ROAD TRAFFIC (AMENDMENT NO. 2) BILL

Debate resumed.

Mr Chay Wai Chuen (Tanjong Pagar): Mdm Deputy Speaker, I wish to speak in support of this amendment Bill. There are several areas of amendments listed out by the Minister and, in general, I support these amendments.

In particular, I want to focus today on this issue of licensing of taxi operators. This is an important feature in this list of amendments, and it focuses mainly on the legislative framework for licensing of taxi operators which will come in place. We have heard a lot of complaints and we read about them regularly in the papers from the public concerning this call for taxis during peak hours or rainy period, and this is one of the issues which I suppose the Bill addresses, ie, service standards of taxi companies.

I agree that while there are certain conditions which are attached to this legislative framework for the licensing of taxi operators within the context of more competition, as spelt out in section 111, I am not, however, entirely persuaded that by licensing conditions alone, we can properly and adequately tackle this question of service standards during periods of heightened demand, such as during holiday season or during peak hours and rainy season, and so on. While I can understand public sentiments when taxis do not respond during holiday seasons and the attempts made by the Minister to try and correct them, we can think about issues or instances of airport service standards during Chinese New Year, or shopping centres, and so on, during rainy periods.

I remember a journalist wrote a long piece decrying the transport service standards in Singapore when she had to wait for hours for taxis at Centrepoint during the Christmas season or rainy period. I appreciate the frustration of any member of the public waiting at a stand for a taxi which does not turn up. But I suggest that we should try to understand the problem of delivering service to satisfy peak demands in its proper context. This kind of heightened peak demand is not something new. Just a heightened peak demand, epitomises by the long queue outside Centrepoint's taxi stand, cannot be satisfied within that window, especially when the holiday shopping season is coupled with a rainy period. It is the same, whether we are talking about waiting for a taxi in Centrepoint or waiting for a taxi outside Harrods in London. It is the same problem.

I am not trying to explain away the problem of taxi operators' service standard. But it is only logical to say that when the demand within the window period is heightened, as is expected during rainy or holiday seasons, some mechanism for rationing and allocation must be allowed to operate, to solve this problem of the frustrated long queue wait. We have to solve such a problem in micro-management terms as best as possible. And it is not fair, I would say, to blast away the overall transport system and decry the world's standard service that we have delivered.

Actually, economists have been talking about this and the answer comes from the time of Adam Smith. It is called the price mechanism in allocating of limited resources. Whenever there is a long queue waiting for taxis and the taxis are not available, we should be wondering where they are. If the taxis are fully occupied in servicing all the other parts of the island, and if we are so concerned about that particular belt or shopping point in town that must be serviced, then the answer is to put in a price differential factor through a proper pricing mechanism sufficiently enough to attract the supply.

So I wonder whether the Minister, in this taxi operating licence and service standard framework, will also instruct the LTA to think along that line. We should allow for the price loading interesting enough for the taxis to ply into the city, not just to attract the flow of taxis into the city but also to offset the additional cost of coming into the city because of ERP charges. And a price loading must also be sufficiently attractive for taxi drivers to come into town because there are so many other demands for their services in other places at those times.

But having said this, it is possible that too many taxis are changing shifts during certain hours. This actually can be adjusted by administrative rules for operators so that they do not change shifts at one time, taking away taxis during a certain time window. The authority can ask operators to actually smooth out the availability within a certain band or plus or minus certain percentage so that the changing of shifts can be actually distributed across a day period. Then you smooth out this aberration in availability of supply during those changing shift periods. Another thing to regulate the supply is actually to require a certain minimum logging of mileage by taxis, which I think is presently being done by the LTA.

While I support these new amendments for taxi operators, I would also caution that we should let market forces more play and more room to play, so that choices can be offered to the customers. Customers should also be realistic about service standard at peak times and be prepared to bear with increased charges for delivering services at those hours. These amendments also pave the way for the liberalisation of the taxi industry and the Minister has said that it will probably be the final touch to the completion of this liberalisation effort. I welcome this. However, while deregulation is welcomed, basic standards of deliverables must be set with rules to comply.

New sections 111(g) and (h) of the Bill spell out the need for the operators to meet the guidelines on codes of practice, performance standards and fair competition. In the past, I understand there had been half-yearly performance yardsticks by which operators have to fulfill and I would like to ask the Minister whether operators, in general, up to now meet these yardsticks. I suppose these include utilisation rate, the engaged mileage rate, radio despatch rate, and so on. If so, what are the further yardsticks or performance indicators that he has in mind that the LTA will need to target.

In developing these performance indices (KPIs), we must not tilt the index list so that the operators in fulfilling them end up giving a buyer's product and output which will not benefit the larger group of consumers. What do I mean? If a KPI list is drawn up for monitoring and it has too much weight given, for example, to measuring booking performance, then operators will play this game. Or the LTA might want to put heavy weight on utilisation rate such as, for example, paid mileage out of a total mileage plied by the taxis. Then, we may end up with most taxis waiting around for calls. If that happens, this would work against the benefit of the public who need taxis for street hire. So the end result is that the poor hirer on the street suffers and taxis will not be available to the people on the street, while meeting the demand for those who want to book.

So, in implementing these regulations, I urge the Ministry to apply the light regulatory touch. We should give market forces more play and more room to play. The more regulations we put in, the less room there is for competitive market forces to be at work, and the net result is a loss of consumer welfare.

Statutory costs should be minimum so that the consumer does not end up paying for all these. While I am a firm believer in relative pricing mechanism to draw out the allocation, I am not urging for heavy fees to be slapped on in a non-discriminatory way. That way will not allow for the allocation mechanism to work. The price mechanism must give room for differentiation in the price level for allocation. Slapping on additional licensing fees alone is not necessarily the solution. In the same way, any cost of administration or audit, or for compliance, should not be passed on to the operators. This is important. In times like this when we are concerned about the competitiveness in our private and public sectors of the economy, we should not pass down costs from administration, which properly should be part of the bureaucracy, to the private sector. Because the efficiency of the bureaucracy and the public sector must also be subject to the rigours of audit and performance and to the yardsticks of efficiency.

Madam, I support the amendments.

Mr Ong Kian Min (Tampines): Mdm Deputy Speaker, I rise in support of the Bill. First of all, I would like to applaud the Ministry of Transport for introducing a legislative framework for the licensing of the taxi industry, which plays an important role in our tourism and transportation development. But I am not sure how this licensing framework is going to address public dissatisfaction with the taxi industry and improve service for the commuters.

One of the key issues we have to look at first is whether taxis are considered public transport service or a mode of private transportation. In the Public Transport Council's "Framework of Regulating Public Transport Services", the Land Transport Authority is acknowledged to have the responsibilities of licensing and regulating rapid transit system as well as taxi services. But, in reality, taxis do not enjoy any benefits that are accorded to public transport providers. Be it the ERP charges, vehicle tax structure or the COE, taxis are basically treated no differently from private cars. Yet, taxi drivers have to abide by various regulations and face constraints that are imposed on private car drivers. So, perhaps ERP charges are one of the key reasons for the complaint of mismatch between supply and demand during peak hours.

Contrary to what many thought, taxis do pick up passengers inside the CBD at peak hours. But once they drive out of the CBD, most would cruise outside the CBD as there are not many passengers who travel into the CBD during week day evenings. Most taxi drivers would not want to risk driving back into the CBD without a fare, pay ERP charges and put up with the traffic jams in the hope of picking up passengers within the CBD a second time. Naturally, without this turnaround, peak hour demand will always exceed supply.

Madam, I then look at the proposed licensing framework again and wonder whether it will solve such service shortcomings and bring about improvements. There are about 19,000 taxis on our roads today. Of these, some 18,000, or 95%, are managed by the big operators - Comfort, City Cab and TIBS. They are either public listed or owned by public listed entities. I would assume that these operators do care about their service standards, are concerned about public complaints and do have the resources to invest in training and facilities to maintain certain performance standards. How would the proposed licensing framework cause taxi companies to improve their service beyond what the existing big operators are already doing? It is not that I do not support the need for taxi operators to be licensed and regulated. My concern is about the big taxi companies passing on the cost of compliance to the 38,000 individual taxi drivers or to taxi commuters who make 600,000 trips daily.

There are an estimated 85,000 persons holding taxi vocational driving licence in our economy. With the current poor economic conditions, there is a queue of people waiting to be taxi drivers. The income of taxi drivers has fallen by 10-15% because of the weak economy. Commuters' expectations and pressure on the taxi drivers to meet higher standards continue to rise. Taxi drivers dare not speak up against their operators for fear of losing their rice bowl. In the meantime, the taxi companies are shifting the operational and financial risks and liabilities to their drivers. The taxi licence thus has become a money printing machine, where the licence holder simply sits back and rents out its taxi without much financial risks.

There is not much taxi drivers can do if operators decide to shift their cost burden to them, or not to share any increase in revenue with them. For example, LTA recently approved a taxi operator's application to place an advertising panel sitting on top of the back of the taxi boot. The panel covers half of the rear view of the taxi driver. This compromises the safety of the driver, passengers and other road users. If the panel is damaged, the taxi driver would most certainly be made responsible for the repairs. But how much of this advertising revenue does the taxi company share with the driver?

Madam, I would like to move on to the revised penalty for off-peak car offenders. Considering that the total number of weekend or off-peak cars registered in the last 10 years is only about 7,000, I am surprised to learn that close to 200 people have received custodial sentences for tampering with their supplementary licences. I fully support the revised penalty framework, as I see this as a necessary move by Parliament to step in and entrench in the law the desired punishment for first-time offenders and to have a higher maximum fine in place of a custodial sentence.

With regard to formalising procedures to make manufacturers and dealers responsible for disclosing vehicle safety related defects and rectifying them, this is indeed a good move. This is particularly so when there are now more and more parallel importers. But with the relative ease of setting up a parallel import agency, one would also expect more of such agencies going out of business. Who could the car owner turn to in the event that his dealer has gone bust? And instead of requiring notice of the defects to be given in the form of newspaper advertisements, would it not be more effective if media releases were issued and carried by the local news networks? The dealer can then be charged a fee based on the number of defective vehicles he has sold which needed to be recalled.

Madam, this Bill also deals with the indiscriminate parking of heavy vehicles. I believe the solution to illegal parking of heavy vehicles is not just in beefing up enforcement and introducing more regulations and fines, but to couple strict enforcement with the provision of more lots for such vehicles at more accessible parking areas closer to the housing estates. I would like to strongly urge the Ministry of Transport to work closely with the Ministry of National Development to solve this problem. Heavy vehicle drivers play an important role in our development as a logistics and transportation hub. For example, a port driver has to be on call and get up at odd hours of the night and morning to move containers and keep our port bustling around the clock. I believe we owe it to them to provide them with some transportational and infrastructural support, to help them in their work duties. We cannot just leave them to tackle their own problems and inconveniences, while we take pride and applaud when our port is ranked the world's best or busiest. Let us not forget the individuals and the nuts and bolts that help drive our success.

Madam, I support this Bill.

Mr Ang Mong Seng (Hong Kah): (In Mandarin): The Road Traffic (Amendment) Bill authorises the Minister to punish the drivers of heavy vehicles for indiscriminate parking. Instead of parking their heavy vehicles in the designated places, these drivers chose to park their buses and lorries near the HDB estates or in the private housing estates, resulting in a lot of complaints from the residents there.

The owners of these heavy vehicles have actually purchased the licences to have their vehicles parked at the designated vehicle parks. Yet, the drivers choose to park these vehicles in the housing estates. I think there must be a reason why they are doing so. I have spoken to some of these drivers and I now understand their problem.

There are two important factors. Most of the drivers of these heavy vehicles, including lorries and buses, are living in HDB estates. They belong to the lower middle income group of people. Their working hours are irregular, having to leave home early and return home late every day. Naturally, they would prefer to park their vehicles at proper parking places near their flats. But parking lots for heavy vehicles are not readily available near the housing estates.

According to the rules of the Land Transport Authority, if an owner wants to renew the road tax for his heavy vehicle, he must produce a Vehicle Parking Certificate (VPC) to prove that he has a proper place to park his vehicle. Since such parking lots are not available near their HDB estates, he would have no choice but to purchase a VPC for parking at a designated vehicle park at some remote industrial estate, just to satisfy the requirement for the renewal of road tax. As these parking places are far away, private bus drivers would have to leave home before 5 o'clock in the morning to ferry the students to school and lorry drivers too have to leave home early to avoid the morning peak hours. More often than not, public transportation such as MRT and buses are not available in the early hours of the morning. In the circumstances, they decide to park their vehicles somewhere near their HDB estates, and risk being booked for such parking offences and incur heavy fines every month.

In 1998, some 2,000 parking lots for heavy vehicles were allocated in Jurong East, Jalan Bahar, Choa Chu Kang, Bukit Panjang and Bukit Gombak. The needs of drivers in the western part of Singapore are basically satisfied. But such parking facilities in the eastern and northern parts of Singapore, particularly in the newer HDB estates in Sengkang, Woodlands, etc, are still lacking. I hope that the Minister would understand the plight of these drivers.

Just now, the Minister mentioned that the total number of available parking lots exceeds the number of heavy vehicles registered in Singapore. But most of these parking lots are situated at industrial estates and remote places which are impractical for the drivers to use them. Yes, there are parking lots, but the drivers just cannot make use of them. Therefore, I urge the Minister to liaise with the HDB and URA to open up or develop more parking lots for heavy vehicles in order to meet their demands. Lorries and bus drivers have played a great role in our nation building and economic development. We should do something to help them.

With advanced IT, can LTA dispense with the need to produce the VPC when renewing the road tax for these heavy vehicles, just like the way we renew our radio licence with the road tax of our motorcars? This would save the owners the trouble of having to go personally to LTA just to physically produce the VPC.

Mr Andy Gan Lai Chiang (Marine Parade): Mdm Deputy Speaker, on the Road Traffic (Amendment) Bill, I will touch mainly on clause 11 which refers to the new Part VA of the Bill that sets out the framework for the licensing of taxi operators with the aim of bringing about better taxi services for commuters.

In putting a licensing framework in place, the amendments will provide a direction for further possibilities in deregulating the taxi industry, such as allowing it to respond to market forces that determine the supply of taxis. The new section 111A defines a person who operates a taxi service as one who owns more than one taxi and leases them to individual drivers for the purpose of providing taxis for hire or booking. The insertion of Part VA is timely for the taxi industry. This is especially so in view of NTUC Comfort's plans to merge with Delgro to form a huge transport company with the potential to monopolise the market.

With the merger, NTUC Comfort will be the market leader with 17,000 taxis, or 90% of the market, leaving TIBS taxis as the other operator with only 2,000 taxis to compete. This Bill will then allow other players, be it big or small, to enter the market to compete. However, I wish to highlight that, while the legal framework allows players to compete within the rules, it must not be stifling to participants who are comparatively of smaller organisation sizes.

We must try to create an environment for competition to be fair, irrespective of the size of market participants. Competition should be based not only on cost but also on services. New section 111D(1)(g) states that the Ministry must specify codes of practice and standards of performances in connection with the preservation and promotion of fair competition. An industry that merely consists of two players is certainly not healthy for our public transport system. Perhaps, the Transport Ministry may, as a start, promote a scheme to encourage successful taxi drivers to band together to form their own corporations to hold licences as taxi operators.

Next, I would like to raise some concerns relating to taxi drivers. Taxi drivers are the frontline faces of the industry. How they carry out the services to commuters will determine the success of the taxi operators that rent the vehicles to them. Collectively, they are a potent force in promoting goodwill to tourists and a conduit for the latest news in town. They work long hours and, most of the time, in heavy traffic conditions under wet and hot weather. It takes stamina and endurance to drive a taxi for eight to ten hours a day.

As such, regulations must be in place to monitor the taxi operators' house rules, which have to be observed by the taxi drivers and which may, at times, be onerous to the taxi drivers when these rules are taken in addition to the usual regulatory obligations of the industry. Such monitoring would go a long way in making sure that the taxi operators give due consideration to the taxi drivers in their pursuit to provide better and competitive services.

New operators who are successful should also be encouraged to provide assistance schemes to taxi drivers. NTUC Comfort has a retirement scheme which has begun this month. Taxi drivers with at least ten years of service will receive a lump-sum ranging from $300 to $1,400. They will also receive annual amounts ranging from $100 to $400. TIBS taxis also has an incentive and progressive bonus of up to $1,300 every year for its drivers.

The Land Transport Authority, which I assume will continue to regulate the taxi industry, should take into account new incentives to encourage taxi drivers to be proud of their vocation, in which this new legislation has not taken into account. Provisions, such as relief packages for taxi drivers in the event of an economic downturn, can be mandatory for taxi operators to set aside. This safety net provided for by the industry players will be more and more crucial when commuters have more choices of transport to choose from, causing the earnings of taxi drivers to fall heavily during bad times.

As an illustration, a taxi hirer pays about $100 per day as hirer's fee, which is usually borne by the hirer and his relief driver. In addition, diesel cost per day comes up to about $15, after discount. This means that, each day, a taxi driver has an overhead cost of at least $115 to recover before seeing any profits. In order to make a decent income each month, a taxi driver has to drive long hours to earn more, in order to cover his fixed overhead costs. This may be at the expense of maintaining a safe level of concentration for themselves and other road users. A relief package during poor economic conditions will help in reducing business costs to the taxi drivers.

NTUC Comfort, as a responsible taxi operator, has already extended a relief package to taxi drivers since November 2001, which will last till August 2003. This package consists of a monthly rental rebate of $40 in cash and $20 worth of diesel, adding up to a $60 relief package. It has also promised to sell diesel to cabbies at a discounted price. However, I urge the Ministry to monitor such relief schemes, in order to do more to help taxi drivers tide over tough times. This help scheme is even more necessary, as the relationship between drivers and operators is no longer that of a cooperative, where the drivers are shareholders of the cooperative and owners of their cars.

Another point which regulators need to note in regulating a robust taxi industry is the taxi operators' way of handling taxi drivers' welfare after road accidents. Let me illustrate. For NTUC Comfort drivers, a deposit of $1,500, excluding GST, has to be paid irregardless whether the driver was at fault or not. Deductions would then be made from the deposit for repairs when he is at fault. However, if the driver is not at fault, it takes up to a year for the refund to be made. The driver is further disadvantaged as he would be out of pocket during the period of repairs to his vehicles.

New section 111C(3)(d) of the Bill states that the Ministry will consider "the existence of other taxi services", which is the supply side, "and the demand for taxi services" to determine whether to grant a licence to operate a taxi service. I would like the Minister to clarify what are the considerations the Ministry will take into account to determine the number of taxi drivers and operators in the market, and what are the guideposts that will signal the Ministry that the market may be saturated.

NTUC Comfort started with a fleet of 1,200 taxis in 1970, rising to 11,000 in 2002. TIBS taxis started with 50 taxis in 1990 and, in 2000, it released its 2,000th taxi on the road. This steady increase in the number of taxis has been even felt by passengers. A grassroots leader told me that 10 years ago, one has to wait at least 20-30 minutes for a cab. Today, according to a survey conducted by NTUC Comfort, 90% of passengers say they can get a cab within 10 minutes. While this is good news to the commuters, it translates into lower income for drivers, but not necessarily taxi operators.

Finally, when regulating the taxi industry, fines and punishments, as stated in new section 111H for both taxi operators and taxi drivers for offences, need not necessarily be made in haste for the sake of efficiency, through imposing heavy fines according to the book. But options must be in place for a dispute resolution and mediation process, which may eventually lead to either a waiver or reduction of the fine. This avenue can help taxi drivers who find that the cost of doing the business in driving a taxi already too high. The Ministry, in planning for a well- run taxi industry, should have a market mechanism, such as a dispute resolution and mediation panel that is fair and unbiased for taxi drivers and operators to turn to for help when faced with unfair practices.

Mdm Deputy Speaker, I believe this Bill will provide a foundation for the Ministry of Transport to allow healthy competition in the taxi industry which, in turn, will be more responsive to changes in the transport needs of the commuters.

Mr Yeo Guat Kwang (Aljunied): Mdm Deputy Speaker, please allow me to seek clarification from Mr Andy Gan. Is he aware that Comfort is a publicly-listed company and not a NTUC cooperative?

Mr Andy Gan Lai Chiang: Yes, I am aware of that.

Mr Yeo Cheow Tong: Mdm Deputy Speaker, I would like to thank the four MPs who have spoken, and Mr Yeo Guat Kwang, the 5th MP, who pointed out that Comfort is no longer a NTUC cooperative.

I will address the points brought up by the Members in turn. Some of them may overlap, because they all touch on pretty much the same theme.

Mr Chay started by talking about the problems faced by the taxi industry, particularly the dissatisfaction with the taxi industry in terms of supply versus demand - that during peak periods, commuters have to wait for a long time. And he felt that the price solution is really the best mechanism, that when there is a scarce resource and there is a mismatch between supply and demand, the price mechanism needs to come in to make sure that there is a better balance. I totally agree with Mr Chay that this indeed is the case, especially when the demand is not constant throughout the day. The commuters complain about the long queues for taxis at peak periods during rainy weather and that, even when there is fine weather, during the peak periods, there is never enough. But it is not because taxi drivers are not working. It is because demand far outstrips supply. So, the question is: Is the supply of taxis in Singapore inadequate?

Mdm Deputy Speaker, the answer is: No, far from it. We actually have more taxis per 1,000 population in Singapore than any other equivalent major city. Let me explain. In Singapore today, we have 4.8 taxis per 1,000 population. This compares with only 2.8 taxis in Hong Kong, 2.9 in New York, 2.6 in London, and 2.3 in Tokyo. If we have almost double the number of taxis compared to other places, and despite the fact that we have a good bus and MRT system, why is there such a strong mismatch between supply and demand during peak periods? The answer, as pointed out by Mr Chay, is the price mechanism. In Singapore, the average fare for a 10-kilometre taxi ride costs about $7, compared to $16.70 in Hong Kong and $20 in New York and London. In fact, with our low taxi fares, 3-4 persons travelling together as a group will find the taxi fare only a little bit higher than if they had taken a bus.

But it is not for my Ministry to set taxi fares, as we had deregulated taxi fares already in 1998. Taxi companies will need to strike a good balance between fares that are too low versus raising them too high. Low fares will result in taxi drivers having to work very long hours to earn a decent living, but will generate plenty of consumer demand. On the other hand, higher fares will give the taxi hirers a better income but may reduce taxi ridership.

Understandably, the taxi companies have been careful about raising fares in a weak economy. Also, there is no shortage of taxi drivers, as the income is still attractive. But when the economy recovers, the taxi industry will have to compete with other employers for workers and drivers. And what the drivers are able to earn, compared to other jobs, will then be a relevant factor.

Nonetheless, even today, it may be useful for the taxi companies to look into, as Mr Chay has pointed out, whether a higher premium should be added for certain places. For example, at the airport. The airport needed to put on a surcharge in order to attract taxis to go there to serve the passengers. So, for certain shopping centres, etc, whether a surcharge may be needed to attract taxi drivers to go there to serve the passengers, that is something the taxi companies will have to look at.

Mr Chay also talked about the changing of shifts. Mdm Deputy Speaker, the taxi companies are exploring now the various means to encourage taxi drivers not to perform shift change during the peak periods. LTA also proposes to use this macro approach for a start. With the proposed quality of service standards, one indicator that LTA will be using is the cater rate for phone bookings of taxis. This cater rate is the percentage of calls despatched that are successfully matched with taxis, and this is to be measured during the peak periods especially. In order for the taxis to be available to meet the cater rate, taxi companies will have to explore ways to encourage the taxi drivers not to perform shift change during the peak periods. If this does not work, I am sure LTA will also look into other ways of effecting this.

Mr Chay asked about the quality of service standards, whether the operators have met the existing standards, and what the new standards meant to achieve. Mdm Deputy Speaker, in the past, the LTA did not prescribe any standards. What the LTA did was to monitor the indicators of performance captured by the taxi companies themselves, and use the different submissions from the three companies as a comparison and rank them, ie, it was not meant to be a service standard to be complied with, but rather for LTA to monitor how the companies are actually doing. By having the quality of service standards now under this new framework, LTA can therefore proceed to stipulate what are the benchmarks that the taxi companies would have to comply with. As pointed out by Mr Chay, we will make sure that the benchmarks are such that they are not overly biased in any direction.

The quality of service standards will comprise a few elements, including performance with the phone bookings, which really must be the guaranteed service. Anyone who wants a taxi very badly, all they have to do is to call up any of the taxi companies, and they should be able to get a taxi within a prescribed time-frame. So, in this way, we are able to assure anyone who needs a taxi badly, that they will be able to get one. However, we would not be able to guarantee that a street hailer would be able to just raise a hand and get one, because this is something which is fully out of the hands of LTA. If they are at the taxi stand or they are waiting somewhere and cannot get a taxi, which company is guilty of not supplying enough taxis? Whereas we can make sure that when a commuter calls in to a specific taxi company, that taxi company must be able to meet the needs of that caller.

Mr Chay called for LTA to have a light regulatory touch and to leave to the market enough room to play, and also to make sure that the cost of administration should not be passed on to operators. Indeed, that is what LTA intends to do. LTA intends to implement this new framework with a light touch, and leave the taxi companies to decide on how they want to operate, decide on what fares they want to charge, which they are doing now, as well as what size of the taxi fleet they wish to have. Also, we hope that with the opening up of the market, new players would come in and, therefore, provide additional competition.

In terms of the licence fees, LTA will keep the licence fees very moderate, and will only aim to recover cost. Why do they need to recover cost? Basically because this work that they are doing is meant to benefit both commuters and the taxi companies. They will need to do some auditing and they will need to do some administrative work. It will not impose much of a financial burden on the companies and, in fact, in terms of the audit work, LTA does not intend to set up a full-time workforce within LTA. As and when needed, they will farm the auditing work to consultants outside, who then have to bid for the job. So, in this way, we make sure that work is being done in the most cost-effective way.

Mr Ong Kian Min asked whether the taxi companies are public or private transport. Taxi is a high-end personalised form of public transport, because it provides fast, convenient, door-to-door service to commuters, without the burden of the commuters having to own a vehicle. As it does not belong to the mainstream public transport, our policy is to treat the taxi service like a private car in terms of the tax structure. Otherwise, it will provide incentives for people to hire taxis and to use it as a private vehicle because the taxi is exempted from all the different taxes and fees. This would be contrary to our policy. Notwithstanding this, taxis still enjoy some form of tax concession, in terms of their road tax and the COE category. In addition, taxi companies get automatic renewal of their COE by just paying the prevailing quota premium instead of having to bid for a new COE.

Mr Ong Kian Min also speculated as to whether the ERP is one of the factors why taxis refuse to come into the city centre to pick up passengers. The answer is very simple. Because the demand outstrips supply, taxi drivers who fetch passengers from the city centre to the outlying areas normally do not need to come in because they can find passengers wherever they are, whether it is in an HDB estate or elsewhere. The answer, as Mr Chay has mentioned, is if you want to draw them in, it may be necessary for taxi companies to impose a surcharge to make it attractive for the taxi drivers to come in. In any case, with this new framework, anyone within the city centre, if they require a taxi badly, whether they are in a taxi queue or otherwise, they should just be able to call up and be guaranteed of a taxi within, I think, a 10-minute timeframe. This would be much shorter than having to queue up for half-an-hour in a taxi queue if they need a taxi badly.

Mr Ong was also concerned about the welfare of the taxi operators. He is afraid that companies will just pass on the cost of compliance to drivers and not be concerned about the welfare of the drivers. I think the actions of the three taxi companies over the past year or so when the taxi drivers were facing the challenge of the economic downturn show that the taxi companies have actually been very concerned about the welfare of their drivers. And this is for a good reason. They are "employers", in effect, and as "employers", if they do not look after their own employees, I think they are going to have very, very great difficulty recruiting fresh drivers whenever there are resignations. I would, therefore, leave it to the taxi companies and the market place to operate in this area, rather than have the Government intervene in terms of making compulsory or mandate what sort of relief package would be needed.

Madam, Mr Ong also said that the taxi licence may be akin to a money printing machine. If it was so, under this new framework new companies can be set up because if the taxi companies are indeed making outrageous profits, I am sure other companies would very gladly come in and set up their own taxi fleet.

Mr Ong asked about the vehicle recall. He asked what happens if the dealer goes bust, and he proposes that we require the use of the local news network to publicise the recall. Under the new framework, if there is a recall, the manufacturer and the present dealer will have to make the recall. If the dealer is no longer in existence, we will still go to the manufacturer, through the new dealer, to do the recall. This has been the on-going practice. But, in the past, this was an administrative procedure, and we depended on the cooperation of the dealer and the manufacturer. With the passing of this Bill, we will now have the regulatory powers to do so, if cooperation is not forthcoming. So, it has been on-going and it has worked quite well. The dealers would then communicate directly with the car-owners because they have the details of who bought which model. So, for that particular model they will know exactly who are the owners. And, if they are unable to find or to identify the current owners, LTA will assist them because we have the details of who the current owners are. So, it is unlikely they need to really go to the local news network to reach out to the current owners.

Mr Ong and Mr Ang touched on heavy vehicle parks and I will answer them together. As I explained just now, I can understand why the individual owners and drivers would prefer to have their heavy vehicles parked nearby. It is great if we could achieve this but, unfortunately, all the MPs must also have encountered this. If we allow heavy vehicles to be parked within the HDB estates, there are a lot of complaints about the noise level and also about the safety issue. In fact, I had one huge lorry park in my area before when I was in Hong Kah South, and I had no end of complaints from the residents in the area. When HDB closed down the lorry park, all the complaints stopped. So, residents are really concerned about the noise because the drivers of the heavy vehicles tend to begin work quite early, as pointed out by Mr Ong and Mr Ang, quite often 5.00 - 6.00 am, and when they start the vehicles it creates a lot of noise. Because of that, HDB and URA have relocated the heavy vehicle parks out of the HDB estates. There are still some remaining, but I think the majority have already been moved out.

The question now is: Is URA able to provide new heavy vehicle parks at sites adjoining HDB estates? We have asked. URA have informed us that most of the large vacant plots available today are earmarked for future developments and therefore they are not able to convert these plots of land to heavy vehicle parks. We will continue to work with URA on this. But, nonetheless, I think it is very important for the minority of drivers and owners who are still parking indiscriminately and illegally, to follow the example set by the majority of the owners and drivers. Most of them, from what I understand, either ride a bicycle or a motor cycle to the heavy vehicle park. In some cases, the companies provide transport or a transport allowance. This is no different from workers who have to work three shifts. When the worker has to work the midnight shift or morning shift, quite often the companies will have to provide private transport or a transport allowance, if the workforce is small. I think this is what is happening for most of the transport companies as well. So, for the minority, we will give them some grace period to understand that the new regulations will be in place soon, and for them to make the necessary transport arrangements to enable them to get to their heavy vehicle in the morning in a very convenient way.

Mr Ang Mong Seng also brought up the issue of the owners of heavy vehicles having to bring the Vehicle Parking Certificate (VPC) to the LTA when they renew their road tax. Madam, the VPC is issued to the owners when they purchase their season parking permit from the operator of the heavy vehicle park. Therefore, they already have it. When they go and renew their road tax, it is no additional problem for them to bring along the VPC, just as when we renew the road tax for our cars we need to show the inspection certificate, we bring it along with us as well. It is no additional inconvenience to them. But, if there is anything in addition to that which we are not aware of, I would be very happy to hear from Mr Ang on this.

Mr Andy Gan asked that in this competitive environment it is important that we be fair to both the big and small taxi operators. Yes, we intend to do so. And, in fact, for the QOS, LTA will be making sure that for the smaller companies, with a smaller taxi fleet, things like cater rate, where they would not be able to perform in the same way as the bigger companies, they will be given some concession.

He also asked whether we have a target figure for the number of taxi companies in Singapore as well as the taxi population. We do not believe that with this framework there is a need for us to arbitrarily establish a number. We will leave it to the market to decide. If there are new companies that are coming in, and they are prepared to invest because they feel that they are able to do a good job, we should not be stopping them. But the provision is there, just in case it is needed in the future.

I believe I have answered all the questions, Madam.

Mr Ong Kian Min: I would like to seek a clarification from the Minister. My question is: are there sufficient taxis on our roads today? Based on the comparative figures per 100,000 population, mentioned by the Minister, it seems that there are sufficient taxis, but yet we all agree that during peak periods and rainy days, there is a mismatch. So, how would the price mechanism help? If you impose a surcharge, let us say, for the CBD or any particular area, would it not just shift supply from one area and transfer it to another area? Could it be that demand actually outstrips supply only during peak hours, and that during other hours, there is actually an oversupply, and increasing the supply of taxis would only lead to an adverse impact on the income of all taxi drivers?

Mr Yeo Cheow Tong: I think Mr Ong answered the question himself. During peak hours, the supply is not adequate. But if the taxi companies expand the taxi fleet significantly to meet this supply, they are going to be in deeper problems during the off-peak period. Perhaps there is a case for differential charging during peak and off-peak periods. That is already being done for the midnight surcharge. Perhaps there could be a case for differential charging. In any case, if the taxi fares remain low, so that three passengers will find it more attractive to ride a taxi than to take a bus, there will never be enough taxis during peak periods. So the price mechanism must come in sooner or later to establish a better balance. But where that balance is, we have to leave it to the taxi companies to decide.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Yeo Cheow Tong].

Bill considered in Committee.

[Mdm Deputy Speaker in the Chair]

The Chairman: The deletion of "No. 2" and the change of the citation year from "2002" to "2003", as indicated in the Order Paper Supplement, will be made.

Clauses 1 to 14 inclusive ordered to stand part of the Bill.

Bill reported without amendment; read a Third time and passed.