SDP’s policy paper on Land Transport

Introduction
The physical infrastructure and demographics of Singapore have undergone rapid transformation. Because of this change, there has been a strong demand for better means of transportation in the country.
The latest problems such as the introduction of the Certificate of Entitlement (COE), the overcrowding of the Mass Rapid Transit or MRT, the mushrooming of Electronic Road Pricing system, and the increase in bus and taxi fares have all contributed to the question of whether the Government has managed the land transportation system well. Clearly there is a dire need for a rethink of the policies surrounding these areas.


Electronic Road Pricing
The Electronic Road Pricing (ERP) was introduced in 1998 primarily to restrict the number of motor vehicles entering the Central Business District (CBD). The fees deducted from the cashcards in the vehicles range variously according to place and time.
Since its inception, ERP gantries have been set up in places far away from downtown areas. The number of gantries look set to increase all over the island. Even roads leading away from the city area now have such electronic points that deduct money from motorists who travel home after work.
Obviously, the original idea of relieving traffic congesting in the CBD areas during peak hours is no longer relevant. Rather, the Government’s aim is to collect road revenue whenever and wherever it can.
Prices of fuel cannot soar unchecked by the government. The authorities cannot put up more and more ERP gantries, extend ERP time and increase season parking fees all in the name of curbing congestion on the roads.
While the idea of of making motorists pay for the use of their vehicles rather than for simply owning them is not a bad one, the ERP system as implemented presently is flawed in several ways:
1.There is little accountability and transparency as to how much is being collected and in what way the revenue is being used.
2.As mentioned, ERP is in force during evening hours on roads used by motorists to return home.
3.Gantries are set up at multiple points within the city area, penalising motorists at several points even though they have no alternative routes once they are inside the CBD.
4.The ERP essentially renders the road tax obsolete. Nevertheless, the suggestion to scrape the road tax has yet to be implemented.


Taxes on motor-vehicles
The cost of purchasing a motor vehicle in Singapore includes the following:
1.The import price of the car, or open market value (OMV)
2.A registration fee*
3.Additional registration fee (ARF, 100% of OMV)*
4.Customs duty (20% of OMV)*
5.Certificate of Entitlement (COE)*
6.Goods and services tax (GST, 7% of OMV and custom duty)*
7.Distributor’s mark-ups (profit)
A car that is priced, for instance, at $12,000 would eventually cost about $50,000. In addition, road users have to factor in other costs such as:
1.Road tax*
2.Insurance
3.Petrol*
4.ERP*
5.Parking fees
Contained in eight of the items above (marked by asterisks) is some form of tax, direct or otherwise. Such taxes put a tremendous strain on those who rely on motor vehicles as part of their livelihood. On the other hand the well-off are largely unaffected.
For example, Minister Lim Swee Say recently commented that he, too, had to pay for the ERP and therefore motorists should be just as willing to abide by such regulations. He forgets that his annual salary is in the millions, and the levies and taxes hardly make a dent in his earnings. Ordinary working Singaporeans, however, continue to suffer the Government’s motor-vehicle tax system.


Certificate of Entitlement and the Vehicle Quota System
The Vehicle Quota System (VQS) allows the Land Transport Authority (LTA) to limit the growth of vehicles on the road to 3% a year. As part of the VQS, the Certificate of Entitlement (COE) is literally a certificate that gives its holder the entitlement to purchase a car in Singapore.
The system was introduced in 1990 with a par value of $1. However, bidding for the COE over the years fluctuated widely, and reached a high of over $100,000 during the mid-1990s. At the turn of the century the average revenue from COE was a whopping $1.5 billion.
While the implemented quota controls the number of vehicles, the bidding of COE is essentially a mechanism to distribute car ownership to the highest bidders. Again, such a system disadvantages the poor and has little effect on the rich.


Public transport: Is it really public?
The MRT and the bus systems claim that the public’s interest and convenience is at the heart of their operations. In reality, however, their companies are structured along private corporate principles, listed on the stock exchange with profit motivation as the core value.
Given such a narrow, profit-oriented ethos the existing monopolistic transport system can hardly be said to have the public interest at its heart. This is especially so when maximizing profit at the expense of captive users is its main driving force.
In 1970, in the name of major re-organization of bus system, the government forced ten private bus companies to combine into three. In 1973, the three bus companies were further merged to form a single Singapore Bus Service (SBS), now known as SBS Transit Ltd. And for some strange unexplained reason, in 1983 the Trans-Island Bus Services Limited (TIBS) became Singapore’s 2nd public bus operator. TIBS is now known as SMRT Buses Ltd. The first section of the MRT system opened for service in Nov 1987 from Yio Chu Kang to Toa Payoh.
Around this time, the government set up the Public Transport Council (PTC) to what it called “balance the need to safeguard public interest and the financial viability of public transport operators”. Who are in this council and how they are appointed are matters to which the public — the users of transport – has no say.
Spearheading land transport development, including public transport, is the Land Transport Authority (LTA), a statutory board under the Ministry of Transport.
The operating income (earnings before interest and taxes) of the SMRT Corporation in 2007 was $48 million. Over the years transport cost has escalated to become a major component in household expenditure.
It is vital that public transport has to be run for the benefit of the public and not for generating profits for the companies’ major shareholders and highly paid executives who sit in their air-con comfort unmindful of the plight of commuters. Long waiting time for buses and jam-packed MRT carriages are a common site.


Taxis
A taxi ride from Yishun to North Bridge Road at around 8.30 am costs a walloping $35.00. This includes the peak hour surcharge and the four ERP gantries the cab-driver has to pass under. $35.00 in the EZ-link card is equivalent to about 12 days of bus or train rides.
Taxi drivers say that the recent revision in taxi charges does not mean that their earnings are increased. Instead they are taking home less due to the exorbitant price of diesel. The surcharge for passing under an ERP gantry are not pocketed by them.
When commuters are finding that taking taxis are becoming too expensive and taxi drivers are finding that they are earning less, who does all this price increases benefit?
Taxi drivers have to drive even when they’re ill in order to cover their cab rental. Many work 12-hour shifts and take only one day off per week. In the meantime, the taxi companies continue to generate greater profit.


Proposals
1. The Government has the means to control the number of cars being allowed on the road through the COE system. Yet it continues to allow more cars in and then counter this by installing more ERP gantries. This problem can be rectified by having an effective and transparant control of cars being introduced on to Singapore roads.
2. Urban planning must be done more more intelligently. Widening of roads and improving current infrastructures need to be looked into instead of just taxing motorists through the ERP system. For example, it makes little sense to build a university right in the city centre and then cry that there is too much congestion there. Ministers should set the example by moving their offices outof the CBD into the less dense areas of the country.
3. Have separate categories for the COE-bidding system where the working class and not pitted against the rich. A millionaire family who wants the third car for their teenage son should not have unfair advantage over one who needs a vehicle to run a small business.
4. Significantly reduce or completely remove some of the taxes involved with purchasing and owning a vehicle. With the VQS in place there is aboslutely no need to continue to discourage care ownership through taxes.
5. The appointments to the PTC must be made and transparently. Elected members of the public must be able to sit in the council. Consultations with the public must be made openly and decisions of the PTC must be free of Government interference.
6. Whatever revenue collected from the ERP should be used to subsidising MRT and bus fares.
7. The companies running the MRT and bus systems must be freed of corporate-state monopoly and opened up for genuine competition between private companies that would provide the best of services at competitive prices.
8. Taxi drivers should be free to form their own unions to safeguard their interests. This will prevent the cab companies from exploiting both the drivers and passengers.

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