HEAD W - MINISTRY OF TRANSPORT

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Head W - Ministry of Transport

The Chairman: Head W - Ministry of Transport. Amendment No. (1), Mr Chay.

Public Transport

Mr Chay Wai Chuen (Tanjong Pagar): Sir, I beg to move,

That the total sum to be allocated for Head W of the Main Estimates be reduced by $100.

Sir, the Public Transport Council (PTC) has been charged with the duty of administering the service standards of public transport operators and the approval of routes and licensing among other things. It also has the not very welcome task of approving applications for fare adjustments and hikes from time to time by operators.

To maintain a world-class transport system, the Government must harness technology and equitable rules to the area of public transport operations so that there are benefits and gains to both the public and operators. The public is understandably always unhappy whenever there are fare hikes. Operators, however, need to perform to certain overall service standards and in certain sectors of routes to ensure their role as universal operators.

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If the operators fail to perform to service standards in overall performance or in certain sectors of the routes, how does the Minister hope to impose penalties or fine the operators so as to nudge them to do better? If operators do not manage cost well with the rise in cost of operation, will allowing them to raise fares be fair to the public? On the other hand, if the bus operators do well and achieve productivity gains which result in lower cost of operations, should the operators not be rewarded fairly?

Somewhere in this web of technology, service standard criteria, efficiency and productivity yardsticks, the transport operators' performance will be evaluated and rewarded. If the quality of service is good, the public will be less unwilling to pay. Using the CPI plus X formula with a cap of 1.5% for X, as in the current model of fare adjustments, seems workable. X is a small percentage to account for various cost factors such as wages, charges and gains from productivity that will influence fares. This has been capped at 1.5% for five years, from 2001 to 2005. As this Budget covers up to March 2005, does the Minister have any plan to review the model to factor in efficiency and equitable rewards and payment?

Mr Yeo Guat Kwang (Aljunied): Sir , Singapore is working towards the goal of building a world-class transport system for our people. To achieve this goal, it is important to address the issue of how we can best measure the effectiveness and efficiency of our transport system.

One prime concern often cited by the workers and commuters is that of time effectiveness. People who rely on public transport to commute on a daily basis is mainly interested in the time that it takes for them to move from point A to point B. For most Singaporeans who commute by bus, especially those living in the housing

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estates, their daily journey to work or to school can often take more than one hour. Surely, we should consider how we can best reduce such lengthy travel time for all our Singaporeans.

One way to improve on efficiency of travelling time is to put in place a more comprehensive rail network. In Singapore , there are still quite a number of areas that are denied the benefit of an efficient rail network. I am interested to know what are the plans for expanding our rail network. I would like to ask what is the status of the new rail line projects, such as the Bukit Timah Line, Eastern Regional Line and Jurong Regional Line, that were previously announced. While some will argue that these lines should not be added now because of budget constraints, one should also not ignore the social benefits of the comprehensive rail network. In any case, we should consider the potential long-term cost benefits of building such new lines sooner rather than later.

Sir, transport cost is the other key concern. What are the measures taken by the MOT to moderate public transport costs? MOH has set a good example in its efforts recently to reduce healthcare costs. Is the MOT doing something similar? Another question I wish to raise again is: why can the bus operators not be allowed to retain the rental revenues from the bus interchanges like the MRT operators? This is particularly so given that the operators will pass the cost they pay for the maintenance of the interchanges to the commuters.

I would also like to ask the Ministry whether some of the guidelines imposed on operators, eg, to achieve world-class standard, are actually so onerous that it drives up costs for them, and thus the commuters end up having to pay more. Should we not reconsider trimming some

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of these unnecessary frills that commuters may not actually need it?

Encik Yatiman Yusof: Sir , Singapore is a compact city. While town planners had approached the development of public housing to include the creation of self-contained satellite towns, the nature of Singapore as a city state is such that heavy movement of our people around and across the island cannot be avoided. The land constraint dictates that there is a limit to the growth of private vehicles. Hence, the imposition of multiple measures on vehicle ownership and usage. This means that the majority of Singaporeans will have to rely on public transporters.

Over the years, we have seen improvements made in the public transport sector. But as our population grows to its current four million plus another 7.5 million visitors annually, there is a real need for the Government to improve both the qualitative as well as the quantitative aspects of public transporters. In this respect, I would like to know whether the Minister for Transport can share with us what he considers is the key performance index (KPI) for the public transporters in Singapore . Also, what else can we do to make Singapore 's public transport the best in the world?

Mr Wee Siew Kim (Ang Mo Kio): Sir, on 3rd June last year, it was reported in the Straits Times that the feedback to the fiscal development feedback group indicated that many Singaporeans asked the Government to spend more on public transportation. Cost effective and affordable public transportation is key to the functioning of our economy and for the pursuit of leisure activities of our citizens. It is both a matter of livelihood and lifestyle. However, with salaries seemingly not going up, with families suffering wage cuts, there is a strong possibility that the rate of increase of cost

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of public transportation may very quickly outstrip the ability of our citizens to pay, for we all know that the PTC looks at a basket of factors in determining fare increases and as the objective of keeping transport operators economically viable as well.

When the cost of public transportation rises, the impact will be most felt by families in the lower income categories. I ask the Minister to provide an awareness of the proportion of the disposable income of families in households with household income below $1,500 to pay for transportation, especially if one takes a typical family of two working spouses and two school-going children, and if we can articulate a policy such that transportation cost as a proportion of disposable income for such families will not reach a level that they become unaffordable. On many other things, we can advise citizens to cut back, but transportation for most people is not a discretionary luxury good. Ensuring availability and affordability of transportation is key.

Rail projects

Mr Ong Kian Min (Tampines): Sir, road and rail projects require huge investments in infrastructure which can run into billions of dollars and take a long time to complete. New roads, once completed and open to traffic, tend to attract more traffic and get filled up pretty quickly as motorists find them more convenient or faster to use. Also, through the ERP, the authorities can influence the usage of certain roads and divert traffic away from more congested stretches of our roads. However, unlike roads, rail lines are fixed and ridership numbers are dependent on the population living in the vicinity of that fixed route. We have long-term plans for rail projects such as the ERL, BTL, JRL and other LRTs. It takes many years of study, planning and construction, and involves multiple agencies. Before major projects get the

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go-ahead, there is no doubt that the Government spends a lot of money and attention engaging consultants and experts to conduct

feasibility studies. Sometimes, projections and forecasts are an art more than a science. Also, circumstances change over time and new developments happen. If there is insufficient ridership when the project is completed, it will operate at a loss. From the recent experiences of Buangkok Station and Sengkang LRT, such systems will not be put into operation, although huge capital expenditure has been committed and incurred on the infrastructure. It is such a waste of public money to spend constructing such infrastructure only to see it lying there and not put into operation.

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Therefore, instead of embarking on totally green field projects, like building an LRT in an undeveloped area that is only projected to be developed later, we should introduce other more flexible and low-cost mode of public transport, such as bus services first, to build up ridership. When there is sufficient commuter demand, and this is proven, these services can then be replaced by more fixed and capital intensive infrastructure like rail lines.

Light Rail System

Mr Chay Wai Chuen: Sir, I share some of the views of the previous speaker, Mr Ong, on the rail system. The question I want to raise here is whether the light rail system is economically viable and efficient as a mode of transport feeding to the main line MRT system. Can the Minister give us his views on whether the present light rail system is an anachronism of public transport technology and system? I am not a user of the light rail. But having travelled a few times in Bukit Panjang, my observation is that it is quite inflexible and uncomfortable, especially when crowded, as there is only a limited

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number of two coaches running at one time. Then there is the hassle of walking up the stairs and crossing the rail line to get to the right side, depending on where you are heading.

There is also the big loop that one has to go when one has to travel in different directions to get to a nearby point. The time taken to get nearby to connect seems like eternity when crowded. In principle, I believe that there is something wrong with this LRT system. It is a rather inefficient way of ferrying people, I believe, collecting more and more people on the undersized coaches, longer than necessary, and therefore, causing over-crowding on the LRT, and everybody ends up paying for nobody to go nowhere. Will the Minister not think that a simpler and more direct feeder bus service which costs a fraction of the LRT system will do the job, and giving the LRT some competition of private bus operators even now at this stage may do the trick?

Competition is good for the consumers and the economy. This will give choice to the consumers. Then we can truly value the so-called quality of service and lifestyle things that is so wanted in the current LRT system. I understand there are further LRT projects in view. I urge the Minister to do a review in order for money to be well spent here. Although the Government pays for the LRT system and operators recover operational cost, we must realise ultimately in all these that it is not the Government who pays. It is always the people who pay, and they pay and they pay. Rail operators and bus operators sometimes think that they are so efficient and so good. But it is the public who is providing the ridership, as pointed out by the previous speaker, and the road factor that makes the operation viable. And when they cannot balance the cost, they go to the Government to raise the fares. The Government owes it

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to the people to build systems which can be efficiently operated with minimum cost and maximum benefit. Such a system should also be flexible and speedy in delivery, with minimum waiting and travelling time. Considering all the ---

The Chairman: Mr Chay, you have got to speed up your speech on the LRT.

Mr Chay Wai Chuen: Will the Minister review the LRT projects on its economic viability and efficiency?

MRT Monopoly

Dr Chong Weng Chiew (Tanjong Pagar): It is generally agreed that competition, as Mr Chay has mentioned, however imperfect, serves to improve the level of services and level prices down for the benefit of the consumers. While the MRT and bus operators provide different forms of land transportation, they are actually quite similar, in terms of affordability and the degree of privacy. Thus, competition exists between MRT and bus operators for passengers. In a healthy competitive environment, the MRT operator should not be the owner of the buses which ply the same routes. For example, competition between MRT and buses along the NEL was reduced and, I quote from the Straits Times, "SBS slashed its network of bus routes to avoid cannibalisation of its train services." The resulting monopoly means that the consumers now have less choice and possibly less convenience and less comfort as they would have to vie for a place on the MRT, especially during peak hours. I hope the Ministry will review its policy regarding this aspect of public transportation. If we want less congestion, less cars on the roads, if we want to encourage more Singaporeans to take public transport, we must ensure affordability, speed, comfort and choice for different individual needs and preferences.

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Also, on another point which is on a lighter note, as we become a developed country, we should be looking and providing our country men more choices in life. We spend about 10% of our life travelling. We should try to enjoy our journeys to and from work as well. And the choice to travel by train or bus would really sometimes depend on the mood of the day. Let us give our Singaporeans more choices in life.

Last, but not least, the Minister mentioned the potential merger of two MRT operators a couple of months ago. Could the Minister give us an update on this issue?

Bus Operators

Mr Ong Kian Min: Sir, there has been much speculation and media interest about a possible merger of SMRT and Delgro. If it is proposed that the services presently offered by these two companies are merged and run by one operator, should the regulator allow it? The Ministry has stated that both companies are public listed companies and they will have to make their own corporate decisions for the benefit of the company. I can accept that it is up to the managements of the two companies and their shareholders to decide what is best for them. In principle, I have no difficulty about the rail operations being merged and run by one operator in the interest of efficiency and economy of scale. But should we allow the bus operations to be merged?

We have to consider the consequences of a merger on the commuter. Even at the present, the bus services offered by these two companies do not actually compete along the same trunk services. Will a single operator lead to monopolistic behaviour, resulting in poor quality of service for the commuters? There is a contradiction, on the one hand, to take the stance that these are two

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public companies and they should be free to decide for themselves without Government intervention and, on the other hand, to restrict competition in bus trunk services by not opening up for other operators to come in. If we want to have free competition, why not let other local bus operators to come in to compete in offering public bus services? When there is commuter demand or where the incumbent operator is not providing adequate services, others should be allowed to come in to offer those services.

The Minister for Transport (Mr Yeo Cheow Tong): First let me thank the Members who have spoken on the land transport system in Singapore . Sir, let me start with the points made by Mr Chay Wai Chuen. Sir, first let me thank Mr Chay for having raised an issue that is close to the hearts of most Singaporeans. He was talking about the fare revisions and the role of the PTC. Sir, as all of you know, public transport fare revisions, no matter how small, never fail to ignite extensive and emotionally-charged public debates. As Mr Chay pointed out, the Public Transport Council (PTC) is responsible for assessing fare revision applications by the public transport operators. He called it a very thankless task, but actually it is a very delicate balance between safeguarding commuter interests and ensuring the financial viability of the public transport operators. It is a difficult and very unenviable task, but it is a very important one. And I am indeed glad that the PTC members have carried out this very difficult task in an outstanding manner.

Sir, the PTC is guarded by the CPI+X formula, as outlined by Mr Chay. The formula sets the cap for fare increases each year and was first implemented from 1998. As Mr Chay pointed out, the value of X takes into consideration cost increases and discounts for productivity. I think this latter part is very important

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because, if the operators do not gain from the productivity improvements, then really there is no reason for them to look into improving their productivity.

Sir, I am glad that the PTC has indeed safeguarded the commuters' interest very well under the CPI+X framework. Since the adoption of the formula six years ago, public transport fares have increased by a total of about 5%. This is much lower than the cap of 15% allowed under the CPI+X formula and certainly much lower than the 20% increase in average wages over the last six years.

Sir, although the CPI+X formula has worked out well, I agree with Mr Chay that it is timely to review the fare review framework, and to see how it can be further improved. And I think this is especially so, because the current value of X in the formula will expire next year.

Sir, I am therefore very happy to inform this House that I intend to appoint Mr Chay, as the Chairman of the GPC for Transport, to form a Committee to undertake this review. The Review Committee will study and propose improvements to the framework for the annual fare review exercise, including the CPI+X formula.

Sir, the outcome of the review should be a framework that continues to achieve a good balance between affordable fares and sustainable public transport operations. I look forward to the Committee completing its work within a year. My Ministry and the PTC will support the secretariat and provide other support for the work of the Committee. I hope Mr Chay will be kind enough to undertake this very challenging assignment.

Mr Yeo Guat Kwang asked about the expansion plans for our rail network and a

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few other matters. Sir, one of our key strategies to achieving an efficient land transport system is to develop a comprehensive Rapid Transit System (RTS) as the backbone of our public transport system. To achieve this, LTA has developed an RTS Master Plan to provide comprehensive coverage of key parts of Singapore , including those parts which Mr Yeo pointed out are not covered yet.

Sir, however, the rail projects involve very heavy capital investments. We therefore have to ensure that taxpayers' money is spent prudently. As such, we will only proceed with a new rail line if it is financially viable.

Based on LTA's current construction programme, our rail network will already grow by some 50% from today's 122 kilometres to 172 kilometres in the year 2010, when the Circle Line is completed. Sir, the Circle Line will significantly enhance the connectivity of our rail network, and it will allow commuters to achieve far greater savings in travel times. We are also in the final stages of planning for an extension of the East-West Line into the Jurong Industrial Estate. This would reduce travel time for workers in the Jurong and Tuas Industrial Estates, and reduce the heavy congestion at the Boon Lay MRT station and the bus interchange there.

Sir, Mr Yeo asked about the status of the three new lines that we had talked about - the Bukit Timah Line (BTL), the Jurong Region Line (JRL) and the Eastern Region Line (ERL). Sir, LTA is currently carrying out feasibility studies on these three lines.

The implementation schedule will depend on their financial viability, and whether the current public transport modes can cater to the prevailing demand. If they are able to cater to the prevailing demand, then there is no need

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for us to sink billions of dollars into building the new lines. Sir, being heavy investments, the development schedule will also depend on the Government's financial situation. So while I agree with Mr Yeo's sentiments about the social benefits of a comprehensive rail system, unfortunately, we cannot throw fiscal prudence to the wind.

2.15 pm

Sir, Mr Yeo also asked about measures taken

to moderate public transport costs. Sir, I would like to assure him that my Ministry certainly shares his concern and is mindful of the need to keep statutory costs of public transport services low. For example, as part of the relief package that we announced last year, LTA extended the statutory lifespan of buses by two years, from 15 to 17 years. So, this had helped the operators lower costs through savings in depreciation and in terms of the capital cost of having to buy new buses.

Sir, many people appear to have the perception that public transport costs have gone up significantly over the years. It is therefore important for me to assure Members of the House as well as the public that this is not so. Between 1987 and 2002, average wages went up by 136%. But for an average 8-kilometre trip, bus fares only went up by 14%, from 90 cents to $1.03 for an 8-km ride and train fares by 30%, from 80 cents to $1.04. As such, we should commend the operators for having done a good job of providing a service that is even more affordable today, compared to 17 years ago, relative to average wages. I think Members would also be happy to know that SBS Transit has indicated that it would not be applying for a fare adjustment this year and I think this is indeed good news for commuters.

So moving forward, we will continue to work with the operators to help them

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lower costs. Mr Yeo had asked that the bus operators be allowed to retain the rental revenues from the bus interchanges. Sir, this is not allowed at the moment as the bus interchanges are built by the Government and leased to the operators for a nominal fee of $12 a year. Notwithstanding this, I am happy to inform Mr Yeo that we are currently reviewing this policy and I hope to get back to him shortly.

With regard to our standards, I would also like to reassure Mr Yeo that LTA has not imposed onerous standards and requirements on the operators. What LTA strives to achieve is to ensure that the bus operators are able to have an acceptable level of service, safety and operational efficiency. The aim is to keep the cost of public transport low, while maintaining safety standards and service quality. I would like to assure Mr Yeo that we keep in close touch with the operators and I can assure him that if the standards are too onerous, they will not hesitate to make sure that we know about it.

Sir, let me move on to Mr Wee Siew Kim first, because his cuts are pretty much similar to the points brought up by Mr Yeo. Sir, Mr Wee Siew Kim asked about measures to help address the rising cost of public transport and whether the Government could perhaps help to make the transport services more affordable for the lower income group, in a way implying that we could find a way to subsidise them.

Sir, as I have replied to Mr Yeo, the perception that transport costs have been going up and going up rapidly, and therefore becoming unaffordable, is a very much misplaced one.

Fares have gone up much less than the average wage increases over the last 17 years. As a result, public transport expenditure, as a proportion of household

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expenditure, has decreased from 5.1% in 1988 to 4% in 1998. So from 5% in 1988, it has gone down to 4% in 1998, over a 10-year period. I think he also asked about the lower 20th percentile, those people with household incomes of about $1,300 to $1,400. Sir, I do not have the actual figures to compare between that 10-year period, but what I have is that in 1988, the household income was $642 for the 20th percentile. And 10 years later, in 1998, the 20th percentile income had gone up, and had more than doubled to $1,368. And as I mentioned just now, the average fares have gone up very marginally over the last 10 years. This means that, actually, with regard to the lowest 20th percentile, the impact on them has also been that the fares have become a lot more affordable.

Sir, nevertheless, we do recognise that there will be some people who may genuinely face financial difficulties and do need help. I think the Government's approach is to target the financial assistance at those who really need it, through the various schemes implemented either at the Government or community levels. And such assistance is normally given in a holistic manner, with counselling given on how to help them manage their finances. I think the counsellors would also try to match them with a job nearer their home, if they find that that particular person who is appealing for help is spending too much money travelling to and from work. Nonetheless, some short-term assistance with the cost of transport is available for those in financial need. One example is the Public Transport Fund set up recently by NTUC and the CDCs, with financial contributions from the transport operators.

If Mr Wee is aware of people who require financial support, I would urge him to refer them to the relevant Government

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and community organisations for assistance.

Sir, Mr Yatiman Yusof asked about the KPIs for the public transport operators because of the importance of the public transport system. Sir, I agree with Mr Yatiman Yusof that the level of public transport service contributes greatly towards enhancing the mobility and quality of life in Singapore . That is why we have put in place minimum standards to ensure that our public transport service operators are able to meet adequate service levels. Today, LTA imposes service standards on taxi and rail operators, and the PTC specifies service standards for the bus operators. Sir, the KPIs (Key Performance Indicators) are very detailed and lengthy. I will highlight the philosophy and the approach taken by LTA and PTC instead.

Generally, these standards cover the areas of service availability, safety and customer satisfaction. For example, the rail operators have to comply with schedule adherence and service availability indicators, while the bus operators have to ensure that their services meet stipulated headways during the peak periods. When the taxi industry was deregulated last year, LTA also introduced a set of Quality of Service (QoS) standards to ensure minimum service levels for taxis. These relate to service factors, such as safety and responsiveness to radiophone bookings.

Sir, as our public transport industry evolves, our regulators will review the standards regularly to ensure that they remain relevant to our needs. For instance, PTC is now reviewing and updating the bus service standards which were established in 1994. And I can assure Members that when conducting such reviews, we will continue to balance the commuters' expectations of service with the cost implications of imposing high standards on the operators.

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Sir, Mr Chay also asked about compliance with the standards and what happens if they do not comply. To ensure compliance with the standards, LTA and PTC do conduct regular audits on the operators, including ad-hoc on-site audits. If the operators are unable to comply with the required standards, they may face financial penalties of up to $100,000 for the taxi operators, and up to $1 million for rail operators.

For the bus operators, their security deposits of $2,000 per bus route can also be forfeited. I am happy to inform Mr Chay that the audit of the operators' performance in the year 2003, last year, showed that they have generally been able to meet the required standards, but we will continue to monitor them to make sure.

Sir, let me now reply to the points made by Mr Ong Kian Min on the rail projects. Sir, he asked about the three new lines, which I have replied already, and he also stressed that we should not build new rail lines to new areas under development in case there are changes to the development schedule which will make the new line non-viable. Circumstances do change, as he has pointed out. Sir, as I had pointed out to Mr Yeo Guat Kwang, the Government will only embark on a new rail line after it is fully satisfied that the new line is really needed, and that it will be financially viable.

Mr Ong is correct in stating that the rail lines were previously built based on projected demand and ridership. Sir, that was not a problem when we first built the North-South and the East-West lines, because these two lines serve areas that were already largely developed and well-populated. Unfortunately, as you have pointed out, rail projects are major developments that can stretch eight to 10 years from the approval stage to the completion stage and during the long

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construction period, unforeseen developments may occur and, as we have seen with the NEL, do occur.

And because of our experience with the NEL system, we are now proceeding very carefully with future rail projects. So, I can assure Mr Ong that we will build new lines in the future only when we are satisfied that they will be viable. And in the meantime, we will continue to provide the residents in the areas under consideration with a good and well-proven system of the feeder bus network.

Mr Chay asked me to give my views on the LRT system, whether they are really cost-effective and he asked also if we should be building new ones. Sir, let me first explain that the Government decided to build LRT systems that are available today to serve as feeder services because there are several notable, in actual fact, advantages connected to LRT systems. Firstly, it is a more efficient form of transport compared to buses in densely populated towns or areas with high activity levels. The train is also more reliable in its time schedules and, unlike buses, is not subject to delays from traffic congestion. In addition, the elevated train system frees up land which would otherwise have to be used to provide more road space. So, this allows for a better use of our limited land, especially in areas that are already very densely built up. However, as Mr Chay has rightly pointed out, the LRT projects also require heavy investments. And in that, it means that the Government has to subsidise, also very heavily, this mode of transport. Sir, for this reason, we will only proceed to build new lines, the LRT lines, when we are assured that they are viable, when there are positive cost benefits, and I think also, when we are sure that the location under consideration is suitable for introducing such a system.

Dr Chong Weng Chiew asked that we give commuters a choice, that in this day

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and age, especially with our present state of development, commuters are entitled to have choices. And he also asked about the merger of the two transport operators. Sir, I can understand the point made by Dr Chong that the commuters would prefer to be served by both buses and trains along the same corridor. It gives them the ability to choose between one or the other. However, such duplication of expensive resources is very wasteful and certainly not cost effective. It will only lead to a lose-lose situation for both the bus and rail operators, and ultimately, the commuters. This is because ridership must suffer for both operations that duplicate one another, and they will become less viable. The higher operating costs needed to run systems concurrently would eventually have to be passed on to the commuters in the form of higher fares.

So, this is why we have to rationalise bus services each time a new rail line opens and this is to prevent or, at least, reduce unnecessary duplication. Sir, he was afraid also that by having the MRT operator running the bus routes, the monopoly would enable the train operator to over-rationalise and deprive commuters of bus services which may be very needed. Sir, I want to assure him that this is not so, because the rationalisation plan is independent of whether the same operator runs both the train and the bus services. In fact, the rationalisation plan

is done by TransitLink which is an independent operator. And after that, it has to be submitted to PTC for approval. So there are plenty of safeguards to make sure that if it is a single operator, the single operator does not abuse its monopoly position.

2.30 pm

Sir, he also asked about the merger of the two operators. Mr Ong Kian Min also

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touched on that, so I will combine the two answers together. Mr Ong spoke of the possibility of the SMRT and Delgro merging their bus and rail operations and asked whether, whilst he understands about the rail operation, we should agree to the merger of the bus operations.

Sir, as pointed out by Mr Ong, the two public operators are public-listed companies. They are free to explore mergers, whether in bus or rail, if they think there are commercial benefits in doing so. At this point in time, let me correct the mistake made by Dr Chong. He said that I had talked about the merger of the two companies. And in fact, Mr Inderjit Singh, on Monday also in this House, said to the effect that it was not right for a Government Minister to direct the two transport operators to merge their rail operations.

I think he was referring to me, of course. Sir, both Mr Inderjit Singh and Dr Chong are wrong, because I never directed them to do such a thing. What happened was that I was asked a supplementary question in this House in August last year, whether it would not have been better, for one operator to run all the rail lines in Singapore. This took place, I think Members would recall, during my answer to Mr Charles Chong's very famous question on Buangkok MRT station.

Sir, in my reply, I explained the background as to why the NEL was given to a second operator. I also said that we cannot do anything to change the operators now, as both rail operators are listed companies. But my Ministry will not object should they decide to explore the option of merging their rail operations.

So, at no time did I direct the two rail operators to merge the operations. Dr Chong asked what is the status. I would like to inform Dr Chong that neither my Ministry nor LTA has received any

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proposals from any of the two operators about this option.

Sir, on the issue of allowing competition in bus services, Mr Ong may recall that two years ago, I had announced that PTC is prepared to allow feeder bus competition in HDB new towns. Unfortunately, up to now, no private bus operator has come forward to express its interest.

Sir, however, despite this lack of response, we are still very keen on this idea and will continue looking for ways to introduce more competition in the provision of bus services. And since we are still pursuing the idea of enhancing bus competition, I think we will have to think seriously whether it will make sense for us to allow a merger of the current bus services, should the two operators come to us with this option.

Sir, I think I have answered all the points made in this order.

Mr Speaker: Order. I propose to take the break now.

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

Sitting accordingly suspended

at 2.34 pm until 2.55 pm.

Sitting resumed at 2.55 pm

[Mr Speaker in the Chair]

Debate in Committee of Supply resumed.

[Mr Speaker in the Chair]

Head W (cont.) -

The Chairman: Amendment No. (1). Mr Ang Mong Seng.

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Taxis

Mr Ang Mong Seng (Hong Kah): ( In Mandarin ): Sir, right now, our public transport system consists of MRT, bus and taxi services. For the elderly and the handicapped who are less mobile, the better form of public transport is taxi. If we expect our taxis to render better service to the elderly and the handicapped, then we need to modify our taxis.

If taxi companies or the taxi-drivers themselves want to take the initiative to modify their taxis, they would have to bear the full cost of such modification. I would like to know if the Minister would consider giving them tax incentives on the cost of such modification so as to encourage them to upgrade part of their taxi fleet in order to render better service to the elderly and the handicapped people. If we want to put our public transport system on par with the best in the world, we should look into improving our services to all citizens, particularly those who are less mobile.

Encik Yatiman Yusof: When I was in San Jose, California, for an attachment, I came across a taxi-driver who was the sole owner and operator of a taxi. This man was very enterprising. While driving me to my workplace, he showed his wealth of knowledge about interesting places, the political system and the way of life in San Jose. I was impressed with his performance and decided to hire him throughout my stay there as I had to travel 30 kilometres to the office where I was attached to.

Sir, Singapore too had its own one-man operated taxis. In the 1960s, many of us were familiar with the pirated taxis known as " pa wang chia " which charged 30 cents for the fare from Geylang to Chinatown and 20 cents from Chinatown to Alexandra. Users need not have to wait for more than three minutes to get

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connected and transported. While I am not in favour of the return of " pa wang chia " because of the downside of such services, I wonder whether the current policy of strict licensing for taxi operators is the best that we can have. The condition imposed on newcomers for taxi operations is so restrictive that at best, it allows only a very few number of players in the industry. A new operator needs to have 400 taxis, which can be bought over a period of four years, to obtain a licence. It seems that the rationale is to enjoy economy of scale and to have back-up services needed for such operators. Why 400? Why not 200, 100, 50 or 10 taxis to be allowed to apply for a licence if they can come up with an arrangement where the back-up and other services needed can be shared by the players?

In this way, we can provide real competition to the existing major players such as Comfort Delgro, TIBS, CityCab and the SilverCab. Just like in any other economic sector, where the big MNCs are able to live side by side with the local manufacturers and the small and medium enterprises, we should be creative enough to allow the transportation sector, especially the taxi service, to open up a little more so that the current oligopolistic competition can be changed into an open competition. I would be happy if the Minister could share with us his views on this matter.

Mr Chandra Mohan K Nair (Nominated Member): Sir, the taxi service in Singapore has generally improved over the years. Taxis are clean and the drivers are generally courteous. One problem, Sir, is around midnight when it may be difficult to get a taxi. This has to do with midnight charges. Another problem, Sir, is the various charges we have to pay for a taxi ride. There is a basic charge, a midnight charge, an electronic road pricing charge, early morning and evening

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charges in the Central Business District. All these can be confusing to our people. When I go to court early in the morning in the Central Business District, say, from home, all or most of these charges come into play. I just pay what is asked for by the taxi driver without querying because it may be time-consuming, and the taxi driver may be a little impatient, having to explain. Once in a while when we ask, they do explain. Could the Ministry try and fine-tune all these taxi charges so that it is simple and easy to understand for the lay persons? Let there be one charge generally.

The cost element, Sir, also should be considered. If there are less charges imposed by the Land Transport Authority on road tax, taxi licences, etc, and also by taxi companies which own the taxis, in terms of rentals of taxi, reduced petrol charges by petrol companies, etc, then we might see the taxi fares, which commuters need to pay, reduce or maintain at today's level.

Certificates of Entitlement

Mr Ang Mong Seng: (In Mandarin ): Sir, at present, when a car owner buys his car, he pays cash for the Certificate of Entitlement. But when he scraps his car, all he gets is just another certificate, and not cash. This certificate can only be used to offset the cost of the Certificate of Entitlement of his next car.

If the car owner wants to get back the rebate in cash, he would have to sell his paper to a third party, such as a second-hand car dealer. Of course, the third party would charge 2-3% as commission. This does not seem to be logical. Initially, he paid for it in cash, but when he deregisters his car, why can he not get back his PARF rebate in cash? In recent years, many car owners have been facing financial difficulties and could no longer afford to own their cars. They could not sell their cars as the second-hand car

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market has been discouraging. As a result, they have no choice but to deregister their cars with the hope of getting some cash back to tide over the difficult times.

As a matter of fact, the Land Transport Authority should know and be able to forecast how many cars are being imported each year, and how many cars are deregistered. This information is certainly in the hands of the Ministry of Transport. As such, I hope that the Minister will reconsider the plea to make cash refund to motorists who deregister their cars.

Land Transport System

Mr Ong Kian Min: Sir, one of the two points in the Ministry of Transport's vision to achieve a quality and efficient land transport system is to have congestion-free roads. I agree we should minimise congestion so that we do not waste time stuck in traffic. But we must also not forget that roads are there to serve a number of objectives, not only to get us there as quickly as possible, but once we get there, to allow us to achieve our other purpose of wanting to get there in the first place. By that I refer to parking places and loading and unloading facilities. I feel that the present policy emphasises too much on congestion-free roads. Vehicles are supposed to get off the roads as soon as they arrive at their destination by going into parking places provided either in buildings or designated areas. I feel that not enough attention has been given to providing for facilities for parking, waiting, loading or unloading, so that people can go about doing their business more efficiently. In our CBD, parking is always a problem for despatch riders and delivery men. These are important contributors to our economy. Parking for them is ad hoc , ill-planned and unsystematic. We see motorcycles parked along the pavements and loading and unloading done anywhere that is possible

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and not hounded by the parking wardens or traffic police.

Traffic and parking in Central London used to be horrendous. However, in recent years, they introduced limited short-term parking, where you are allowed to park in curbside lots for up to a maximum time limit ranging from 15 minutes to one hour. It has now become quite easy to find a parking space for short-term parking. It is now so convenient to stop, park, run into a shop to do an errand and be off. It does not allow drivers to hog the lots even if they are prepared to pay for them. It allows short stays to encourage people to come, do what they are there for, and go off quickly and efficiently. The turnover is fantastic, and businesses and customers benefit.

Road and Traffic Management

Mr Yeo Guat Kwang: Sir, although road pricing is an effective way to keep our roads free-flowing, I feel that more should be done in the area of road management. In particular, more attention should be paid to the following areas.

First, although there is a committee to coordinate roadwork the problem still exists as roadworks appear to occur at the most inopportune time at places of high usage. For example, there are constantly roadworks that cut off one lane on roads that are heavily used during peak hours. Braddell Road is one of the examples. I just saw them repainted the bus lane a week ago, after a month-long of digging, and yesterday they started digging again. Is there anything that the authorities will do regarding the appropriate timing and duration of such roadworks?

Second, despite the fact that there are regulations to keep our roads free-flowing, eg, zigzag lines to prevent cars from stopping and clogging up congested

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roads, they are usually not effective due to insufficient enforcement. The situation outside Clifford Centre is one example. What plan does the Ministry have to better coordinate efforts between the LTA and the Traffic Police especially when some functions of these two agencies appear to overlap?

Third, on the issue of clarity and effectiveness of road signs. Many new roads are built and the road network is getting more complex. Many motorists end up circulating a few times because they missed a certain or critical turning. This contributes to the density of traffic. Is there anything being done to look into how we can better position our road signs that can effectively assist motorists so that they do not end up circulating and choking up the roads?

The above issues need to be resolved in order to convince motorists that the authorities have indeed done their best to address the issue of road management before introducing additional road pricing.

Finally, many Singaporeans find driving here a stressful experience. Would LTA, together with the Traffic Police, step up efforts to improve the "heartware" of our motorists to get them to show basic courtesy by using the car signal lights whenever applicable, appropriately and pay more attention to road safety?

Local Traffic Management

Mrs Lim Hwee Hua (Marine Parade): Sir, what I shall be speaking on may sound a little contrary to the call to delegate more authority to the community, but I do think minimum professional standards must always prevail for all things.

Sir, of late, there has been a conscious move by the Ministry,

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specifically the LTA, to involve the community more in local traffic management. This is extended to a whole range of issues from which car park lots to be reserved for season parking, to whether humps should be built along accident-prone stretches and, if so, where precisely. Sir, everyone knows that there is nothing scientific about which side of the road to draw double white lines, or where the single white line should end. As my parliamentary colleagues would well know, there is frequently no right answer nor consensus as everyone would readily support the building of humps but no one would want it right outside his home. Yet this can frequently give rise to unexpected, un-neighbourly behaviour.

Sir, whilst the move to involve the community is very commendable, it should never be done at the expense of a professional opinion. Towards this end, I would like to ask the Minister to state what is the Ministry's position with respect to LTA's rendering of professional views for local traffic management issues, as not doing so is tantamount to passing the unpopular buck to grassroots volunteers. Grassroots volunteers are happy to help facilitate the getting of feedback, but I do think it is unfair to impose the burden of professional decision-making on them.

ERP for Motorcycles

Mr Steve Chia Kiah Hong (Non-Constituency Member): Sir, the current cash card reader on motorcycle is big and bulky and openly subjected to theft of cash card. Many motorcyclists, myself included, as I declare here, are known to have lost many cash cards when they forget to take it out from the reader, after they have parked the motorcycle. Not everyone is born with the talent of good memory and habit of checking for our cash cards before leaving our machine. Bikers should not be financially penalised with loss because of the design system

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issue or problem. The ERP reader has been in place for almost 10 years since the start of the road pricing. It is high time an alternative to the cash card reader be considered and implemented for motorists to alleviate this problem of stolen cash cards in motorcycles and also smashed windscreens in cars.

My suggestion is for LTA to consider the setting up of a system whereby the motorists, whether car drivers or motorcyclists, can sign up for a monthly billing and Giro deduction system. Under such a system, the card reader records the different entries under different ERP gantries and LTA can bill the registered motorists electronically at month-end and receive payment via Giro automatically. I believe this is not a very high-tech nor expensive system and it will greatly reduce the inconvenience that road users have to bear, especially when they forget to insert the card, top up the cash card, hide or lose their cash card or stolen through windscreen breakage. This will also discourage petty theft as there is less opportunity to tempt the thief into stealing and smashing windows for that cash card. I hope the Minister will at least agree to look into this idea before giving his objection.

Public Transport for the Disabled

Ms Braema Mathiaparanam: Sir, I would like to first say thank you to the Minister for letting me park this topic under MOT instead of the usual place, which is MCDS. The reason is that I do see it as a national policy because such a provision actually caters to four groups of people: parents with strollers; the disabled; the elderly and the normally healthy people, who because of an injury, are wheelchair-bound for a temporary period. As such, providing transport for the disabled becomes a national concern that affects everyone right now, or in the future. So, it does need a mindset change. If we leave it with MCDS, the

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provision of a dedicated service will be transferred to, in all probability, the VWOs to manage, which will then come back to the citizens, in all probability, as a charity dollar to support the system. Therefore, it is my hope that if we truly believe in our desired outcome of providing a first-class transport system for the citizenry, that is seamless, we have to bite the bullet and look into providing at least kneeling buses that will complement the NEL and the SMRT lines. We do not have to look very far. They are already in Singapore on Sentosa Island, brought in at $250,000 and they are giving our tourists the best experience. A recent report in the Straits Times, I quote the Deputy Communications Director who says, "These are just small touches that we hope will give our visitors a pleasant experience." My question then is: what more are our own small touches, big and small, that we have to provide for our own citizenry? Let me quote a visitor's experience. A Mr Huang from Hong Kong said, in that same report, "It is very convenient, these kneeling buses. We have something similar back home. Only it has an additional ramp. This is more convenient."

Sir, we are providing wonderful experiences for our visitors. What more do we have to do for our own citizens? And, if the Minister is going to ask me whether the citizens will want to pay for this, I see it as corporate responsibility. The state, the two bus operators and the citizenry must pay, so that the disabled do not just have to go to Sentosa.

Mr Yeo Cheow Tong: Sir, let me thank the Members who have spoken again. Let me start with the reply to Mr Ang Mong Seng. He asked for assistance for the taxi operators for the wheelchair-enabled taxis.

Sir, today, there are already close to 100 wheelchair accessible taxis in Singapore . It shows that the lack of

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incentives before has not prevented the taxi companies from buying them. The good news I have for Mr Ang is that last year, we did come up with an incentive for the operators.

As part of this incentive scheme, wheel lifts and associated installation costs are exempted from Additional Registration Fee (ARF) and excise duty. So what this means is that this will now help to lower the upfront cost of such taxis by some 20%. So it is quite a significant incentive and I hope that this will encourage the taxi operators to bring in additional taxis that are so fitted.

3.15 pm

Sir, Mr Yatiman asked that we open up the taxi industry even more. The current policy is still too restrictive, too strict. Sir, when we liberalised the industry last year, we did consider the number of taxis that we should stipulate for the new operators. LTA did a study and found that in view of the high overheads related to the cost of the despatch system and the radiophone system that we need a certain minimum size. The calculation showed that 400 was already a very minimum number, and anything lower than that will not be viable at all.

And I am glad that since we liberalised last year, the taxi landscape in Singapore has changed. Today, we have three new taxi companies, bringing the total number of players to seven. This shows that our objective of allowing greater competition in the taxi industry is working. And I hope in the years ahead, we will see new players coming in, once the three new players have settled down.

Sir, Mr Yatiman asked why not allow the small operators to come in and share the back-end costs, so that they can start with a smaller number of taxis. Sir, there

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is nothing to prevent them from joining together as aspiring entrepreneurs to join up together and pool their resources, rather than starting one on their own. In any case, Sir, we allow them a four-year period to invest in 400 taxis. So, it is not something that they are required to invest in upfront.

Mr Chandra Mohan touched on the complexity of all the different charges for the taxi fares. The taxi fare in Singapore is not unique to Singapore . It is very similar to the taxi fare structure in other major cities like London , Hong Kong , New York and Sydney . This is because the surcharges are meant to cater to the varying situations over the 24-hour period in a normal day.

Sir, since September 1998, taxi fares in Singapore have been fully de-regulated. And, as such, taxi companies are free to determine their own fare structures and pricing strategies to respond to the demand and the needs of the commuters. However, the taxi companies are required by PTC to provide sufficient information so that commuters can understand the fare structure and make informed choices. If Mr Chandra Mohan does not know what he is paying for, what he can do is to look at the fare information, which I understand is displayed very prominently in the back of the taxi and on the rear windscreen, as well as at the taxi stands. So you can see what you are paying for at that time of the day.

But having said that, I am quite happy that the taxi companies are starting to innovate, for example, to address the shortage of taxis before midnight , CityCab recently adopted a different pricing strategy. It has implemented a staggered late-night surcharge in January, with a staggered surcharge starting from 11.30 pm and fully implemented at 1.00 am . I hope that the other taxi companies will also come up with innovative solutions to this and other challenges that they face.

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Sir, Mr Ang Mong Seng talked about the COE rebate. At the present moment, the rebate is given through a rebate certificate rather than cash. He asked why not give out in cash. Sir, let me explain the reasons for not granting the rebate in cash.

As Members are aware, the COE allows vehicle owners to use their vehicles for 10 years. However, we do recognise that some owners may have to scrap or export their vehicles before the expiry of the COE. Therefore, as a concession, the Government has allowed owners to use the residual COE value to offset the upfront taxes payable for a new vehicle. We have also made the process for utilising the rebate as flexible as possible. For example, an owner can transfer the COE rebate to another person, say, a friend or relative, if he does not intend to use it. He can also combine the rebate certificates or split them up when utilising them. Sir, as such, the process is a simple and very flexible one, and the Government does not intend to change the rebate into a cash payment.

Mr Ong Kian Min said that we emphasised too much on road congestion and we are not paying enough attention to looking after the people who are loading or unloading or parking their vehicles in the city. I think Mr Yeo Guat Kwang also touched on the need to keep our roads free flowing.

Sir, one of our measures to achieve this, ie, keeping our roads congestion free, is through controlling the population of the vehicles in Singapore and through congestion pricing. With the proper measures in place to manage congestion, we will be able to allow our vehicle population to grow at a sustainable rate. This is currently set at 3% per annum.

At this juncture, I am pleased to announce that the total COE quota for 2004 is 120,538. This is a 1.6%

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increase from last year's quota, with the quota for cars increasing by about 4%. LTA will be releasing the detailed breakdown of the 2004 quota later today.

Let me now address the specific points raised by Mr Ong Kian Min. He spoke about the need to provide adequate parking spaces for parking, loading and unloading activities. He felt that today the provision of such spaces is ad hoc, ill-planned and unsystematic, especially in the CBD.

In land-scarce Singapore , we all recognise that we need to ensure that our limited road space is used for the efficient movement of people and goods. Roadside parking facilities may serve the needs of motorists such as delivery men or despatch riders, who need to park and deliver something quickly. However, the provision of such facilities must be balanced against all conflicting demands. As such, on the main city roads, where traffic volume is high and the roads are already congested, kerbside parking is not allowed. But where the impact on traffic is manageable, and there is a need to increase the supply of parking facilities to meet the demand, URA and LTA have introduced roadside parking facilities, eg, along the minor roads in the CBD. This is very similar in almost all the big cities in the world.

He is therefore mistaken in claiming that the provision of such spaces is ad hoc and ill planned. In fact, LTA requires all developers to make provisions for adequate parking and loading/unloading facilities when they submit their project proposals for planning approval. In reviewing these proposals, LTA would ensure that the provisions are indeed sufficient so that the loading and unloading activities do not spill over onto the main roads and affect the traffic flow of the surrounding roads and affect the safety of the road-users.

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Sir, I can understand that the despatch riders and the delivery men will want to park as close to the entrance of the buildings as possible. But this is not always possible. Nonetheless, in such situations, the drivers and the despatch riders will still have to observe the road regulations. Otherwise, they will impose inconveniences on other road-users, or worse, break some road regulations.

Of course, we can always ask the Traffic Police to increase the enforcement actions - I think this is what Mr Yeo Guat Kwang has also asked. But there is also a need for people to be more observant of road regulations. This is part and parcel of becoming a more civic and gracious society.

Moving on to Mr Yeo Guat Kwang. Sir, the road works problem is a perennial problem and there is no easy solution. We have a Committee set up to coordinate the road openings. As far as possible, the road openings are timed to coincide with LTA's road construction and maintenance programme. But, it is not always possible to do so, given that Singapore is a highly urbanised city, with many of its utility services running below the roads. There are many reasons why roads may need to be opened, for example, to lay additional utility supply because of new property developments in the area, emergency repairs to the utility services, upgrading of aged utility infrastructure, and so on. Some of these works are not easily planned or even foreseeable. I can assure him that LTA and the Committee will try to find ways for the coordination.

Mr Yeo also talked about improving road signs. I agree with him that proper directional signs play an important role in minimising unnecessary traffic circulation, especially in the city area. The key is to have clear and well-positioned directional

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signs. They are usually placed near road intersections where motorists have to decide whether to turn right or turn left or go straight. More importantly, we need to avoid a proliferation of signs, as these will mar the landscape and confuse motorists. So I can assure him that LTA pays a lot of attention to having appropriate signs and to make sure that the signs are meaningful. If Mr Yeo has any feedback on places where signages can be improved, I will be happy to hear from him.

Mr Yeo also said that we should explore alternative measures to keep the roads free-flowing before we introduce ERP. Let me assure him that this is already being done today. When there are congested roads, LTA does not go in and implement ERP straightaway. In fact, we have not implemented ERP for quite some time. This is because LTA will go in to analyse the situation and find if there are other ways to relieve the congestion first, and will only resort to ERP as the last measure.

Mrs Lim Hwee Hua stated that minimum professionalism needs to prevail when devolving responsibilities to the community, and she asked what is our position. Sir, let me assure Mrs Lim that LTA remains the authority on road matters. It should never shed its responsibility from what needs to be done.

LTA has a clear two-level approach where the community is concerned. If there is a definite need to implement a scheme due to safety or traffic reasons, LTA will proceed to do so without consultation as these are essential, but they will explain to residents in the area why there is a need for the scheme.

But where there are no safety and traffic efficiency concerns, LTA has adopted a more consultative approach. This is in keeping with the times. This allows LTA to tap and benefit from the

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local knowledge of community leaders and the local residents.

For example, many local issues such as introducing parking restrictions or road humps do not impact directly on the safety or efficiency of the road network. But they do affect the local residents in one way or another. As such, LTA will work with the local community and grassroots organisations (GROs) to ensure that

the interest of the residents in the neighbourhood is taken care of. And I have reminded LTA that they should not pass the decision to the residents or claim that they are doing it on behalf of the residents. They are doing it because they have heard the feedback and they agreed to the recommendation. So I will make sure of that and if Mrs Lim has any feedback on such a problem, I will be very happy to hear from her.

3.30 pm

Mr Steve Chia mentioned about the poor design of the motorcycle IU. I agree with Mr Chia that the present In-vehicle Unit (IU) for motorcycles is not really ideal. But the key constraint that we have to bear in mind is that the IU has to be mounted in front of the vehicle to allow it to communicate with the ERP gantry, and to enable the motorist to view the value of his Cashcard. This applies to both cars and motorcycles. I think the problem is, unlike cars, for motorcycles it is very difficult to place the IU in a position where it can be locked and concealed because the motorcycle is a very open one.

The good news I have for Mr Chia is that LTA is now looking into a new generation IU that would have improved features to reduce the incidence of Cashcard theft. In the meantime, we have to continue to remind motorists to avoid the risk of losing their Cashcard by remembering to remove it from their IUs when they lock up their vehicles.

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He also suggested a system where the motorist can sign up and have their ERP charges deducted automatically at the end of the month. Sir, in fact this was one of the options looked at when designing the ERP system and designing the in-vehicle unit. But the feedback was a very negative one, because what this means is that there will be a record kept of where you were at each time of the day for the whole month. Many thought this was an intrusion of the privacy of the individual. And in view of the very negative feedback, LTA decided not to adopt this system. I would imagine that the objections will still prevail today if we are to propose it. So, let us look for other solutions instead.

Sir, Ms Braema, in her appeal for better transport for the disabled, felt that we should take this under the public transport system. As she said, bite the bullet€”because kneeling buses are already here, why can we not have them elsewhere in the city. And why are we looking after the tourists better than the local citizens, especially when Sentosa has already got them?

I can sympathise with the sentiments of Ms Braema. We would like to do our best to help the disabled. But I think we have to look at the issue from a very holistic manner and see what is the best way to help the disabled in a very proactive manner. At the moment, this issue is taken up under MCDS, because MCDS is looking at the whole situation of what to do in terms of looking after the needs of the disabled, including the transport needs.

It is not feasible for MOT to take this over under the public transport system because the public transport system caters for the mass transport needs on a daily basis of the millions of Singaporeans who need to move from one place to another. Why is Sentosa able to do it? The reason is very simple. Sentosa has a

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few million visitors each year and many of them will either go on to the monorail or they will take the bus. So the number of people taking the bus on Sentosa island is probably two-thirds of the total visitors.

In contrast, on the public roads every day, we have about three million public transport rides. If you look at our public roads, buses are going past every few seconds. A delay of 20 or 30 seconds for each bus at the bus stop will create huge jams on our public roads. It will result in higher fares, and much longer travelling time for all Singaporeans. So we have to look at the national requirements and see how we can cater for the majority and, at the same time, have a different plan to cater for the niche group of people who may need assistance. That is why MCDS is still the best place for looking after the specific needs of the disabled.

The Chairman: Let me remind Members we are running out of time. Mr Chay.

Mr Chay Wai Chuen: Sir, can you spare me a minute for me to respond to the Minister?

The Chairman: Half a minute.

Mr Chay Wai Chuen: On the Minister's unenviable offer to the GPC to take on this task of looking at the new model for the CPI+X, I have discussed with my members of the GPC and we have agreed that we should take on this task, and we will not shy away from it. However, I would like to urge the Minister that the GPC has got quite a good record in the past of making good suggestions to the Ministry of Transport, in particular I would like to add the open bidding system, the VQS report that we did, and also the suggestion that the Ministry should consider privatisation of berth terminal operations by private operators many

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years ago, which was only accepted recently. So, in that spirit, we will take on this offer and we will consult the experts and the public on this new model which we will make recommendations.

Sir, I would like to touch on this topic on port competition.

The Chairman: You have got two minutes.

Port Competition

Mr Chay Wai Chuen: We were told again that Singapore has become the world's busiest port for shipping tonnage and we are the top bunkering port with a record TEU last year from PSA of 18.4 TEU. So we aim to be both a world-class hub port as well as an international maritime centre. However, it is significant to note that in 2003, PSA did its record best TEU at considerable discounts to its tariffs, the year of celebratory discounts, so to speak. I do not know the exact number, but I believe it to be in the range of at least 20-30% of the tariffs. For several years, I have argued in this Committee the need for privatisation and competition in port operations, in berth operations and terminals, in downstream operations, and I have also pointed out the risk of PSA as a monopoly dinosaur earning 50% of profits before tax on turnover just barely a few years ago.

The good performance of a re-awakened PSA shows the importance of sensitivity to the voice of the market and competitive response to market signals. Not even our so-called renowned locational advantage, connectivity and IT superiority can retain the top two shipping customers when an upstart port from across the Causeway offered privatised berth operation. The challenge I would pose to PSA is, "What's next?" As I argued last year, the world's shipping industry is changing rapidly with supply change and industrial structural changes.

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The single factor which accounts for businesses going out of business is the failure to respond to industry-wide changes. Although volumes and TEUs have hit a record, operating profit of PSA has fallen drastically. 2002 saw operating profit at $740.6 million compared to $1,080 million in 2001, a fall of more than 30%.

We should note that the pull to Tanjong Pelapas has not stopped. The berths are full to capacity and they are probably building new ones. Hence, there is currently no position to attract new customers. Bearing in mind that PSA brings many downstream economic activities to the economy, is the Minister satisfied that PSA will continue to ensure that port services, which are responsive to market demands, will bring more benefits to the Singapore economy?

Mr Ang Mong Seng: (In Mandarin ): The Singapore Port Authority manages the world's largest container port with good service and high efficiency which has won us many awards. In recent years, the ports in our neighbouring countries have become competitive, resulting in the loss of some of our major customers to them. This is shocking and disappointing. But it is heartening to know that some of these customers are coming back to us. I would like to ask the Minister, after all these setbacks, how was the Singapore Port Authority's performance in 2003. Has it reached its set targets? What is its forecast for 2004? What is the development strategy for the future in the face of keen competition?

When countries in the world are actively fighting terrorists, what measures has our Port Authority taken to strengthen the security of our ports? In particular, how does the Port Authority strengthen security checks on transhipment cargo vessels entering Singapore so as to prevent the attacks by the terrorists and to avoid explosions taking place in

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Singapore, which would undermine our image as the number one container port in the world?

Air Hub

Mr Chay Wai Chuen: I find the stated strategy of the MOT and CAAS to reduce cost of operating at Changi Airport very comforting. For example, the three main areas that MOT and CAAS strategise to reduce costs are in the area of liberalising the ground handling sector, reviewing charges and, of course, reviewing cost of land in relation to other airports around the world. The authorities have also stated a package of incentive schemes, for example, $210 million fund for air hub development, $40 million growth incentive scheme, $45 million SARS relief package and $10 million air traffic development scheme. Many of these schemes are aimed at where the mouth is, at the users of Changi Airport .

When the Civil Aviation Authority of Singapore is on top, they are talking about liberalising the downstream sector. I detect these responses are quite different, for example, from the way our sea hub status was guarded some years ago till the customers voted with their feet. I wish to congratulate the Minister and the Civil Aviation Authority on this forward looking approach. The civil aviation sector contributes as much as 9.6% to our economy on account of the downstream and ancilliary services. With so many changes in airplane technology, planes flying longer, non-stop, for example, the Airbus 380, and the changing route pattern, I believe these planes can fly non-stop from Sydney to London . With the changing technology of planes, will transfer hubs, such as Singapore , continue to have a slice of the international air route business? Is there still a need to stop for refueling or to connect flights after all the planes can fly long distance to any destination?

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I was told that the Emirates Airline ordered 48 Airbus 380, while SIA only ordered 10, which would be delivered in 2006. I am sure SIA is a great airline. But I also believe that the top class Changi Airport is as much an asset to SIA and Changi Airport's success rubs on SIA. With newer long flying planes, will the hub status of Changi Airport be affected and, with it, our SIA? I would like to have the Minister's comment on the technology challenge to our air hub status and what he sees of the future of our civil aviation sector in the economy.

Encik Yatiman Yusof: Sir, Singaporeans are proud on learning that for many years, the Changi International Airport has been voted as the best airport in the world. This has certainly enhanced our image as a desired destination for air travellers and an important air hub. As the air hub industry accounts for more than 5% of GDP and the inclusion of downstream effect of Changi Airport on related industry makes a total of 9% of our GDP, it is indeed a major contributor to our economy. However, the growth of China as an economic power and a direct competition coming from countries like Japan, Taiwan, Hong Kong and Bangkok to become the world air hubs have created a new competitive environment

in the air service.

3.45 pm

With air travel in Asia projected to grow 5% to 8% per annum over the next 20 years, Singapore will have to face stronger competition from old and new players. Despite our small population base, we have strengthened our position by capitalising on our advantage of being able to provide quality services and maximising our geographical location, among others. However, the technological change and development of new generation aeroplanes with longer

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range will change this equation. The growth of China as an economic giant will mean over the long term an increase in intra-Asia and trans-Pacific passenger movement. At the same time, there will be stronger competition coming from our neighbours, such as Malaysia, Indonesia, Thailand, the Philippines and even Brunei. Can the Minister share with us his views on how Singapore can sustain and strengthen its position as the world's air hub, and what are the factors that can guarantee that Singapore will remain ahead of the others?

Budget Airlines

Mr Ang Mong Seng: ( In Mandarin ): Sir, in recent years, many budget airline companies have sprung up. Their main feature is their low-price air tickets, while maintaining a standard of service not inferior to the normal airlines.

SIA, with its superior service and the Singapore Girl image has become our national icon and international brand name, the main challenge is in the price of air tickets. Therefore, we have to be more flexible in order to attract more passengers. Singapore Airlines tickets are generally more expensive than other airlines. The fares of the Chinese airlines are more attractive. If you buy more tickets, you would even get discounts. SIA offers some discounts from time to time too, but with many conditions attached. A one-way ticket from Singapore to Bangkok costs only $23 on the budget airlines. In view of these changes and the intense competition, what will be the strategy of Singapore Airlines to meet such challenges?

Infrastructure for Low Cost Carriers

Dr Ahmad Mohd Magad: Sir, budget airfares provided by low-cost carriers, something that was unique in America and Europe, are now becoming the trend in Asia too. These low-cost carriers offer

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travellers attractive and relatively cheap airfares coupled with promises of efficient service and reliability. The growth in the number of low-cost carriers will be a boon to budget-conscious travellers in the region who are eagerly waiting to see if competition amongst budget carriers will result in even cheaper travelling. It is imperative that Singapore, being the region's international airhub, moves fast to position itself to adapt and respond to this growing market.

I am heartened to note that CAAS is considering building a new airport terminal to specially cater for low-cost carriers. However, Sir, I am concerned that if we do not move fast enough, we will be overtaken by our competitors who already have the infrastructure to cater for low-cost carriers. I therefore urge the Minister for Transport to urgently decide to build the new airport terminal and, in the meantime, to also make accommodation in the infrastructure to cater to the specific needs of the operators of the low-cost carriers. It will mean that airport charges may have to be lower for these airlines, but we should not lose the big picture in wanting to position ourselves as the leading airhub of the region. As the Minister for Transport himself has eloquently put it, this new form of air travel requires not only a mindset change in terms of nimbleness in adapting to this new trend, but also take into account the perception of the travelling public who has long been accustomed to the high standards of our Changi Airport. Hence, low cost as it may be, it is imperative that service standards cannot be that much different from the current plethora of services and efficiency that Changi has been world-renowned for. We must preserve Changi's reputation at all costs.

The Chairman: Mr Yeo Cheow Tong. You have about 20 minutes till the guillotine time on the Ministry of Transport.

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Mr Yeo Cheow Tong: Sir, first, let me thank Mr Chay for accepting the invitation to chair the Committee to review the framework for fare increases.

Let me address his question on the airhub. He asked what are the technological challenges posed to Changi from the development of the new planes. There is no doubt that the new technology planes will definitely change the air travel patterns.

First, from the ultra long range plane, we may lose some hub traffic if passengers choose to travel non-stop the ultra long range planes and bypass Singapore . But we must also remember that this same technology is also an opportunity for Changi. Why? SIA is one of the first airlines in the world to acquire the A340-500, the ultra long range plane, and SIA started non-stop services from Changi to Los Angeles last month. I understand that demand is quite high and it will fly non-stop from Singapore to New York starting late June. The new plane therefore allows SIA to take full advantage of our open-skies agreement with the US . And I think given the huge US market and our excellent connectivity to South and Southeast Asia , this is likely to generate new demand and traffic for Changi Airport .

Apart from the A340-500, we will, in 2006, see SIA launch the new A380. This is a huge plane with a capacity of about 550 passengers, almost double the size of most aircraft today. Its operating range is similar to that of the 747. As such, the advent of this new aircraft will again create opportunities for hub airports like Changi. For example, it will support Changi's hub operations by enlarging the current pipe that links Changi to the other established hubs like Heathrow. It will also enable airlines to overcome slot capacity problems at busy hub airports, again like Heathrow. The new A380s will

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require new infrastructures at airports, such as wider taxiways and double level aerobridges, and I am happy to inform Mr Chay and Members here that Changi Airport has already begun preparations and we will be ready to handle this new plane when it starts flying in 2006.

But at the same time, however, I think I should add that the key to maintaining our hub status here is to ensure that Singapore remains attractive as a stopover point and as a destination point for the airlines and the millions of passengers that they carry, and that this challenge extends beyond CAAS. We need the Singapore Tourism Board, EDB and other Government agencies to continue to play their part and to work hard to ensure that Singapore remains a premier business and tourist destination.

Sir, Mr Yatiman Yusof asked what are our strategies to maintain and sustain our airhub. We have a three-pronged strategy, and these are:

(1) Improve Changi's cost competitiveness;

(2) Enhance the unique Changi experience; and

(3) Actively work with other countries to further liberalise our air services agreements.

Mr Chay mentioned about our incentives to assist the airlines. That will help. As I announced last month, we are also introducing a third ground handling company at Changi, and this will bring about a more competitive environment and should help to reduce costs at Changi.

Second, to enhance the Changi experience, we are now upgrading

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Terminals 1 and 2, and we will be completing Terminal 3 at a cost of $1.75 billion in the year 2008. We have also decided, conditional upon the formal acceptance by the low-cost carriers of our proposal, to build a low-cost terminal that will be specifically tailored to meet the needs of the low-cost carriers. I think this answers Dr Ahmad Magad's point also. In this way, we will ensure that we are well prepared should the LCCs take off in a big way in Asia .

Third, we will continue to pro-actively liberalise our bilateral air service agreements. This approach has allowed foreign airlines to liberally mount services to Singapore and allowed our own carriers to expand their operations. The result is Changi's strong connectivity and our hub status. So, we are quite confident that this three-pronged approach will stand us in good stead for meeting the challenges ahead.

On budget airlines, Mr Ang Mong Seng talked about the pricing and the competition faced by SIA. He asked whether I know what are SIA's strategies. SIA is a private company that does not report to me, so, I am sorry, I do not know what are the specific strategies of SIA. But I can only imagine that SIA will ensure that it remains competitive so that it can meet the competition from the regional airlines as well as the international airlines, and SIA will continue to ensure that it has a niche area which it is strong in. These are things which I have read about publicly in the newspapers, and I am sure SIA will be very busy thinking of what to do with the advent of the LCCs as well.

Dr Ahmad Magad said that there is a need to move fast to cater to the LCCs, we need to urgently decide on the new terminal we have, and we need to use part of the existing terminals for the LCCs.

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Sir, T1 and T2 were built for full service carriers, and the services and functions there are consistent with the business model of the full service carriers. So, whilst we are building the new LCC terminal, once the LCCs agree to use it, in the meantime, the LCCs can make use of T1 and T2. We welcome them there. But it is not possible for us to lower the airport charges for the LCCs during the interim period that they are using T1 and T2. This is because they will be using the same services and facilities of the terminal, similar to what the other airlines are doing. And our policy and principle have always been to maintain a level playing field for all our valued airline partners, many of whom have been operating at Changi for many, many years and have contributed significantly to our growth as a hub. So, we must continue to uphold this principle. But once the low-cost carriers have agreed on the design of the new LCC terminal, we will proceed expeditiously to build it.

The Chairman: Mr Chay, are you withdrawing the amendment?

Mr Chay Wai Chuen: Sir, I thank the Minister for his answer, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: Amendment No. (2). Mr Wee Siew Kim.

Sengkang LRT

Mr Wee Siew Kim: Sir, I beg to move,

That the sum to be allocated for Head W of the Main Estimates to be reduced by $10 in respect of Code WA 1500.

Sir, the Sengkang New Town was conceived with an LRT system as an integral part of the town. The connection of this LRT to the North East Line serves to provide ready access to the north

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eastern part of Singapore to the rest of the island. However, the West Loop of the Sengkang LRT is still not operational. The residents who have moved in with the expectation of LRT ---

The Chairman: Do hurry up, Mr Wee.

Mr Wee Siew Kim: Sir, can I ask the Minister two questions:

(1) When and under what conditions would the West Loop be opened; and

(2) In the interim, what measures can he propose so that the transportation needs of the Sengkang residents in the West Loop could be met, especially since the main marketing amenities of Sengkang Town have been located in the eastern part of the town.

The Chairman: Mr Wee, do you want to continue or you want the answer?

Mr Wee Siew Kim: Can I continue with my next cut?

The Chairman: Yes.

Transportation Hub

Mr Wee Siew Kim: Sir, we have a world-class infrastructure - good roads, great airport, highly competitive seaport. Much more investments have been recently announced for terminal upgrades at the airport, new berths at the seaport, and new expressways. These investments keep us ahead of competition. But hardware investments are not enough. The competitors can also find money to outbuild us. Beyond the hardware part, competitors have also locked horns with us on the software aspects. For example, they have brought on board foreign management at their seaports and renewed their emphasis on service deliveries. I firmly believe that we are true to our reputation of impeccable service and ever innovating on product

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and service deliveries at our sea and air hubs. However, for users of our airports and seaports, their first interface and, ultimately, their perception of whether we are good or not is the frontline service staff. Can I ask the Minister to put aside adequate funds to ensure that the training, grooming and retention of experience of such frontline staff are well taken care of? I believe that this is an area that we should spend more rather than less.

The Chairman: Mr Yeo. You have four minutes.

Mr Yeo Cheow Tong: Sir, I will answer Mr Wee's second cut first, because that is what it appears on the Order Paper Supplement.

4.00 pm

Sir, in terms of the software, I agree with Mr Wee. The hardware can always be replicated. It is the software that differentiates us. And at Changi Airport, the software development at the staff level, especially those in the front line, is an issue of high priority and Changi Airport will continue to invest in upgrading the software capabilities of the frontline staff. I am happy to tell Mr Wee that Changi Airport spends about $1 million annually on training programmes to make sure that the service level of the staff is kept at a high level.

Sir, on the Sengkang LRT, Mr Wee spoke about the non-opening of the Sengkang LRT West Loop. As he knows, the opening of the West Loop has been deferred due to the lack of development in the western part of Sengkang New Town. The development in this part of the town slowed down significantly since the LRT project was approved by the Government in 1996. At the start of the project, HDB

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had projected that there would be about 12,300 HDB units ready in the West Loop by the year 2003. However, today, there are only about 7,600 units with very little new development in the area. As such, it is not viable for SBS Transit to open that line. In fact, anyone who takes a ride round the area will know that for much of the West Loop, it is like a wild west. There is no development at all, other than for a small corner of the West Loop train line. SBS Transit and LTA estimate that operating the West Loop will increase the losses incurred by SBS Transit by up to $4 million a year. As such, it is not viable. What we have done is we have ensured that the bus operator provides adequate bus services to meet the needs of the residents in the Sengkang west area. I can assure Mr Wee that we are aware that there is always a need and room for improvement. I have asked SBS Transit to keep in close touch with Mr Wee and work out whether there is a need for the bus services in that area to be improved.

Mr Wee Siew Kim: Sir, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn .

The Chairman: Amendment No. (3). Dr Warren Lee, you have one minute left.

Public Transport in Sembawang

Dr Warren Lee (Sembawang): Sir, I beg to move,

That the sum to be allocated for Head W of the Development Estimates be reduced by $10 in respect of Code WH 5200.

Sir, residents in Sembawang New Town have been wondering when the new bus interchange and the bridge across the Sembawang River can be completed. I wonder if the Minister could enlighten us.

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Mr Yeo Cheow Tong: The bridge will be completed in June this year. The bus interchange will be completed middle to late next year and we expect to see the project begin in the second half of this year.

Dr Warren Lee: I thank the Minister for his answer. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The sum of $293,655,190 for Head W ordered to stand part of the Main Estimates.

The sum of $1,913,110,500 for Head W ordered to stand part of the Development Estimates.