Singapore COEs, ERP and the questions in between

Singapore COEs, ERP and the questions in between

Solving the traffic congestion problem will become trickier

By Han Fook Kwang, Editor

IT IS not often that Singaporeans hear of differences in opinion within the highest ranks of Government, but there was a hint last week.
Senior Minister Goh Chok Tong was at a dialogue with Marine Parade residents when he revealed an interesting divide over transport policy.

He said Minister Mentor Lee Kuan Yew was in favour of making car ownership very expensive so that fewer people would own cars hence leading to less congestion on the roads.

Prime Minister Lee Hsien Loong, on the other hand, wanted more people to be able to own cars and to control congestion by applying more stringent usage measures like Electronic Road Pricing (ERP).

‘The PM believes it’s fairer if you can spread car ownership. Philosophically, the PM is right. In a practical sense, the MM is right,’ he said.

‘But then the problem is, the middle class can’t own cars, only the rich can. So the PM is right philosophically, and I think it’s the fairer approach. But then, more road congestion, and so ERP.’

It has always been a tricky balance, getting the right mix of ownership and usage measures to work, to ensure not just free-flowing traffic but also meet the growing aspiration of people to have their own set of wheels.

Which is the more effective method for Singapore? Which the fairer? Is it possible to be both effective and fair?

This is not just a matter of transport policy. It is also highly political in nature, especially when questions of fairness are raised.

Or to put it more bluntly, as SM Goh did, should only the rich be able to own cars?

You cannot get more political than that.

When the certificates of entitlement (COEs) were first introduced in 1990, it seemed that the ownership school had prevailed. If ever there was an ultimate weapon to control car numbers with absolute precision, this was it.

What could be more final a solution?

Except, of course, for the tricky business of deciding how many COEs are to be released.

For as long as I can remember, a growth rate of 3 per cent per year for the car population has been prescribed since COEs were introduced.

That growth rate has resulted in the number of cars going up from about 248,000 in 1990 to nearly 540,000 today.

That means one in seven persons today owning cars compared to one in eleven 18 years ago.

In other words, the COE system has not impeded more widespread ownership.

Those COE-rich years were accompanied by - from today’s perspective - a fairly relaxed set of usage measures. ERP charges were fairly low. Parking charges paled in comparison to those in cities like Tokyo, New York and London.

Those good old days clearly could not last. By the early 2000s, it was evident that the roads were becoming congested. Traffic volumes in parts of the city reached saturation levels with increasing frequency.

It took a new Transport Minister to declare a more aggressive approach to the problem. Mr Raymond Lim announced a new target for COE growth, halving it to 1 and a half per cent a year, from next year, and a widening of the network of ERP gantries, with higher charges all round.

Taken together, these measures signalled a major shifting of the gears on both the ownership and usage fronts.

What does this new regime mean for Singaporean motorists?

Apart from the obvious effect of making the cost of owning and using cars more expensive, there are another two important implications, the significance of which might not have sunk in yet.

First, any tightening of the COE supply favours existing car owners over future ones. In fact, everything else being equal, existing owners enjoy a windfall if a reduction in the supply of COEs results in prices going up, and a corresponding increase in the value of all cars, new and existing.

That is good news for those owning cars today.

But not so for prospective car owners, especially those buying their first cars, including younger generations of Singaporeans.

In fact, they face a double whammy. Not only will COE supply shrink but Singapore’s population is expected to increase as the Government woos skilled immigrants to settle here, a significant proportion of whom might be expected to be of the car-coveting lot.

Younger Singaporeans will have to compete with new immigrants for the reduced car quota.

It is tough on them, but it is politically a more palatable solution than relying more heavily on usage measures like the ERP which would affect a far larger group of motorists.

In fact, by reducing the total number of COEs, the authorities have given themselves more breathing space to go easier on usage measures.

The second implication has to do with public transport.

The Government recognises that the key to getting people to give up owning and using their cars is to improve public transport, and it has announced a $50 billion plan to expand the MRT network over the next 12 years.

That is a good start, but I wonder if it is enough.

When thousands of would-be motorists who have been priced out of owning cars because of the reduced COE allocation join the MRT-and-bus commuting public every year, the standards they expect will invariably be higher.

As high perhaps as commuters in major cities such as Tokyo, London and Paris, with MRT stations within walking distance in almost every part of the city.

Singapore needs to ramp up its network - and make up for lost time brought up by the COE-rich years - if it wants to make public transport a viable alternative.

If not, the combined angst of a car-deprived population and a frustrated commuting public might exact quite a political price.

Source : Straits Times - 05 Sept 2008

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