ELECTRONIC ROAD PRICING SYSTEM AND AREA LICENSING SCHEME

Dr Lee Tsao Yuan asked the Minister for Communications if he will provide a comparison of the Electronic Road Pricing system with the Area Licensing Scheme and the changes which have occurred with regard to (i) road traffic patterns and (ii) revenue collected.

Mr Tay Beng Chuan asked the Minister for Communications (a) whether his Ministry has evaluated the business cost implications of extending the electronic road pricing in September 1999; and (b) whether it has considered levying a lower charge on commercial vehicles to bring down their business costs.

Mr Shriniwas Rai asked the Minister for Communications when the Land Transport Authority will release the fee to be charged at the new 9 Electronic Road Pricing gantries.

Mr Mah Bow Tan: Mr Speaker, Sir, may I have your permission to take Questions 5, 6 and 7 together as they are related?

Mr Speaker: Yes.

Mr Mah Bow Tan: Sir, the ERP is a critical policy instrument to manage congestion on our roads. Together with the Vehicle Quota System, they keep our roads flowing freely, so that goods and people do not get stuck in traffic jams. In other words, and this is in response to Mr Tay's question, the ERP has had a positive impact on business, not only in direct cash terms but also in terms of faster travel times that lead to overall lowering of transport costs. This ultimately helps us to maintain our competitiveness as an efficient international manufacturing, logistics and business centre.

As our vehicle population expands, in order to cater to growing demands from business and to meet the aspirations of our people, the challenge to keep congestion at bay will become increasingly more difficult. Our choices are limited. We can build more roads, but we will have to sacrifice land for housing, schools, industries and recreation. This is not an option for most Singaporeans. We can restrain car growth. Again, this is not an option if we are to give young Singaporeans and those who can afford their chance to own a car. Finally, we can manage the traffic on our roads, by encouraging better use of our limited road space through ERP. This is the preferred option. With ERP, motorists are more careful about using their vehicles. They have several choices. Do they have to drive? Can they take a bus or train? Can they share a car with friends or colleagues? Or can they switch their travel to a less congested time? If they really need to drive at peak hours, they are free to do so, and in return for a small fee, they enjoy a smoother and faster ride.

Our experience with ERP and ALS has been positive. In 1975, when road pricing was first introduced, total vehicle population was 280,000. Today, it is 680,000, an increase of almost 150%. Over the same period, our road network has increased by 44%. Trips made by public transport has gone up by about 90%. The bottom line is that while cars have increased, our roads are still free-flowing because more people are using public transport.

However, pockets of congestion are appearing in areas outside the CBD and along the expressways. Moreover, they are spreading from the morning to the evening peak hours as well. This is not surprising as our vehicle population is continuing to expand faster than our road capacity. That is why we need to expand the ERP.

The LTA will shortly announce the exact locations of the first seven gantries to be implemented on 1st September 1999. Other gantries will be considered when the traffic conditions demand them.

Mr Rai asked about the rates that will be charged at these gantries. They will only be fixed closer to the date of implementation, ie, in September 1999, based on the prevailing traffic conditions then.

Mr Tay asked about lowering charges for commercial vehicles. When ERP was introduced last year, the Government, as promised, lowered the cost of vehicle ownership. Up-front and annual ownership taxes such as Customs Duties, Registration Fees, Additional Registration Fees and road tax were significantly reduced. The majority of vehicle owners, including owners of commercial vehicles, enjoyed substantial savings in annual road tax, ranging from about $280 per year for cars to as much as $2,000 per year for commercial vehicles. In addition, all vehicle owners were given a road tax rebate of $200 per PCU.

We have also helped businesses to adjust to ERP by phasing in the charges for commercial vehicles over four years. Currently, commercial vehicles pay only a quarter of their full ERP rates, except for the CTE, where they pay half the rate. Whether it is quarter or half, this is still much lower than what they were paying under the manual road pricing scheme. In fact, owners of commercial vehicles will save about $63 million in the first year of ERP implementation.

Dr Lee asked for a comparison between the ERP and the manual Area Licensing Scheme (ALS). With ERP, traffic is now better spread out with charges corresponding more closely to traffic conditions. Travel speeds in the Restricted Zone (RZ) range from 20 to 30 km per hour and on the expressways between 45 and 65 km per hour. At these speeds, the roads and expressways are carrying close to their designed capacity while remaining congestion free.

ERP rates are also lower than the corresponding ALS fees. For example, the ALS fee for cars was $3.00 during peak periods and $2.00 during off-peak periods. Now, with ERP, the Restricted Zone rates range from $1.00 to $2.50. And on Saturdays, it is now free entry.

Government revenue from ERP today is about 60% of the revenue under the manual ALS/RPS schemes. This is expected to decrease further following the last rate adjustment in April 1999, which saw the lifting of ERP on Saturdays and reductions in charges for some time periods in the RZ and on one of the Expressways. This demonstrates clearly that ERP is a traffic management tool, not a revenue-generating instrument. The objective of ERP, I repeat again, is to keep our roads congestion free and smooth flowing while allowing our vehicle population to increase. In so doing, it helps to maintain Singapore as an attractive and efficient place to live in and do business in.

Dr Lee Tsao Yuan: Sir, the Minister mentioned that the ERP system has led to an overall lowering of transport costs and that Government revenue has decreased to 60% of that under the ALS scheme. However, we do not know from the consumers' point of view, in other words, the motorists' point of view, whether it has actually taken them a longer time to reach their destinations because of travelling on alternative routes, or that they actually had to rearrange their time schedules in order to have a reduction in terms of price. Therefore, we do not necessarily know that from the motorists' point of view there is an overall reduction in terms of all sorts of costs, including time. Would the Minister therefore consider doing a survey to find out from motorists how they have actually adjusted their traffic patterns and whether they have saved in terms not only of cost but also in terms of time travelled?

Mr Mah Bow Tan: Sir, the purpose of the ERP is not just to spread the traffic. If we take it from the point of view of what Dr Lee mentioned where people are just avoiding the traffic jams alone, I think that in itself is not going to solve the problem. The purpose of this exercise is to offer more than just that option. There are other options involved which include - and this is most important - either a forgoing of trips because the trips are not necessary or a shift from private to public transport.

We have not done a comprehensive survey because we have just started to implement the system. Such a survey will be part of the overall strategic traffic studies that are done on a regular basis, and these figures will come out. But the overall impact of ERP as far as direct Government revenue is concerned is that there has been a reduction. In other words, motorists are actually keeping 40% of the money. What do they do with this money? Whether they decide to keep it and to travel longer distance or they decide to keep it and use it for public transport or they decide to share a car with their colleagues and split the cost, that we do not know at the moment. But we have given them several choices. It is up to them. And if they believe that their time is not worth the money that they need to spend to pay ERP or if they believe that a train is more comfortable and faster, which in some cases it is, that is also their choice.