members of the public and Members of the House that there should be more usage restraint measures. But we remind everyone that usage measures cannot replace ownership measures. And as long as they cannot replace ownership measures, there must continue to be ownership measures. The question is: in what way ownership measures should be implemented? We also agree that the infrastructure should be expanded. We agree that we should improve the public transportation system.

On the question of quotas, I do not think a single Member of this House disagrees with the idea that it will be effective. There is no question that it will be effective. The reservation has been on the implications of the quota system. Some Members have suggested that although it is effective, we should only use it when we really need it, maybe only as a last resort.

Mr Chin Harn Tong has given an example from Chinese gongfu practice which is you do not use your most powerful weapon until you really have to. I happen to be an avid watcher of gongfu serials too. And I cannot help wondering why at times the grandmaster withholds his heavenly sword and sees his underlings killed one by one, until at the very last he pulls out his last weapon, and he saves the day. The poor underlings have to be destroyed in the process. I think that if the quota system is effective and if it can be implemented fairly, it should be used even if there were other methods that were less effective and easier to implement.

Sir, there have been many Members of the House who agree with the quota system but have reservations about some of the consequences. I would like, if I may, classify their reservations into three categories.

The first reservation is that quotas will squeeze out middle income earners and young people who aspire to own cars. Sir, I would like to point out again that as much as that appears to be the case, and as much as that is the initial reaction of many members of the public, I would like to point out that the rate of population growth in Singapore is something under 2%. The rate of growth in the car population, historically, I think over the last 13 years, has been about 5%. [Interruptions] 4 point something. Well, it depends on whether you do an arithmetic or a compound average. It is about 5%. If the quota system is implemented, and if the quota is set on average at, say, 5%, then we have a much higher rate of growth in the car population than in the rate of population growth. Mathematical logic would force us to conclude that it means that an increasing proportion of Singaporeans will own cars. That has to be. Sir, unless the Minister for Communications and Information is going to be so stringent on quotas as to keep it below 2%, which I hope is not the case, unless that was the case, and if quotas are 5% or thereabouts or more, or only slightly less, then we should see an increasing proportion of Singaporeans owning cars. If that was the case, it cannot possibly be true that middle income and aspiring owners are going to be squeezed out. There have to be an increasing proportion of car owners. So I would like to assure Members that if indeed the quota system is implemented, there will not be an increasing number of people being squeezed out. There will in fact be an increasing proportion of Singaporeans who will own cars.

The second category of objections, Sir, to the quota system is that it is inequitable to new owners. I agree that there is an element of inequity in the quota system if PARF continues to exist. It is inequitable in the sense that PARF gives existing car owners an advantage, in that they can buy future cars at a concession rate. As I pointed out earlier, the problem is PARF, the problem is not quotas. Yes, it will be possible to implement a quota system without PARF. If we scrapped PARF altogether and went on a pure bidding system without the concession of trading in your used car for scrap value to buy a car, then we remove this element of inequity. I am persuaded by the arguments that Members have put forward that perhaps we should retain PARF for existing cars and possibly for new cars, I am persuaded that we should examine PARF much more carefully to see whether we can gradually remove this inequity. In saying so, I would like to point out that PARF does serve a function, which is it keeps cars young and in good condition on our roads. So I would urge the Minister for Communications to consider this point very carefully, whether there was a way whereby we could make the quota system more equitable and whether PARF could somehow be modified to be less inequitable.

Sir, Dr Koh and others have pointed out that perhaps we should use the balloting system to remove inequity. I can understand that a balloting system will be popular in the sense that psychologically everyone feels that he has an equal chance, regardless of his income. But the balloting system, I am afraid, has other problems in that it will not necessarily allocate the ownership or use of a car to people who value it most. The good thing about the pricing system is that people purchase goods based on the value they place on it. And the value they place on it is best reflected in the price they are willing to pay for it. As much as I like the element of fairness in a balloting system, I am afraid that at this time I personally do not think it will be a very practical measure. Perhaps on further consideration and study, there is a way to make it fair and reflect better the needs of the people. I personally would not want to rule it out altogether. And I would urge the Minister to consider it, and see if there is a way to incorporate it without some of the undesirable features that are attendant upon balloting as a system.

Sir, the third category of objections to the quota system is that it will cause prices to increase very sharply, ie, the quota system instead of the pricing system will cause sharp price increases. I think perhaps the best way of addressing this concern is to consider the following scenario.

Supposing that because of the very sharp increase in demand for cars in the last year or two, supposing as a consequence of that, the Minister had decided at the end of last year to increase the import duty on cars. Supposing instead of 45%, he had raised it to 100%. And supposing as a result of that, demand drops very sharply so that today we see only a 1% growth rate in the car population. Supposing that was the case. And supposing six months later when the growth rate is still about 1% or 2%, the Minister introduces a quota system and says that the quota will be 5% from here on. Would Members of the House agree that with the introduction of a quota system at a time when the growth rate is only 1% or 2%, and if the quota was 5%, that the prices of cars would fall? It has to, because supply exceeds demand.

Sir, I paint this scenario mainly to point out that rising or falling of prices with the quota system has nothing so much to do with the quota as to do with demand and supply. It is true that today when demand is very high, it will be rational to expect that under any system, whether quota or pricing, that at some stage prices may go up, if indeed we want to moderate demand from 9-10% to, say, 4-5%. Prices have to go up under any system. The quota system is able to achieve this in a more accurate way and we think in a smoother way, in that we bite the bullet once, bring the system to a rational mode, so to speak, and in the future prices will only adjust gradually according to demand and supply. I would like to assure Members that it is not the quota system that would cause the price to rise. It would be demand and supply. If we never adopted a quota system and if we stuck to the present tax-based pricing system, and if demand continues to be high, I believe the Minister will have no choice but to raise either import duty or ARF and prices will go up anyway.

Sir, if I may briefly address the Minister's remark on the quota system and on the success of the pricing system, it is true that the pricing system has been quite successful in the last 15 years or so. The Select Committee did consider that and recognised that. However, we noticed two things. The first is that under the pricing system, as much as the average rate of growth over the last 15 years has been acceptable, about 4-5%, there have been very sharp changes in different years. Whenever a tax increase was introduced, there would be speculation, demand would rise, there might be some panic buying and when the price finally goes up, the demand drops very sharply. The result is that there is some distortion in consumer behaviour and it is also somewhat traumatic for people who are trying to buy cars to face this kind of very sharp uncertainties. That is one problem with the system, even though it has been successful like keeping the average acceptable. It has these problems in particular years.

The other observation we made was that in the last two years demand has been very high, the growth rate has been very high. It will probably take fairly draconian measures to bring it back in line. As I have mentioned, it is only understandable that the Government would usually slap on a higher price increase or tax increase than is necessary at that time to bring it really down so that it has time to come up again to the target level. So we felt that, on balance, considering these two factors and also considering the fact that the quota system will in fact give a more predictable and a gradual price system in the future, we decided to recommend the quota system to the Government for serious consideration, recognising many complications, problems and problems that are attendant upon such a system by having complete faith in the Minister for Communications and Information that if he adopts the quota system he will find satisfactory solutions to these particular problems.

Sir, finally, I would like to address the point raised by Dr Lee Siew-Choh as to what it means to adopt the Report. As I understand it, to adopt the Report is simply to tell the Select Committee that its work is completed and it does not have to go back and do more work and produce another Report. We would be very grateful, Sir, if the House could adopt the Report and we would also urge the Government to give serious considerations to the recommendations, not only of the Select Committee but of all the Members of this House who have very sincerely and thoughtfully looked at the recommendations and have come up with proposals. Thank you, Sir. [Applause.]

Question put, and agreed to.

Resolved,

That this House adopts the report of the Select Committee on Land Transportation Policy and urges the government to give the committee's recommendations serious consideration.