APPLYING THE POLLUTER PAYS PRINCIPLE IN THE MANAGEMENT OF ROAD TRANSPORTATION IN SINGAPORE

1. APPLYING THE POLLUTER PAYS PRINCIPLE IN THE MANAGEMENT OF ROAD TRANSPORTATION IN SINGAPORE IUCN Academy of Environmental Law 7th Annual Colloquium “Environmental Governance and Sustainability” LYE Lin-Heng Deputy Director, Asia-Pacific Centre for Environmental Law (APCEL) Faculty of Law National University of Singapore email : lawlyelh@nus.edu.sg

2. SINGAPORE - From Garden City to City in a Garden

3. “We have built, we have progressed. But there is no hallmark of success more distinctive and more meaningful than achieving our position as the cleanest and greenest city in Southeast Asia”Lee Kuan Yew, 1st Prime Minister of Singapore, Launch of month-long Keep Singapore Clean campaign, 1968

4. Port of Singapore

5. A “Fine” City

6. Reminder in a Bus

7. Mass Rapid Transit (MRT) Trains

8. Public Housing in Singapore • Today, 81% are housed in high-rise apartments, built by the Housing and Development Board (HDB) • HDB formed in 1960, soon after self –government was attained • Built over 500,000 flats in 5 years • Since 1964 – Home Ownership programme – purchase of 99 year leasehold under easy finance schemes • Part of Nation Building • Today, there are almost 900,000 flats across Singapore, housing 81% of our population. • Of the people living in HDB flats, more than 95% own their homes.

11. The electronic road pricing (ERP) system

12. Outline of presentation • Overview to Singapore • Measures to reduce congestion: land use planning • Implementing the “Polluter Pays” principle in vehicle ownership and Use - vehicle taxes - the Certificate of Entitlement (COE) - road pricing - car park charges - fuel costs • Special car categories – weekend or ‘off-peak’ cars, company registered cars, vintage cars • The “Green Alternatives” - hybrid and CNG cars - car sharing - encouraging bicycles

13. Singapore island - only 23 x 42 km (708 sq km) Road network – 3,200 km Expressways – 170 km. • Cars : 1.17 cars for every 10 persons (2006); • Singapore - 1.07 cars per 10 persons (31 Dec 2008) • US – 4.5 cars for every 10 persons • HK – 0.74 cars for every 10 persons

14. Dealing with Traffic Congestion • Traffic congestion a problem since 1960s • Peaked in 1975 – average speed of rush-hour traffic : 19 km per hour • Car ownership continued to rise – increasing 65% in 10 years • Roads now take up 12 % of land space

15. Measures to address congestion : Land use planning • 1971 – Long-range Concept Plan : ‘Ring’ plan from Central Catchment area, linked by roads • 1991 – Revised Concept Plan (in 10 yearly intervals till population reaches 4 million) ‘Constellation’ pattern, 4 new areas fanning out from Central Business district – each with new residential and commercial centres • Strategic Transport Plan – to integrate urban development with transport planning • 1995 – establishment of Land Transport Authority (LTA) to provide a ‘world class transport system’

16. Strategy of the LTA –Integrated land use /transport planning • Integration of land use with town and transport planning – satellite towns to bring jobs to people, minimize need to travel; • Development of comprehensive road network with modern technology eg. intelligent traffic management systems “green wave” • Improvement of public transport – optimize MRT, LRT, buses, cabs • Effective management of the growth and use of motor vehicles by creative pricing, taxes and other policies • Optimise road networks – expansions judiciously planned

17. The Management of Vehicle Ownership and Use • Measures to discourage car ownership : To increase cost of cars via various taxes, so that fewer persons can own cars - “polluter pays” principle • Measures to control the number of cars on the road - introduction of the Certificate of Entitlement (COE) to own /use a car for 10 years - restricting the number of COEs per year based on projections by Land Transport Authority (LTA) 3. Measures to increase the costs of driving a car - - through congestion pricing, high fuel costs, high parking charges, road tax based on engine capacity.

18. I. Taxes & other fees for new Motor Vehicles • Excise duty: 20% of Open Market Value (OMV) for cars OMV = purchase price, freight, insurance, handling and all other charges incidental for sale of vehicle from country of origin to S’pore • Registration Fee - $140 (US$70). It was $1,000 until introduction of Electronic Road System (ERP) on 1 April 1998. 3. Additional Registration Fee (ARF) : 110% of OMV (formerly 140%) • Goods and Services Tax (GST) – 7% of cost of car, based on cost, insurance and freight plus customs duty

19. II. Vehicle OwnershipThe Vehicle Quota System and the Certificate of Entitlement (COE) • Started in May 1990 following recommendations of Select Committee on Land Transportation. • The number of new vehicles allowed each year is pre-determined annually, taking into account : - no. of vehicles de-registered - traffic conditions generally - presently, 3% increase allowed p.a. • All new owners must bid for a COE that only lasts 10 years for all vehicles except taxis (7 years). • On expiration, owner may bid for another COE (10 years or 5 years)

20. THE COE • LTA allocates a specific number of COEs for each month, divided into 5 categories (see Table). • Bidding for COEs - monthly : - Bids submitted to LTA directly or through ATMs, phone banking, internet of banks. - Bids considered in descending order - COEs awarded at price of the lowest bidder whose acceptance would exhaust the pre-determined supply for that month : all bidders who offered this amount or more will get a COE. • Bids refunded for unsuccessful applicants • Cost of the COE added to cost of the car - reduces affordability of cars

21. Results for OCTOBER 20082nd Open Bidding Exercise Next bidding: 03/11/2008 12:00 hrs COE prices for October 2009

22. III. Measuresto increase costs of motoring /discourage use These include : • Road tax – based on engine capacity, assessed per annum • Electronic road pricing (ERP) • High fuel costs – taxes on fuels • Parking fees – can be prohibitive in CBD though not as high as many cities in developed world - 8 hours parking in CBD costs S$92.63 (London); $74.12 (Sydney) ; $62.60 (Tokyo); $38.32 (HK); $27.16 Singapore (ranked No. 52 out of 138 cities)

23. Other taxes on car ownership (contd) • Road Tax per year – increases with engine capacity • Annual road tax for 1,600 cc car = S$ 874 ($1,440 in 2002 ); further reduced as from June 2008 to $744. • Annual road tax for diesel cars = 6 times rate of non-diesel car • Annual road tax for Euro IV diesel car = 4 times rate of non-diesel car 6. Cars more than 10 years old – surcharge of 10% per year rising to 150% for cars 15 years and older

24. I. Congestion Pricing • Area Licensing Scheme (ALS) • Started in 1975 as morning peak-hour licensing scheme for Central Business District (CBD) • Car pools of 4 persons or more exempted • By 1994 – whole day ALS, from 7.30 am to 7 pm (except sundays and saturdays after 2 pm). 2 types of licences : (a) Full day : 7.30 am to 7 pm (weekdays), 7.30 – 2 pm (saturdays) (b) Part day : 9.30 am to 4.30 pm (weekdays), 9.30 am to 2 pm (saturdays) • Company registered cars pay double

25. CONGESTION PRICING - Early Years - The Area Licence Scheme (ALS)

26. Effect of ALS • Traffic volumes during morning peak hours fell immediately by 45% • Average speed increased from 18 to 35 km per hr. • But car ownership continued to rise • Therefore, need to curb car ownership, through car quota scheme and COE

27. The Initial Years – Area Licence Scheme (ALS) and COE • Motor taxes were a valuable revenue source for govt. • In 1993, these taxes formed : - 5% of GDP, - 29.1% of total tax revenue - 22.9% of total operating revenue of govt. - facilitated implementation of ERP (costing S$39M)

28. Special categories of cars • Week-end car (w.e.f.1 May 1991) Restricted use : * sundays * saturdays after 3 pm * weekdays from 7 pm to 7 am * may be used during prohibited times on payment of $20 license fee • Separate COE category • Tax rebates on registration fee, import duty and COE premium • May convert to normal car on payment of $800 conversion fee, difference in tax rebates and COE premium

29. 2. Off-Peak Cars • From 1 October 1994 – replaces weekend cars • No separate COE category • Tax rebate :S$17,000 • Annual road tax savings $800 • Normal cars may be converted into off-peak cars. • Weekend cars automatically converted into off-peak cars when electronic road pricing system (ERP) implemented island-wide. • Special red number plate, welded to bodywork

30. 3. ‘Classic’ Cars • Cars that are 35 years or older • COE – 10% prevailing quota premium • Road Tax : S$280 per year • Can only be used 28 days a year – special coupon for each day of use • Inspected for road-worthiness every 2 years • Special number plate : white letters on red and yellow background, welded to bodywork

31. 4. Foreign registered vehicles • Foreigners who live/work in S’pore not allowed to drive foreign registered vehicles. • Restrictions akin to off-peak cars • Monthly permit - $340 or $30 per day.

32. Reducing vehicular pollution • Increased costs of motoring discourages car purchases, reduces number of cars • COE ensures most cars are not more than 10 years old – cleaner, less pollutive • Lead-free petrol/gasoline • Vehicle emission standards & enforcement • Compulsory inspections for all vehicles that are 3 years old – for roadworthiness, air emissions • Encouraging cleaner cars – hybrids, CNG cars

33. Rebates for Green Cars • For electric, hybrid or natural-gas cars registered between 1 January 2006 and 31 December 2009, a rebate equivalent to 40% of the OMV can be used to offset the ARF payable at registration. • Introduced in 2001. Revised 4 times. Now extended to 2011. • Few takers – as of June 2009, only 0.88% of cars (2,296 hybrids), 4 CNG, 1 electric, 2,634 bi-fuel vehicles. • As from 2012, CNG vehicles will be removed from GVR. Plus duty of S$0.20 cents per kg will be imposed. • Hybrid cars still cost more. - June 2009 Toyota Prius $88,988 c/p Corolla Altis $62,988

34. Rebates for de-registering cars • Rebates on OMV if car is de-registered (Preferential Additional Registration Fee [PARF]) – amount of rebate depends on age of car at time of de-registration, ranging from 80% (cars below 5 years old) to 80% (9-10 years old) • These cars are either exported or scrapped. • Q – environmental footprint if scrapped?

35. Self-Importation of cars • Only cars less than 3 years old may be imported into Singapore • Age of a car is dated from date of its first registration in a foreign country. • If this cannot be ascertained, the age is deemed the first day of manufacture • Must use unleaded petrol, CFC-free airconditioners, pass mechanical inspection by Land Transport Authority

36. Electronic Road Pricing (ERP)System • Commenced April 1998 • Cost S$197 M (US$107M) to install and S$39 (US$21.3M) to operate in the fist 5 years. • IVU (in-vehicle unit) electronic smart card reader Costs S$100 (US$55) • enables fine-tuning of road charges at different times of the day, month etc. • Just introduced – pay by credit card

37. Minister for Communications, 1999, Mr MAH Bow-Tan “The ERP is a critical policy instrument to manage congestion on our roads.Together with the Vehicle Quota System, they keep our roads flowing freely, so that goods and people do not get stuck in traffic jams. It has had a positive impact on business, not only in direct cash terms but also in terms of faster travel times that lead to an overall lowering of transport costs. This ultimately helps us to maintain our competitiveness as an efficient international manufacturing, logistics and business centre.” ERP system now implemented in London and other cities.

38. New Alternatives : Car Sharing • May 1997 car sharing operative initiated. • Entrance fee : $100 + annual fee $100 + refundable deposit $200 • Members billed monthly, charges deducted through Giro. • Charges on a per hour basis, • After making a booking, members collect car key from a centre by entering a code. • Upgrading : GSM mobile system – key in reservations via phone or internet, flash personal smart card to a sensor in the car to unlock, key in pin and drive.

39. Car sharing

40. Honda Car Sharing to end – 1 March 2008

41. LTA’s Transport Review 2006-2008 Concerns : • Car population continues to rise with increased affluence – grew almost 40% in last 10 years • Cars here also among the most extensively used in the world, averaging 21,000km per year c/p London (9,100km); Melbourne (13,900km), Chicago (19,800km) • Current vehicle growth of 3% per year is not sustainable. • By 2007, average traffic speed in CBD dropped by over 20% since 2002.

42. Solutions to congestion 2008-9 • COEs will have to be reduced by 50% • More ERP gantries will be built – traffic flow will be closely monitored to see whether they should be implemented • Need to increase ERP charges • Facilitate payment of ERP through credit cards • Monitor traffic conditions 24-7 through cameras – public information system • Build more expressways, parking guidance systems • Promote alternative transport systems eg. Bicycles, MRT, LRT

43. New Policies initiated by new Minister for Transport, Mr Raymond Lim Make public transport a choice mode of transport 1. Buses Improve bus services, allow buses to duplicate rail network • Increase frequencies of bus services & feeder services to MRT, LRT • Increase premium bus services • Full-day bus lanes • Motorists must give way to buses exiting from bus bays • Buses move off first at traffic lights • All buses to be wheelchair friendly by 2020

44. Transport Review 2008 (contd) • Trains • Increase train capacity & frequency • Revise rail operating performance standards – more frequent services during peak periods (2-3 minutes morning; 5-6 minutes lunch time – currently 7 minutes • Double rail network – new lines • Facilitate cyclists – trail period to allow foldable bikes on board, improve bicycle parking facilities • ERP • 6 new gantries added this year, and another 6 will be added but not all in operation, pending careful study • “ERP gives people a choice – pay for speed” – Minister of Transport, Mr Raymond Lim

45. Conclusion • Tax policies “Polluter pays principle” are effective to reduce road congestion but there must be constant vigilance • Need for integration of measures aimed at effective transport management. Economic measures are just 1 component. • Need for effective land use planning, infrastructure and public transport policies, laws, enforcement. • Q – should public transport be provided by government or private sector? • Which Ministry is responsible? Ministry of Finance to give more generous rebates for green vehicles!