Hansard, 1990-01-15

Under the provisions of clause 2(d) of Article 46 of the Constitution of the Republic of Singapore, the following Members have been granted permission to be or to remain absent from sittings of Parliament (or any Committee of Parlia- ment to which they have been appointed) for the periods stated:- Mr Chiam See Tong (Potong Pasir) - from 4th to 31st December, 1989. BG Lee Hsien Loong (Teck Ghee), Minister for Trade and Industry and Second Minister for Defence (Services) -from 7th to 11th December and from 29th to 30th December, 1989. BG George Yong-Boon Yeo (Aljunied GRC), Minister of State, Ministry of Finance and Ministry of Foreign Affairs -from 9th to 16th December, 1989 and from 5th to 10th January, 1990. Dr Dixie Tan (Ulu Pandan) - on 10th December, 1989. Mr Goh Chee Wee (Boon Lay) - from 11th to 23rd December, 1989. Mr Choo Wee Khiang (Marine Parade GRC) - from 11th to 18th December, 1989. Dr Hong Hai (Bedok GRC) - from 11th to 15th December, 1989. Mr Charles Chong (Sembawang GRC) - from 11th to 15th December, 1989. Mr S.Chandra Das (Cheng San GRC) - from 12th to 17th December, from 25th to 29th December, 1989, from 3rd to 6th January, from 14th to 19th January and from 21st to 23rd January, 1990. Mr Chin Harn Tong (Aljunied GRC) - from 13th to 15th December, 1989. Encik Wan Hussin bin Hj Zoohri (Aljunied GRC) - from 13th to 20th December, 1989. Dr Arthur Beng Kian Lam (Fengshan) - from 14th December, 1989 to 2nd January, 1990. Mr Yeo Toon Chia (Ang Mo Kio) - from 15th to 31st December, 1989. Encik Abbas Abu Amin (Pasir Panjang GRC) - from 16th to 26th December, 1989. Mr Ch'ng Jit Koon (Tiong Bahru GRC), Minister of State, Ministry of Community Development - from 17th to 23rd December, 1989. Mr Abdullah Tarmugi (Siglap), Deputy Speaker - from 19th to 29th December, 1989. Encik Ibrahim Othman (Bedok GRC) - from 22nd to 26th December, 1989. Mr Mah Bow Tan (Tampines GRC), Minister of State, Ministry of Communications and Information and Ministry of Trade and Industry - from 22nd to 31st December, 1989. Mr Chua Sian Chin (MacPherson) - from 23rd December, 1989 to 15th January, 1990. Dr Ahmad Mattar (Brickworks GRC), Minister for the Environment - from 25th December, 1989 to 1st January, 1990. Dr Tay Eng Soon (Eunos GRC), Senior Minister of State, Ministry of Education - from 26th to 30th December, 1989 and from 17th to 18th January, 1990. Encik Othman bin Haron Eusofe (Marine Parade GRC) - from 26th to 28th December, 1989. Dr Wong Kwei Cheong (Cairnhill) - from 26th to 29th December, 1989. Mr Peter Sung (Buona Vista), Minister of State, Ministry of Foreign Affairs and Ministry of National Development - from 28th to 30th December, 1989, from 4th to 11th January and from 13th to 16th January, 1990. Mr Ng Pock Too (Nee Soon Central) - from 3rd to 12th January, 1990. Mr Lim Chee Onn (Bukit Merah) - on 3rd and 4th January and from 8th to 16th January, 1990. Mr Ong Teng Cheong (Kim Keat), Second Deputy Prime Minister - from 4th to 10th January, 1990. Mr Teo Chong Tee (Changi) - from 7th to 13th January, 1990. Mr Lew Syn Pau (Tanglin) - from 20th to 25th January and from 3rd to 11th February, 1990. TAN SOO KHOON Speaker Parliament of Singapore

The following Bills were assented to by the President of the Republic of Singapore on the date stated: 27th December, 1989 (i) Companies (Amendment) Bill; (ii) Misuse of Drugs (Amendment) Bill; (iii) Trustees (Amendment) Bill; and (iv) Environmental Public Health (Amendment) Bill. TAN SOO KHOON Speaker Parliament of Singapore

asked the Minister for National Development whether he will allow the purchase of Housing and Development Board flats in the open market by family units where only one member is a permanent resident.

Mr Speaker, Sir, prior to August 1989, only Singapore citizens with one other family member who is a citizen or permanent resident were eligible to purchase flats directly from HDB or in the resale market. In August 1989, HDB relaxed its rules to allow permanent residents to buy HDB flats in the resale market. But a buyer who is a permanent resident must have a family nucleus with at least one other member in his household who is also a permanent resident. To allow a family where only one member is a permanent resident to buy an HDB flat would mean treating the permanent resi- dent more favourably than a Singapore citizen. This is not fair to our citizens and is not good public housing policy. We will not allow a family unit where one member is a permanent resident and the others are non-permanent residents to buy an HDB flat.

Sir, may I ask the Senior Minister of State whether the present policy allows Singapore citizens, regardless of their income level, to buy flats in the open market? Because he did mention that to allow a family where only one member is a permanent resident to buy a flat from the open market would mean treating the permanent resident more favourably than Singaporeans.

Mr Speaker, Sir, any Singaporean is eligible to buy an HDB flat from the resale market provided he complies with the other requirement, ie, family nucleus. And within the family nucleus, he must have either a citizen or another PR.

Sir, does this mean that if a family unit has only one Singaporean and no permanent resident, the family unit is not permitted to buy a flat from the open market?

That is correct, Sir.

Sir, in that case, may I ask the Senior Minister of State to take this particular situation into consideration? May I ask the Senior Minister of State whether he will agree with me that buying flats from the open market will not incur the element of subsidy from the Government, since it is an established point that the subsidy has been taken away in the open market. May I also ask him whether he views it equitable to treat long-serving permanent residents of more than 20-30 years in Singapore in this manner when the present policy allows new immigrants, the moment they are given PR status, PR status will also be given to all their family members so as to allow them to buy flats in the open market?

Mr Speaker, that is a very lengthy question. I do not really know which particular part of the question I should address. But let me assure the Member that the our policy on eligibility for public housing should be fair to our Singaporeans and should treat our Singaporeans better, if not equal, to permanent residents, and this is regardless of whether they are old or new permanent residents.

Sir, may I ask the Senior Minister of State whether he considers it fair to allow new permanent residents to buy flats whereas he does not allow a Singaporean with a proper family unit to buy a flat if this Singaporean happen not to have a Singapore citizen or a permanent resident in his family? I would say that this policy is not fair to that particular Singaporean.

I think that is a gross misunderstanding of the policy. If a Singapore citizen has a family here and it is quite likely that in due course he will be able to sponsor his other family members to become permanent residents, then he will be able to enjoy the benefits of public housing. The Member is trying to compare with some of the new permanent residents. May I remind the Member that new permanent residents must also comply with our family nucleus requirement. Therefore, it is not a case of a single person coming here as a permanent resident and suddenly he becomes eligible to purchase a resale flat in the open market. He must also have a family and the family must comply with our requirement; ie, within the family, there must be at least one other permanent resident.

Sir, one final question, please, with your indulgence. May I just ask why the Senior Minister of State objects to these permanent residents buying flats in the open market when these flats are no longer subsidized by the Government?

HDB flats are sold to our citizens on a subsidized basis and we have gone through all this before. The fact that they have been sold by the owners on the resale market does not mean that the owners have fully exploited the potential because the supply of HDB flats is there. It is for that reason that the prices of HDB flats even on the resale market are still lower than private housing. The element of subsidy is to some extent carried forward. Otherwise, some of our newer HDB resale flats, like Executive flats, ought to cost more, if not the same as some private housing. But the Member knows that this is not so. I think it is for this reason alone that we ought to continue with this policy of requiring a citizen or a PR within the family nucleus for eligibility to purchase HDB flats.

asked the Minister for National Development how many applicants have selected their Housing and Development Board flats since the HDB changed its allocation system in 1989; and how many applicants have withdrawn their applications after failing to get the estates of their choice.

Mr Speaker, Sir, when the booking system was implemented on 3rd July 1989, there were about 40,000 applicants on the waiting list for 4-room, 5-room and Executive flats. These 40,000 applicants have been dealt with as follows. First, 30,000 of them have been successfully assigned to New Towns of their choice. They are being invited in batches to book flats. So far, 2,200 applicants have been invited to book flats in the Towns of their choice. out of these, 1,800 have selected their flats. The balance of 400 will be presumed to have withdrawn their applications if they do not select a flat. That leaves us with another 10,000 applicants. Out of these 10,000 applicants, 4,000 applicants did not get a New Town of their choice either because they did not indicate a sufficient number of New Towns or they put all their choices in one or two popular New Towns. These 4,000 are considered to have withdrawn their applications. They can apply for flats under the new booking system or buy one under the Walk-In-Selection Scheme or from the resale market. 3,000 out of the 10,000 withdrew their applications and dropped out completely from the waiting list. Finally, another 3,000 have either purchased flats under the Walk-In Selection Scheme or from the resale market. Sir, all those who have decided to withdraw their applications will have their down-payments refunded completely.

Sir, what are the options available to those applicants who either withdrew voluntarily or were forced to withdraw their applications, in particular those applicants who no longer qualify to apply for HDB flats under the income ceiling rules?

Mr Speaker, Sir, those who dropped out or withdrew from the waiting list because they have not succeeded to either select a New Town or a flat will have to re-apply to purchase flats under the new booking system when these flats are offered for selection. Amongst these applicants, there may be some, as the Member has indicated, who find that their present income level has now exceeded the permitted limit, which is $5,000 per month. I will ask HDB to consider exempting this group of applicants from the income ceiling when they subsequently re-submit applications under the new booking system.

asked the Minister for the Environment what measures the Government has taken to minimise the shrinking of the ozone layer.

Mr Speaker, Sir, the depletion of the ozone layer has been linked mainly to the presence of chlorofluorocarbons, more commonly referred to as CFCs, and halons in the stratosphere. It is a problem of global dimensions and only through concerted international co-operation can we hope to prevent further damage to the ozone layer. Introduced in September 1987, the Montreal Protocol for the Control of Ozone Depleting Substances is an international treaty which provides the framework and controls for a regulated reduction in the use of some types of CFCs that are very damaging to the ozone layer. Singapore became party to this treaty in January 1989. Sir, since October 1989, measures have been taken to reduce controlled CFCs imported into and used in Singapore to 1986 levels. The Government has introduced legislation to control the import and export of controlled CFCS. Further reductions will be made in the quantity of controlled CFCs imported into and used in Singapore to 80% of 1986 levels commencing July 1993 and 50% of 1986 levels commencing July 1998. Three types of halons, controlled under the Montreal Protocol, will be frozen at 1986 levels commencing January 1992. Sir, to minimise the impact on our industries, financial assistance will be provided by the EDB as well as technological assistance by SISIR to identify and develop suitable substitutes and CFC recycling processes.

Sir, apart from Singapore becoming a signatory to the Montreal Protocol, what are the companies in the affected industries doing to reduce their consumption of CFCs?

Mr Speaker, Sir, first of all, let me say that one of the major users of CFCs in Singapore is the electronic industry. And here the CFCs are used as a solvent or cleansing agent. As far as I know, a number of leading disk drive manufacturers in Singapore are investing large sums of money on water-based cleaning systems which, according to them, will substantially reduce the dependency on CFCs. I am also aware of a supplier who is doing something to reduce the consumption of CFCs. This particular supplier who supplies refrigerants to the marine industry is offering services to help ships convert their cooling systems to a type of CFC which is not restricted.

asked the Minister for the Environment what steps are being taken to clarify to foreign tourists the recent legislation against smoking in restricted places so that they can better understand its rationale and implementation.

Mr Speaker, Sir, I am answering on behalf of my Minister. The managements of premises which come under the Smoking (Prohibition in Certain Places) Act have a major role to play in enforcing the smoking prohibition. Under the Act, the managements have to put up appropriate signages to inform their customers that smoking is not permitted on their premises. In the event that a customer smokes in a prohibited place, the management will have to inform him of the prohibition and then ask him to either stop smoking or leave the premises. If the customer persists in smoking on the premises, the management may then call on the Ministry's public health inspectors or the Police for assistance. To ensure that managements understand the rationale behind the legislation and are able to clearly explain the probibition to their customers, my Ministry held dialogue sessions with members of the Singapore Hotel Association and the Restaurant Association of Singapore before the law came into effect on 1st November 1989. Relevant sections of the law, as well as literature on the harm of cigarettes sidestream smoke, were distributed to members of the associations. The dialogue sessions saw an active participation from the association members, and I am pleased to inform the House that they followed up with positive measures to enforce the law. "No-smoking" signs were placed in the prohibited places to remind both the local population and tourists of the prohibition. The staff of the prohibited places were briefed on the way to approach smokers to advise them on the prohibition. Some of the hotels also highlighted the prohibition in their in-house magazines. Since 1st November 1989, officers from my Ministry have closely monitored the premises placed under the ambit of the Smoking (Prohibition in Certain Places) Act. The monitoring has shown that managements have played their part in enforcing the law. Members of the public including tourists are today observing the smoking prohibition.

asked the Minister for Home Affairs whether the Government will consider relaxing its demands on political detainee Chia Thye Poh and immediately and unconditionally release him from detention in Sentosa now that the political situation has completely changed in the Thai-Malaysian border and the West.

Mr Speaker, Sir, let me first correct the Member: Chia Thye Poh is not a detainee. He was released to Sentosa in May 1989. At the time of release, the Government made it very clear that the lifting of the restrictive conditions and allowing him to return to the main island depends on the assessment of the ISD as to whether he still poses a security threat. It was also pointed out that the Government had consistently required detainees associated with the CPM to renounce the CPM or disavow the use of force before releasing them. Chia has refused to do so. However, the ISD was satisfied that the CPM to which Chia was linked had been sufficiently weakened and disrupted such that Chia's release to Sentosa would not pose a security problem. At the time of making this assessment, the ISD had taken into consideration the likelihood of the CPM concluding an agreement with the Malaysian and Thai Governments. Sir, the CPM has only agreed to disarm but not disband itself. Thus the party organisation remains intac, and so also its ability to conduct subversive undergrouund and United Front acitivities in which Chia Thye Poh was involved. We must also not forget that the CPM had given up its arms once before when ther Japanese Occupation ended in 1945. However, it was able to resume armed insurgency and subversive activities shortly thereafter. It also remains to be seen if all the CPM members emerge from the jungles as envisaged under the agreement on termination of hostilities. Therefore, as long as the CPM continues to exist, even without its armed units, the Government must be vigilant. Therefore, there is no question of lifting of the restrictive conditions on Chia merely because of the developments on the Thai-Malaysian border or elsewhere. These conditions on Chia will be lifted when the Government, on ISD's advice, is satisfied that Chia poses no security risk. Until then, Chia will remain on Sentosa.

Whatever the label they may put on detainee Chia Thye Poh, what is the security threat that he is now posing in Singapore?

Mr Speaker, Sir, that question has been answered by me in this House on several occasions. He has refused consistently to renounce the CPM or the use of force. Nevertheless, we have released him to Sentosa. The strict restrictive conditions are necessary, as we said in the Government press statement, to make sure that he does not get involve again with the CPM or be involved in communist United Front activities. And until we are satisified that he poses no risk, that will be the position.

If Mr Chia Thye Poh has been detained because he has refused to renounce the use of force, since when has Chia Thye Poh really used force in any way? Has Government been able to prove that he has used force or advocated the use of force? Therefore, to put a label on him and use that as an excuse to detain him is not fair at all.

Mr Speaker, Sir, it is not an excuse. In this House, I have given a list of instances where Chia Thye Poh advocated the use of force. It is all documented in Hansard and I do not think, Mr Speaker, Sir, you want me to repeat what can be found in the Hansard.

Does the Singapore Government accept the fact that the CPM has given up the use of force pursuant to its agreement at the Malaysia-Thai border?

Mr Speaker, Sir, I hope the Member will read the communique that has been published with care. The CPM has not disbanded itself, nor agreed to cease to be a party organisation. All that it has done is to announce the cessation of hostilities. I have asked the Member to read carefully what has been published. It has not agreed to give up its struggle by any other means.

The Minister keeps on talking about the list and instances he enumerated in Parliament House. But if Chia had really advocated the use of force, why should he not be put on trial in a court and be proven guilty?

Mr Speaker, Sir, we have been through all this in the several debates we had on the ISA or on Marxist detainees as to why ISA cases cannot be put for judicial review in a court of law. If the Member, notwithstanding the several debates we have had in the House, wishes to have another debate, we can always do so. He can file a motion and the Government will again reiterate and explain why for security cases the Executive decision cannot be justiciable in a court of law.

Does it mean that Mr Chia Thye Poh, Teo Soh Lung and Vincent Cheng have to go on TV and renounce whatever they believe in or not believe in before they get a release?

I do not think the Member expects me to answer that question, because we have never laid as a pre-condition that they must appear on TV. The release is based on the security assessment and that is the basis for release, continued detention or lifting of restrictive conditions.

asked the Minister for Finance whether he will make it a legal requirement for directors and executives of publicly listed companies to make detailed disclosures of their annual incomes and perks and/or cash compensations.

Mr Speaker, Sir, the Ninth Schedule to the Companies Act already provides for the disclosure of directors' renumeration not only for public-listed companies but for all companies. The audited accounts of a company presented to shareholders at the company's Annual General Meeting must disclose the total amount paid to directors as remuneration for their services inclusive of fees, percentages, bonuses and commissions or other emoluments. Should a shareholder require further details or clarification, he is entitled to question the directors at the company's Annual General Meeting. Similarly, there is nothing to prevent shareholders from querying directors at the Annual General Meeting on the emoluments and perks paid to the senior management of the companies. In addition to the Ninth Schedule requirement, section 164A of the Act provides that shareholders may at any time by notice require the company to disclose the emoluments and other benefits received by the directors. There is therefore already in existence an adequate framework for the disclosure of directors' emoluments. There is therefore no need for further legislation in this area at this point of time.

Sir, does the Minister agree that in fact the Ninth Schedule gives only the remunerations of executive and non-executive directors, all lumped together and not the detailed remunerations?

Yes, Sir, I am well aware of that. As far as I am aware, there is no great public pressure for detailed disclosure of individual director's emoluments. If the Member believes that this is so, I think he will need to demonstrate that this is indeed the case.

Is the Minister aware that in fact there is a move in England to change their law to make directors release details of their remunerations?

I do not think we are concerned at this point of time over legislation in other countries.

asked the Minister for Finance (a) whether the Collection Division of the Inland Revenue Department is under-staffed; and (b) if he will give the number of complaints received both by telephone and letters in relation to this Division from 1988 up to the latest available date.

Mr Speaker, Sir, the Inland Revenue Department (IRD) has been experiencing some staff shortages in recent years. This is a problem which is not just peculiar to the Department but is one encountered by all major employers in the public and private sectors who have to cope with the tight labour market brought about by the strong economic growth in Singapore. The Collection Division of the Inland Revenaue Department, in particular, has been operating with about 15% of its posts remaining vacant over the last two years. To cope with an increasing workload despite the staff shortage, the Inland Revenue Department has extensively computerised its operations and simplified work procedures. The staff shortage is expected to ease as a result of the recent revision of salaries and promotion guidelines for the Department. This will help IRD to retain experienced staff who have marketable skills widely demanded by the booming financial sector.

asked the Minister for Labour if he will explain fully the rationale for the proposed increases in foreign maid levy to $230 in February 1990 and $250 in August 1990.

asked the Minister for Labour whether the tax relief to be granted to working women as a result of the increased levy on foreign maids will be extended to single working parents like widowers and male divorcees who also engage foreign maids to look after their young children.

Mr Speaker, Sir, may I have your consent to answer Questions Nos. 8 and 9 together as they are related?

You have my consent.

The Government liberalised work permit controls in 1978 to allow the import of maids from non-traditional sources like the Philippines and Sri Lanka. Before that, Singaporeans who could afford maids had to recruit them locally or from Malaysia at relatively high wages. Since 1978, the number of foreign maids has shot up from several thousand to nearly 50,000 today. Foreign maids constitute more than a quarter of the total foreign workforce in Singapore. Foreign maids come from low-wage countries and some are prepared to work for as little as $150 per month, which is still higher than what they can earn back home. Without the levy, the number of maids could easily double or even quadruple. For example, the number of maids could mushroom to more than 200,000 if every mother who is working today decides to hire a maid. The ultimate number could be even higher considering that there are about 600,000 families in Singapore, the vast majority of whom are managing without a maid. If maids are so readily available at very low cost, the existing methods of family support and domestic help will rapidly disappear and Singaporeans will become ever more dependent on foreign maids. Alternatives such as child care centres and part-time work will not develop. The Government has to moderate the growing demand for maids and other foreign workers to minimise their long-term social and economic costs. It does so through the levy as a pricing mechanism as well as by administrative controls. When the demand continues to grow as at present, the levy has to be raised to con- tain the demand. Conversely, if the economy slows down and the foreign workforce declines, the levy can be reduced accordingly. A foreign maid is also a foreign worker and poses similar economic and social problems. An unskilled foreigner could be hired as a maid or as a factory worker. If the housewife who employs the maid does not go out to work, then the maid has not made a contribution to our economic growth except what she consumes here, unlike the factory worker. Such situations result in a leakage of our foreign exchange reserves. If the maid displaces the housewife into the job market, then effectively and indirectly we would have increased our workforce by importing an additional foreign worker. If maids are priced too cheaply, even housewives with low skills will be inclined to hire maids to look after their families and take up low paid jobs. The increased pool of unskilled workers will depress local wages and attract labour-intensive, low value-added industries. The number of maids therefore has to be controlled as part of the total pool of foreign workers. Maids also pose various social problems. For example, some foreign maids want to marry Singaporeans and settle here but are not allowed to do so. We can well envisage the total impact on our society if we were to have a whole army of maids here. No developed country admits foreign maids as liberally as we do. The Government has been relaxed towards the employment of foreign maids because it recognises that hiring them encourages our women, especially those with higher skills and qualifications, to continue working and bring up their families. With the levy adjustments, the maid levy will still be $50 less than the foreign worker levy. Employers are allowed to deduct the cost of hiring foreign workers against their taxable income. Similarly, married women who need maids to continue working are allowed to deduct from their taxable income twice the maid levy which approximates the cost of hiring the maid. This tax concession will soften the impact of the levy increase on working wives. The question by the Member for Changi is similar to the requests by various employers to be included in the tax concession on the foreign maid levy for working wives. The details are still being finalised for announcement in the Budget. I would like to inform the House that the tax concession is not meant to help all employers who need foreign maids. It has been granted in recognition of the fact that hiring foreign maids encourages women, especially those with marketable skills and qualifications, to continue working and to have children. This objective has to be considered in deciding the final details of the tax concession.

asked the Minister for Foreign Affairs whether he will make a statement concerning the allegation that Singaporeans had been involved in espionage in Malaysia.

Mr Speaker, Sir, the 'allegation' that Dr Lee referred to was made by a member of the opposition in the Malaysian Parliament. The Malaysian Government has responded to this in its Parliament. It would be improper and counter-productive for me to comment further. All governments must treat such subjects with sensitivity.

Regardless of whether or not the Malaysian Government has issued a statement, does it not strengthen solidarity of ASEAN and relations between Malaysia and Singapore if Singapore should deny this categorically?

I think the question by the Member is in the category of questions from journalists who may ask him, "Have you beaten your wife?" It is in the category of questions which some journalists may ask him whether or not he has beaten his wife.

Of course not!

Then the headline will be, "Mr Chiam denies that he has beaten his wife."

I do not quite follow the logic of the Minister. But does he not agree, generally speaking, that silence in this particular instance could be interpreted as assent to what has been alleged in Kuala Lumpur?

Sir, whatever was alleged in Kuala Lumpur has already been dealt with in Kuala Lumpur and it is not the Government's policy to comment on matters like this.

asked the Minister for Trade and Industry what steps are being taken to ensure that the pricing of petrol will be fair and competitive as a result of deregulation.

Mr Speaker, Sir, the petrol and diesel markets were deregulated with effect from 1st December 1989. Deregulation encourages competition among oil companies. It forces them to operate efficiently and to be more responsive to the needs of the consumers. It allows the free market to determine the real price for the products, and is therefore fair and economically rational. The Government does not regulate the prices of food, transportation, or other basic necessities in Singapore. It leaves it to competition to bid down prices and prevent profiteering. There is no reason why the same mechanism should not also work for petrol and diesel. Having only been recently deregulated, the petrol and diesel market will take some time to find its level. The Ministry of Trade and Industry has been monitoring the situation closely, to ensure that there is no profiteering or formation of cartels to fix prices. To protect the interests of consumers, it has advised the oil companies to give the public sufficient notice of any price changes. The companies have agreed to do so. Consumer vigilance on the part of motorists is also an effective check on petrol and diesel prices. By their responses and feedback, consumers can help to encourage greater competition and fairer pricing to prevail.

I have a number of supplementary questions, Sir. First, will the Minister agree that there is really very little choice for the consumers since there are only six suppliers of petrol. Secondly, if the oil companies are prepared to maintain their market shares, there is no reason for them to reduce their prices even though their raw material input may be lower as long as they maintain their market share. What pressures will the Ministry bring to bear? Lastly, what steps will the Government take if the oil companies, despite different cost structures, raise their prices at the same quantum and at the same time as in the past?

Mr Speaker, Sir, there are about six oil companies, big and small. But if we compare it to some other industries, for example, the newspaper industry, there are fewer than six newspaper companies. If we compare it to the bus services, there are not six major bus companies. So we have to look at how the competition develops between these six companies to decide whether or not six is enough. In the past, when we regulated prices, competition between petrol companies for market share developed on the basis of fringe benefits. You get coupons, you get free gifts, you get lucky draws, you get little smurfettes and smurfs. Is it better for us to force people to compete on the basis of the most interesting smurf, or should we not allow them to compete on the basis of prices? I think the competition is there. The question is: how strong will the pressure be? One important factor here which I believe the oil companies realise, and probably Members too, is that while they can set prices, the Government has a very strong influence. It controls the excise duty. The pump price is the price which they set plus the excise duty. If the companies get together and push their prices too high, it is always within the power of the Government to use the excise duty as an instrument, to make sure that the companies do not gain unfair profits. The companies knowing that, I think, have a strong incentive not to try their luck and to collude.

Sir, in order to allow the consumers to make a better choice, would the Minister consider making it a regulation for petrol stations to post their pump price publicly, as they have done in other countries, for instance, in the US?

Mr Speaker, Sir, we will consider the matter but, at present, I do not think there is a strong pressure to do that because motorists are well-informed, and all it takes is a half-cent difference in the petrol price for them to transfer from one oil company to another. But if there is a need, we will consider it.

asked the Minister for Trade and Industry whether the Government intends to alter the tax-exempt status of cooperative societies since commercial firms in the same business do not enjoy such status.

Mr Speaker, Sir, cooperative societies were first granted tax-exempt status to help them get off the ground and to promote their development. As their operations then were relatively small, the implications of their tax-exempt status were not great. However, some of these cooperatives have grown in size and scale of operations over the years. Hence the economic distortions of their tax-exempt status are no longer insignificant as they compete for business from the public just like any commercial company. At the same time, cooperatives have been successful in serving the needs of their members. In particular, the larger and more successful cooperatives, which were started by NTUC, such as Fairprice, Income, Comfort, have been instrumental in helping to keep down the cost of living, and providing a decent livelihood to their members. Their success in serving their members and the general public alike is a tribute to their managements and to the unions which started them. MTI has studied the issue together with the Ministries of Community Development, Finance and Labour. The Government has decided not to change the tax-exempt status of cooperatives. Instead, it will increase the levy on the annual surplus of cooperatives, which they already pay to the Central Cooperative Fund. Presently, the rate is 5%. The Government will raise this to 20%, but only on that part of the surplus of a cooperative exceeding $0.5 million. Cooperatives can opt to pay this sum to the Singapore Labour Foundation (SLF) if they wish, instead of to the Central Cooperative Fund. This will require amending the Cooperative Societies Act. The higher contribution rate of 20% on the second tier of surplus (meaning that part of the surplus beyond $0.5 million) would be closer to, but still less than, the current corporate tax rate, which is 32%. This should ensure that cooperative societies compete on a more equal footing with commercial companies, without significantly affecting their viability. At the same time, the higher 20% contribution would provide a predictable and steady income stream to the SLF to fund worthwhile projects like the proposed Labour College, and various social and recreational amenities for the benefit of workers.

asked the Acting Minister for Health what plans are being made to provide affordable health care service for the growing number of aged sick.

Mr Speaker, Sir, my Ministry has taken steps to ensure that health care for the aged sick will continue to remain affordable. Heavily subsidised outpatient treatment is available at all Government polyclinics. Patients over the age of 65 pay only 50% of the already subsidised normal attendance and prescription fees. All Government and restructured hospitals will continue to have subsidised beds. My Ministry has established in Tan Tock Seng Hospital a 70-bedded Department of Geriatric Medicine. Toa Payoh Hospital, after its redevelopment, will also have a Department of Geriatric Medicine with 80 beds. We are building a Community Hospital at Ang Mo Kio. This will allow inpatient care for the elderly sick who require more time to convalesce from acute illness or after operations. Charges for subsidised B2 and C class patients at the Community Hospital are expected to be lower than that in the acute Government hospitals. My Ministry will continue to support the Home Nursing Foundation to provide home nursing care, day care and rehabilitation for the elderly sick. This will reduce the need for prolonged hospitalisation with consequent savings in hospital expenses. Finally, for the elderly sick who genuinely cannot afford to pay the heavily subsidised fees in our hospitals or clinics, my Ministry will ensure that their charges incurred are waived.

Sir, may I ask the Acting Minister whether there are plans to implement more supportive health care services in housing estates where there are a growing number of senior citizens and aged sick?

Sir, my Ministry has started to establish senior citizens health care centres at some of the polyclinics. The plan is to establish one in each of the new generation polyclinics that will be opened in the future. This will eventually result in about 16 of these polyclinics having these senior citizens health care centres which provide a wide range of services for the elderly, including rehabilitation, day care and free health screening for senior citizens.

Sir, may I ask the Acting Minister for Health, when his Ministry has not really taken much action to institute programmes of local training for physiotherapists and other para-medical staff, how can he say that he is doing his best to ensure that the care of elderly patients will be indeed moving in that optimal direction?

Sir, the training of physiotherapists and occupational therapists need not be carried out locally because there are very well-established centres in other parts of the world to which we are already sending our local trainees. The Ministry will continue to ensure that the PSC continues to offer scholarships for physiotherapy and for occupational therapy and we will also actively encourage the restructured hospitals to send their own trainees abroad for training.

Sir, the Acting Minister for Health mentioned just now about the new generation polyclinics. Presumably they are in the newer housing estates, but the large numbers of senior citizens are mainly in the city areas. Can I have his assurance that the senior citizens located in the city district will not be left out as far as senior citizens health centres are concerned?

Sir, the senior citizens are distributed not just in the city but also in the older housing estates. We will make sure that they all have easy access to such centres.

asked the Minister for National Development what is the development plan for the piece of unturfed vacant land adjacent to the Simei MRT Station.

Mr Speaker, Sir, the vacant land adjacent to the Simei MRT Station is earmarked for commercial, institutional and residential development. HDB, however, has no immediate plans to develop this parcel of land.

Sir, may I ask the Senior Minister of State whether he could request the HDB to turf the land in the meantime and make it available for residents to use for recreation or as a playground for games?

Mr Speaker, Sir, I will be very happy to ask HDB to look into the Member's request.

asked the Minister for National Development whether plans have been finalised for the redevelopment of some areas in Tiong Bahru GRC; and, if so, when such plans will be implemented.

Mr Speaker, Sir, in January 1989, my Minister informed the Member that redevelopment in Tiong Bahru is likely to start in 1990. Redevelopment will begin with the site above the Tiong Bahru MRT station which will be tendered out for commercial development sometime this year. Public housing redevelopment for the constituency will commence later.

asked the Minister for Finance (a) whether he will give a breakdown of the number of pensioners who receive pensions of less than $400 p.m., $600 p.m. and $800 p.m.; and (b) whether he will consider increasing the allowances of pensioners who draw less than $800 per month.

Mr Speaker, Sir, the figures requested are as follows. The number of pensioners who receive pensions of less than $400 per month is 6,647; those with less than $600 per month is 8,753; those with $800 per month or less is 9,746. The Member raised the same issue in the last Budget debate in March 1989 and I have explained that the Singapore Allowance was revised in 1980, 1982 and finally in April 1986. I also stated that there was no basis for further revision at that time as the change in the Consumer Price Index between 1986 and March 1989 was small. The position has not changed. There is no justification to revise the Singapore Allowance again at the present time.

Has the Minister ever gone into a supermarket or market to buy things?

Indeed I have. But I do not see how that is relevant to the question he asked. He is probably imputing that prices of a lot of things have gone up, but these are usually the luxury items. The basics should be what he should consider.

Are foodstuffs the luxury items for the people in Singapore?

A great deal depends on the type of foodstuffs that he is talking about.

asked the Minister for Trade and Industry whether his Ministry anticipates an acute shortage of hotel rooms in the next two to three years in view of the expected increase of tourists in Singapore; and what plans there are to meet the demand.

asked the Minister for Trade and Industry how effective the Singapore Tourist Promotion Board's tourist promotion programmes will be in view of the escalating hotel room rates in Singapore.

Sir, may I have your permission to take Questions 17 and 18 together as they are related and due to time constraint?

Yes.

Thank you. Sir, the current average occupancy rate of gazetted hotels is about 90%. The occupancy rate is expected to remain around this level of 90% over the next two to three years, based on the projected 8% annual growth in visitor arrivals and an expected 4.5% annual growth in the supply of gazetted hotel rooms. At peak periods, especially when large conventions or exhibitions are held in Singapore, we expect a shortage of rooms. The low room rates over the last few years have helped to boost demand for hotel rooms. In view of the heavy demand for rooms, room rates have started to rise over the last few months. This will help to match supply and demand, and also spur more investments to meet the increased demand. The URA has been steadily releasing parcels of land in the city for commercial developments. Hotel developers can bid to build hotels on these sites. To help the hotel industry to plan ahead, the STPB regularly publishes tourist arrival statistics, and information on the supply of hotel rooms being planned or under construction. Hotel investors can use this information to decide more knowledgeably on their projects. How will the rise in rates affect STPB's promotion efforts? The higher rates reflect the recovery of the hotel sector which has experienced six years of low demand from 1983 to 1988. But despite the rate increases, major surveys conducted in 1989 show that Singapore hotel rates are still amongst the lowest in the region. In other words, Singapore continues to offer good value-for-money compared to other countries in the region. With an expanding economy and with labour costs going up, it is not surprising that hotel room rates have also gone up. The higher room rates will spur more hotel developments. The Government should not interfere in the operation of the free market. The quality of our hotel services is high. If we maintain this standard of service or better still upgrade it, and we continue to provide value for money, the tourism sector can continue to prosper. So STPB's promotion will stress that Singapore is a value-for-money destination. Its target will be the higher yield tourist segment, in other words, the convention visitors and the incentive tour visitors.

Sir, the Minister of State has said that indeed the hotel room rates will remain very high. In view of this, may I ask him why is there a need to increase the cess on hotels and restaurants?

Mr Speaker, Sir, the raising of the cess, as I have explained at one of the STPB's functions, is a means of providing additional promotion moneys for STPB to continue to make sure that the message that Singapore is a value-for-money destination is well heard around the world. We are competing in the area of tourism arrivals with many other countries, and it is very important that we continue to get this message across in a most effective manner. If we do not do that, then the continued growth in tourism arrivals will not be able to be sustained.

Will the Minister of State agree that the increased promotion effort will be better done after the occupancy rate in Singapore hotels has been reduced when more new hotels come on line rather than doing it now, thereby just overheating the already very hot market?

Mr Speaker, Sir, I think it is prudent for STPB to continue to keep on its marketing efforts without letting up, because it is in the nature of such programmes that if you are away from the public eye or notice for a while, it is very difficult to pick up the momentum again.

"to make provisions for the incorporation of governing boards for the purpose of conducting Government schools and aided schools and for matters connected therewith", presented by the Minister for Education (Dr Tony Tan Keng Yam); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to provide for the maintenance of religious harmony and for establishing a Presidential Council for Religious Harmony and for matters connected therewith", presented by the Minister for Home Affairs (Prof. S. Jayakumar); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Order for Second Reading read. 1.30 pm

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment No. 2) Bill 1989 gives legislative effect to five income tax concessions announced in the 1989 Budget Statement. Opportunity is also taken to include six other amendments to the Act. The first Budget concession relates to the reduction in the tax rate for companies, trustees and non-residents from 33% to 32%. This is to ensure that our tax structure remains competitive and is indicative of the direction in which corporate taxation will move if economic conditions require. Clauses 13, 16, 17 and 18 amend the Act to provide for this concession which will take effect from the Year of Assessment 1990. The second Budget concession allows companies, donating computer equipment and peripherals to prescribed educational and research institutions, a tax deduction on such donations. This is to help to upgrade the quality of training in Information Technology in Singapore and will take effect from Year of Assessment 1990. Clause 9 amends section 37 of the Act to provide for this. The third Budget concession allows employers who carry out building alterations or additions, so as to facilitate the mobility of their disabled workers, a deduction for such expenditure, subject to a maximum of $100,000. This is to facilitate the employment of our disabled. Clause 5 inserts a new section 14H to the Act to give effect to this. The fourth Budget concession relates to increases in the following reliefs, effective from Year of Assessment 1990: (a) Wife relief, from $1,000 to $1,500. (b) Aged parent relief, from $1,000 to $2,500. (c) Handicapped dependants' relief, from $750 to $2,500. (d) Normal child relief for the first, second and third child, from $750 to $1,500 each. This is also extended to the fourth child born on or after 1st January 1988. (e) Enhanced child relief for the second, third and fourth child below 12 years of age, from 10%, 15% and 15% respectively of the mothers' earned income, to 15%, 20% and 25% respectively. The maximum claim for the enhanced child relief is also raised from $10,000 to $15,000. Clauses 10 and 20 amend section 39(2) and the Fifth Schedule to the Act to give effect to this concession which is an indication of the Government's support for family formation, care for the aged and the handicapped. The fifth Budget concession extends the special tax rebate of $20,000 claimable either by the husband or wife against their tax liabilities to their fourth child born on or after 1st January 1988. An additional rebate equivalent to 15% of the wife's earned income claimable only by her, is also granted for the birth of the fourth child in lieu of maternity leave. Clause 12 amends section 42A of the Act to allow for this. I will now move to the other amendments. With effect from Year of Assessment 1990, the highest effective tax rate imposed under Part B of the Second Schedule to the Income Tax Act, will be limited to 32%. This is to ensure that those who are taxed under the existing Part B marginal rates, such as management corporations and cooperatives, will not be taxed above the effective corporate tax rate of 32%. Clause 11 amends section 42(5) of the Act to give effect to this. To enhance Singapore as an international centre for oil refining and trading and also as a financial centre, the income of approved oil trading companies derived from transactions in petroleum, petroleum products and petroleum futures, is now taxed at a concessionary rate of 10%. This concessionary rate of tax is also granted to SIMEX members transacting in petroleum futures, with approved oil trading companies. Clauses 14 and 15 amend section 43D(1) and insert a new section 43F to the Act to provide for this. At present, under section 78(1) of the Income Tax Act, the Minister may appoint members of the Board of Review for a fixed period of three years. To provide for greater flexibility, this section is now amended to allow the Minister to appoint members of the Board for a variable period. Clause 19 amends section 78(1) of the Act to give effect to this. Under the present Income Tax Act, capital allowances for motor cars registered as "Q" cars are each restricted to $35,000. Deductions for running costs are also given as a proportion of $35,000. Exceptions are allowed only for taxis, motor cars used as school transport and private hire cars. Clauses 4 and 6 amend sections 14(4) and 19(2C) of the Income Tax Act to exclude motor cars, owned by driving schools and used for providing driving instruction, from these restrictions. This is to ensure that the restrictions do not pose difficulties to those categories of taxpayers who depend on cars for their livelihood. At present, section 14(1)(e) of the Income Tax Act imposes a limit of 10% for the deductions allowed in respect of an employer's contributions to an approved pension or provident fund. This section is now amended through clause 4, to allow for the increase in the limit previously announced by the Ministry of Labour, to 12% commencing on or after 1st July 1988 and before 1st July 1989, and 15% on or after 1st July 1989. Finally, Mr Speaker, Sir, clause 8 amends section 35(2A) of the Income Tax Act to enable a person deriving Singapore dividends in 1988 to be assessed to tax at 33% in Year of Assessment 1989, where such dividends would, by virtue of his accounting period, be assessed to tax at 32% in Year of Assessment 1990. This is to avoid a mismatch whereby dividends derived in 1988 are taxed at 32% while tax credits of 33% are allowed on such dividends. Sir, I beg to move. Question proposed.

Sir, I just have two queries for the Minister. The first is in regard to clause 12. If the Minister can look at clause 12, paragraph (iv), whereby a person is entitled to a rebate of $20,000 and also a rebate of 15% of the wife's income. It says here: 'where a person is entitled .... and his marriage is dissolved by divorce or annulment within 5 years of the birth of the third or fourth child, the rebate or balance, if any, of the unabsorbed rebate shall not be available for deduction against the tax payable for any year of assessment following the year of the order of divorce or annulment.' To me, this is rather unfair. As the Minister would be aware, any divorce case involves two parties and usually one party is at fault. So if a wife is divorced through no fault of hers, she would have suffered a loss unnecessarily. I think this clause is unnecessary and in fact should not be included because it will cause unfairness to a party to a divorce which may not be her fault at all. The other clause I would like a clarification from the Minister is clause 20, new paragraph 7. As for the 15% rebate of the wife, there is a proviso which limits the claims to only persons with a minimum of educational qualification of at least 3 "O" levels passed all at one sitting. Why should there be such a provision? A person may be a drop-out at primary six. But later on, by self-study, she may gain an educational level higher than 3 "O" levels, but she did not bother to go and re-sit the examinations. She may be successful in life. She may be one of those slow developers. Why punish these people? I think the academic qualifications should not be included. I hope the Minister will look into these two points.

Sir, on the first point, I will certainly look into it. But I think the limitation was probably found necessary because people get divorced and then they get married again. On the second point, I think it is necessary to impose some criteria for assess- ment, although it is arguable whether it should be at 3 "O" levels or otherwise. Because our aim is to try and encourage those women in the higher income groups to have as many children as possible. But I will, of course, review this since the Member has asked for it.

Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee.

Clause 1 -

The short title will be altered to read "the Income Tax (Amendment) Act 1990." Clause 1 ordered to stand part of the Bill. Clauses 2 to 20 inclusive ordered to stand part of the Bill. Bill reported without amendment; read a Third time and passed.

Mr Speaker, Sir, I beg to move the motion* standing in my name. *The motion, also standing in the name of Dr Augustine H.H. Tan, reads as follows: That this House adopts the report of the Select Committee on Land Transportation Policy and urges the government to give the committee's recommendations serious consideration. The Motion asks this House to adopt the Report of the Select Committee on Land Transportation Policy. It also urges the Government to give the recommendations of the Report serious consideration. Sir, Members of the Select Committee welcome the views and comments of Members of this House which I am sure will improve upon the recommendations. In moving this motion, therefore, I would like to ask the Government to give equally serious consideration to the views expressed by MPs in this debate. Sir, one of the main recommendations of our Report is that car ownership should continue to rise with the expanding population and with higher aspirations for car ownership. Road infrastructure should be expanded and there could be more intensive use of land for roads, for example, by means of double-deck highways and underpasses. In brief, Sir, we understand and we sympathise with the wish of the man-in-the-street for car ownership and we advocate that such desires be accommodated as far as possible within the limitations of realistic land use allocation. In line with this view, we advocate more extensive application of usage restraint measures, like electronic road pricing and higher parking charges in the city and other congested zones. Such usage restraint measures will persuade some people to leave their cars behind and use public transportation to go to work, and therefore allow the nation to sustain a higher level of car ownership. The German Tribune recently reported that in Munich and Hamburg, where the car ownership rate is close to 100%, more than 80% of the population use public transportation to commute to work. We hope that in Singapore usage restraint measures will enable us to attain and exceed such levels of usage of public transportation and thereby allow us to afford a higher level of car ownership. Sir, having said all this, the Committee is convinced that usage measures alone cannot solve the problem. At the end of the day, there cannot be unlimited growth in car ownership, otherwise the roads will be congested even in the evenings and the weekends. Ownership restraint must therefore continue to be the primary instrument for keeping traffic smooth on our roads. Usage restraints play an important but a complementary role. If we can agree that there must be ownership controls, the criterion surely must be that the level of ownership be consistent with the capacity of our roads to cope with the car population. In other words, car ownership levels must grow only at the rate at which the road infrastructure can accommodate the traffic. If we can agree with this, it follows that Government policy must seek to achieve a target rate of growth in the car population. The target rate can change slightly from year to year depending on whether new or better roads are being built and whether or not more people are using public transportation to commute to work. If it is reasonable for us to aim for a target rate of growth in the car population, the question remains: which is the best way to achieve this target? Sir, the Select Committee considered this question at length and in some depth. We came to the conclusion that the price mechanism is the best way to achieve policy targets for car population growth. But there are at least two ways to use the price mechanism. One way is to have the Government set prices by adjusting taxes periodically, ie, increasing road taxes or the ARF rate so as to dampen demand whenever the ownership rate is too high. This has been the method used in recent years. For want of a better term, we have called it the "pricing system" in our Report. To avoid increasing taxes too often, Government often over-compensates by hitting harder than necessary, then wait for the demand to creep up to the target level. The result of Government price-setting is that we see sharp changes in consumer buying patterns at around the time of tax increases. There is often panic buying as people rush to beat a possible tax increase. This happened last year and contributed to the high growth of over 9%. Sir, Government price-setting therefore leads to erratic demand, with sharp changes associated with tax increases. The Government seldom achieves exactly the target growth it seeks because it is impossible to predict accurately the tax increase necessary to achieve it. In other words, Government price-setting can get both price and quantity wrong, and it sometimes has. What is the alternative? Here, I come to the second way of using the price mechanism. This is to set the quantity for each year and allow the market to set the price. This, in essence, is the quota system. With the quota system, the advantage is that we achieve every year exactly the target growth rate that policy makers judge is commensurate with our road capacity. We get both quantity and price right. The quota system is therefore nothing more and nothing less than a variant of the pricing system. The difference is that it achieves targets accurately without the sharp traumatic movements under the Government pricing system. With a quota system, the car population grows steadily at the target rate, and consumers will find it easier to plan their expenditures as costs will be more predictable. Existing owners will be relieved of facing periodic sharp increases in road tax. Aspiring buyers will not see sudden increases in ARF that may throw them off their budgets for car purchases. In other words, both existing and would-be car buyers will find it easier to manage under a quota system. Sir, there are many ways by which the quota can be allocated. The Select Committee has suggested the bidding method. We acknowledge that there may be alternative and possibly better ways to do it, and we would urge Members of this House to contribute their ideas to the Government for consideration. The Select Committee proposes that the quota system should work in the following way. Each year, the Government announces a target figure for additional cars on the road. It then releases licences periodically, perhaps once every month. For example, if the quota was set at 12,000 additional cars for 1990, there could be 1,000 licences released every month. Sir, at this stage, with your permission, I would like to distribute a chart (Cols. 1023 - 1024) to illustrate my example. [Copies of chart distributed to hon. Members.] chart - PURCHASE OF NEW CARS UNDER A PROPOSED QUOTA SYSTEM (Cols. 1023 - 1024) If I may refer Members to the chart. As I said, supposing the quota was set at 12,000 additional cars in 1990. To buy a new car, a person could either bid for a licence or he could buy a car by scrapping a used car. If he uses a licence for which he has bid, he would pay the ARF. If he buys a scrap car, he would pay the PARF. The total number of new cars on the road for the year will be equal to the number of licences that are released plus the number of cars that are scrapped. In my example, if there were 12,000 new cars purchased with the quota, and we add to that number the number of cars scrapped, which might be, say, 18,000, then we get a total of 30,000 new cars on the road. This works out to be about 12% of the total car population which Members will note is much higher than the quota of 12,000 or 4.8%. These figures are summarised at the bottom of the chart that I have distributed. Sir, the quota system will not necessarily raise prices compared to the present system. To ensure that this will be so, the ARF rate could be lowered at the time of the introduction of the quota system. This means that the sum of the lower ARF plus the bid price for a licence, could be higher or lower than the old ARF. To illustrate this, may I take a hypothetical example. The ARF rate today is 175%. Supposing it is lowered to 150%. If the bid price for a licence amounts to 30%, then the total amount paid to the Government will be 180% which is a bit higher than the present 175%. But if the bid price is only 20%, then the total amount paid would be 170%, or less than the old price. Hence, the quota system can raise or lower prices compared to the old Government price-fixing system. It would depend on the demand for new cars at any particular time. Sir, there is a more practical question. Do car prices have to rise to slow down current demand? This is best left to the judgment of the Minister for Communications and Information. The point, however, is that if it is necessary for prices to rise to moderate demand, it will do so under either system. Either the Government will raise the ARF under the present pricing system or they will rise under market forces within a quota system. But there is no particular reason for the price to rise under the quota system any more than it would under the present pricing system. As the proposed quota system has attracted some public interest, I would like to request the patience of the House to address some of the questions that have been raised in the press and in public discussions on this proposal. The first question: Does the quota system give an undue advantage to existing car owners? The answer is that as long as we have the PARF system in place, existing car owners have an advantage as they can buy cars at concessionary rates. But I must emphasize that it is PARF, not the quota system, that gives existing owners an advantage. Under the existing Government price-fixing system, PARF already confers an advantage on existing owners. It would continue to do so under a quota system. Indeed, if we scrap PARF, our proposed quota system will require all buyers of new cars to bid for licences on an equal footing. But do we want to scrap PARF? Those who object to existing owners having an advantage should ask for the elimination of PARF, not the elimination of quotas. Sir, the second question that has been asked in public is: Will the quota system squeeze out aspiring middle-income earners from the car market? I think this fear is quite unfounded. The population of Singapore is growing at less than 2% per annum. The car population has been growing at over 5% in the last 13 years. This can only mean that an increasing proportion of Singaporeans are able to own cars. Under a quota system, this will not change as long as the annual quota is more than 2% - and I would think that the Government would set it at well above 2% - an increasing proportion of Singaporeans will own cars. This means that middle-class aspirations for car ownership will not be stifled. It is simply not true that only the rich will be able to own cars. Another question that has arisen is: Will auction bidding cause the rich to outbid the poor? We do not have in mind an auction in which someone stands on a rostrum with a hammer and bidding gets higher and higher so that only the rich will have the staying power. In practice, it is likely that car dealers will submit sealed bids and will only submit as many bids each month as the number of cars they expect to sell. If they do not get enough licences, they could buy them from those who secured too many. Or they could get scrap cars instead for their buyers. Most prospective car buyers would get their licences through their dealers who pass on the costs to their customers. No prospective buyer need to be personally taking part in the bidding, although he is free to do so. The rich would not necessarily outbid the poor. Sir, the question arises: for each bidding exercise, does every successful bidder pay the price he bids, or should he pay the price of the lowest successful bid? For example, if the highest bid is $5,000 and the lowest successful bid is $3,000, should one be charged $5,000 and the other $3,000? This is something that the Government will have to decide as to which system of bidding to use. My personal view is that everyone should be charged a uniform price equal to the lowest successful bid. This would benefit car buyers and it would prevent the Government from exacting excessive revenues from the exercise. Finally, Sir, the question has been asked: will speculators and dealers "corner the market" and charge high prices to consumers? The Committee believes that there will be some speculation but it will not be serious. The reason is that we have a competitive market in cars and those who try to reap speculative profits can suffer losses as a result. The Government can discourage speculation by requiring all successful bidders to make their purchases within a short time of one or two months. In summary, Sir, the quota system is really one way of using the price mechanism to achieve reasonable growth targets. These targets can be met more accurately with a quota system, and price movements will be less violent than under the present tax-based pricing system. People will continue to buy cars the way they have done for the last 50 years - from the dealers who will offer them a price and take care of all the other details and formalities. And buying a car will be affordable to an increasing proportion of Singaporeans. Sir, let me now turn to public transportation. The Committee has placed strong emphasis on improvements to the public transportation system to reduce the Singaporeans' dependence on cars. This is necessary as we must cater to the section of the population who do not wish to own cars or who prefer to spend their income on other goods of higher priority. It also provides a viable alternative to car usage and therefore helps to maintain smooth traffic on our roads even as car ownership levels rise. On the question of PARF, the Select Committee has recommended the retention of PARF. This would be fair to existing owners who previously made their purchase decisions on the presumption that their cars would have a certain residual value at the end of 10 years. Retention of PARF would also help keep the average vehicle on Singapore roads young and in good condition. Sir, I would like to conclude by reiterating that the Select Committee has kept at the forefront the interests of Singapore motorists, aspiring car owners and the man in the street who needs a good transportation system to get to work and play. If measures to retain car ownership and usage seem at times a little rigorous, it is only because we need to pay a price for enjoying smooth traffic and a pleasant travelling environment. I commend the report to Members of the House for their views and suggestions, and urge the Government to consider our recommendations and those of Members of the this House. Sir, I beg to move. Question proposed. 2.05 pm

Mr Speaker, Sir, I rise to support the motion. I am privileged to have had the opportunity to serve on the Committee to review and consider some of our land transportation policies. Let me say that I have benefited in the process. I now appreciate more fully how difficult the job of Government is, with respect to land transportation policy. It is easy to put forward suggestions. It is quite different when one has to think through the likely consequences of one policy against the consequences of another policy. I believe the discussions that we have had, and are now having, will also help the public to appreciate the difficult job the Minister for Communications and Information has. It has been suggested that people are rational and will accept rational policies. To this, I have a qualification. People are rational and will make rational choices for themselves. But what is rational to the individual is not necessarily rational for the country. To the individual, to own a car is a rational choice. Not only does it improve his image, but it is also the most efficient means of transportation for him. Needless to say, if everyone exercises his option to buy and use a car, there will be increased congestion. This is not rational from the national viewpoint. But can we reasonably expect each individual to ponder the national interests before making this choice? Thus, when there is a conflict between individual aspirations and national interests, the Government has the unpleasant task of regulating and putting in place disincentives. We are therefore left with the problem of how to make disincentives more acceptable to the people, and yet effective. We cannot hope to make disincentives popular. Then, we also have to bear in mind that for every measure introduced, there will be a number of measures thought up to beat the system. In considering ownership measures, the Committee noted that the present system of pricing is not wholly effective. The Committee agrees that the quota system is more effective in controlling the rate of increase of the car population because it can fix the rate of increase. It considered this in general, and had not gone into the details of the implementation at great length. For example, will there be quotas for different engine sizes? This may not be necessary. The variation in car prices between the upper end high capacity engine cars and the 800 cc cars is very large. It is far larger than in the United States. Although there is a smaller variation in prices in the United States between the upper and lower end engine capacity cars, there is still a market for each type of car. Therefore, a quota system, when it finds its balance, is likely to result in a narrowing of the range of car prices. The consumer will still exercise his choice based upon his affordability. The other factor not fully discussed is how commercial vehicles and Q-plate cars should be treated. In general, all vehicles should come under the same net, because all vehicles used on the roads contribute to congestion. This would have consequences on the cost of doing business. So some preferential treatment ought to be given if we are not to push or distort the cost of doing business unduly. But which is the best way? This has to be debated. One way is for the Government to grant a tax discount. But even this may allow circumvention by people who want to own a car and use a commercial or Q-plate car as an indirect route of owning one. So it has to be studied in greater depth by all of us and by the Ministry of Communications and Information, in particular. One of the other existing policy measures which the Committee considered was PARF. It is a measure introduced to make it attractive for car owners to remove old cars from the roads, so that there will be fewer breakdowns that would add to traffic congestion. In the past year, there was a view put forward that the PARF has turned the car into an investment. The Committee sought views. It became clear in the work of the Committee that the cause of rising second-hand car prices was not PARF itself, but the sharp appreciation of the Yen and the Deutschemark. To abolish PARF on this count would be wrong. In fact, abolishing the PARF scheme would lead to more old cars on the roads, adding to the car population, and what is more, with more old cars there will be higher incidence of breakdowns and ensuing traffic jams. Between 1976 and 1988, about 148,000 new cars were bought using the PARF scheme, an average of 11,340 a year. On average over this period, we are disposing of 11,340 old cars every year. So it is a useful scheme. The Committee therefore concluded that PARF should be retained. It added a refinement, and that is, to introduce a sliding scale to create an incentive for car owners to refurbish and export older cars. The quality of our cars on our roads would therefore be higher with less risks of breakdowns. Whether there is in fact a large market for refurbished cars or not remains to be seen. But we noted, however, that the export of cars, either refurbished or not, already exists. Mr Speaker, Sir, I believe we have opened up even more questions after the work of the Committee and I hope that we will see active participation by the other Members of this House on this motion.

Mr Speaker, Sir, at the outset, I think it is very important for Singaporeans and the motoring public to realise and understand that with today's rate of growth in the number of cars on the road, the prices and the costs of maintaining their cars will inevitably have to go up. The Government would under the present system resort to the use of fiscal measures like increases in car registration fees and road taxes to bring the number of additional vehicles down. This method has the disadvantage of hurting all motorists simultaneously when the problem is the addition of new cars on the road. This system of pricing and fiscal measures have given rise to the continuous tax increases over the years. By comparison, the quota system is more effective in controlling the absolute number of cars on the road. It has the advantage of providing for smoother and orderly adjustments in car prices and in the long run, I believe, it is more predictable and stable. The question in everybody's mind is how to make the quota system more equitable, especially to aspiring car owners who have yet to own cars. The manner of phasing in the new quota system has to be carefully worked out. One measure, however, has to be ironed out. I do not think that it is right and proper to give existing car owners the right of replacing their old cars with new ones in perpetuity. The existing car owners should be given notice that over a period of time they too would have to be treated like all other new car owners, though a smaller concession, but not to the extent that is currently applicable. In adopting the quota system as the overall concept, consideration should be given to people with different degree of affordability and the choice to buy cars of different engine capacities. The quota system could be structured on a layered basis to reflect affordability and choice in terms of price ranges and engine capacities. The statistics on car population over the last few years should form the basis to work out the multi-tiered quota system. With the tender premium paid under the quota system, the ARF system has to be adjusted. We do not want the prices of cars to be artificially inflated. We want high quality cars to remain an available choice to the motoring public. I wish to emphasise that our objective and focus must be to tackle the problem of transportation and not mix it up with the attempt to use this issue to redistribute income and wealth among the different income groups. May I take this opportunity to ask the Government to review the rate of road taxes paid by motorists? As it is now applied, there is too great a difference, say, having to pay road taxes of a 1600 cc car as against that of a 1601 cc car. The owner of a 1600 cc car pays a road tax of $1,440 a year and that of a 1601 cc car $1,681.05, a difference of $241.05 for that additional one cc. A step up approach would be more equitable. May I now come to the public transport system? For places being served by the MRT, we should encourage as many motorists as possible to travel by the MRT. More car parks ought to be provided near the MRT stations in the outlying districts. Amenities like covered-walkways and bridges making MRT stations accessible and convenient for commuters will attract the motoring public to travel by the MRT. Good feeder services by bus to and from MRT stations at reasonable cost will help reduce the need to travel by cars. The Government can give incentives to companies which organise private bus transport for their staff to and from work. This will reduce the need for employees to drive their own cars to work. One major reason as to why people own cars is that they need the car to commute between their homes and places of work. Private buses should also be exempted from the ALS. Finally, Sir, the issue of evening ALS. I welcome the recommendation of the Select Committee to shorten the evening ALS by half-an-hour, from 7.00 pm to 6.30 pm. Many residents, students, and those doing business in the restricted zone have been adversely affected. I hope the Government would implement the revised operating hours for the evening ALS immediately. Sir, with those observations, I support the Motion.

( In Mandarin): Mr Speaker, Sir, the Report of the Select Committee on Land Transportation Policy since its announcement has aroused a lot of talks and discussions among people of various circles. Car dealers, managers, executive personnel, teachers, workers, hawkers and even housewives have been talking about the relevant questions, particularly about the quota system. From this we can see that it is having great effect on the livelihood of our people. Therefore more is the reason we should deal with this matter carefully and cautiously. More so as from the newspaper reports, we learn that many people are rushing to buy new cars, are available for delivery to them. I am the more worried about this kind of behaviour leading to speculation and to some people attempting to make quick money from this kind of situation. Sir, clothing, feeding, housing and transportation are the four major needs of human life. Singapore's economy is generally progressing favourably. The living standard of our people is also rising. It is very common for people to go by car instead of on foot. Cars are a very important means of transportation when people go to work. But, on the other hand, our land space is limited and usable roads are also limited. We are also concerned that if we do not limit the rapidly increasing number of cars on our roads, maybe one day Singapore will become like Bangkok, Tokyo and London where traffic congestion will result in the paralysis of public transportation system. Therefore, the Government has set up a committee to study the relevant problems and seel a solution before the situation worsens. It is right and proper for the Government to do so. Mr Speaker, Sir, I do not deny that the quota system is a very effective measure to curb the number of cars from increasing, but, it is just like what is described in the field of Chinese martial art as a drastic and deadly move of last resort. Usually the martial art master or kung-fu experts would wait until the very critical moment before he would unleash this fatal move as a last resort, because the move will not only cause a fatal hit to the opponent but also likely to wound those around. As it is a most deadly and fatal measure, it would not be resorted to unless very necessary. The quota system is also like this. Therefore I hope the Government will try other means of curbing the cars first and not try to hurriedly exercise this deadly measure until at the very critical stage as a necessary last resort. Although the quota system may effectively curb the increasing number of cars and solve the problem on the roads, it will affect those who have to use cars for their work, and expecially the younger generation who may want to drive to work in the future. I am worried as mentioned earlier that the system may enhance speculative activities. I would like to raise the question that before our land transportation has reached a critical and very serious stage, is it necessary for us to use this extreme measure of the last resort? Are there no other measures which can solve the relevant problems? For instance, can we stipulate that only taxpayers who must pay a certain level of tax before they can qualify to buy cars? In other words, we should use the taxpayers's tax paying record to decide whether he can afford to own a car? If the tax amount reflects adversely on his economic capability, there is no reason for him to possess a car. And, also, should we stipulate that everyone should possess only one car? In other words, if owning more than one car is to be considered a luxuty, then we should prohibit a person from owning more than one car. Of course, the electronic road pricing system suggested by the MCI will be a positive and effective method. But more important is that we should change the habit of the public in relaion to the mode of transportation to serve as an alternative? Now that our MRT has come into operation, it is of course a very historic achievement. But many people do not find the MRT convenient to use because there are only two lines. Do our bus route services conveniently serve the residents in all areas? Can our network of roads, be improved further, such as by building more under-passes? Should we encourage people to make more use of bicycles? Should we than build more bicycle tracts and paths for the greater safety of our bicycle-riders? Sir, the quota system is very effective and quick method to curb car growth. Once you announce that it has been enacted into law with immediate effect it will achieve instant result. But it affects the livelihood of the people to a very great extent. Therefore we should be very careful with this measure. Other measures and ways of improving land transportation, even though may not achieve instant result, but if they are helpful and beneficial to the livelihood of our people, should be made use of first. What I mean is that before reaching the critical stage when it is very necessary for a quota system, we should seek and consider employing other effective means and measures to control the car population and try as much as possible to avoid using this measure of last resort. This then should be the best policy.

( In Mandarin): Sir, I support most of the recommendations by the Select Committee on Land Transportation Policy. I welcome the suggestion that the PARF value should reduce in accordance with the increasing age of the cars. In other words, for future cars, the later a car is to be scrapped, its PARF rate will be the more reduced. So this will enable people to change any concept that a car is not a consumer goods but a luxury. I also agree to the quota system as mentioned, I agree to it also because car dealers and car buyers can freely exercise their demand when bidding on a free market which decide the price of the new cars. This will also avoid the dissatisfaction of people about Government's measures increasing road taxes and so on. However, I am rather perturbed about certain suggested concessions in the Report such as given to the present car owners to continue to have the advantage of replacing their old cars with new cars in addition to enjoying the PARF value on their existing cars. The suggestion in the Report allowing PARF value to continue with the existing cars is understandable. But, when bidding takes place under the quota system the same right of PARF for the existing car owners may not seem right and proper. Because the existing owners can still make use of the PARF for every 10 years to change cars even under the quota system, but those who do not own cars at the moment will have to bid, under the quota system, to buy new cars. So this quota system will appear to be unfair to those who are non-car owners or will give the people the impression that the Government is favouring the rich and the car-owners while ignoring the poorer-offs. It is unwise politically. Therefore, when implementing this system we should also consider the feelings of those who do not own a car at the moment. Therefore, the PARF system and the concession given to the existing car owners to change their cars should be treated separately as two categories. While the PARF system is still in use if we allow the present car owners to change to new cars, we should have further consideration. We could consider allowing the present owners a certain limit of time, say, within 2-5 years, to change their old cars with new cars and not allow them unlimited time to change. When the time is up, they should like every body else tender for new cars before they can exchange their old cars. If we think it is too harsh to present car owners, then we could stipulate that these car owners should pay road tax in a different ratio according to the increasing age and usage of their cars, so that this will not cause any complaint of unfairness to future new car buyers who may feel that they have missed the early boat and are bitter. I feel that for Government measures to be effective, the people who may or may not own a car or who may or may not be able to buy a car should be made to feel that all Government measures are fair to all. We should also think in terms of those who do not have cars at the moment. If those who do not have cars at the moment should find it necessary to have a car for their work they should be enabled to think that they will be fairly treated under the new system so that they will also have a chance to buy new cars. I support most of the recommendations in the Report of the Committee.

Mr Speaker, Sir, I support the motion and I would like to commend the Chairman and his Select Committee on a job well done. Unfortunately, I have to disagree with the Report's main recommendation, i.e, the proposed quota system as a means to restrain the car population. Sir, as I listened to the very persuasive arguments put up earlier by the Member for Bedok GRC, Dr Hong Hai, the Select Committee's Chairman, I must say that I was almost convinced by him that the quota system would be the saviour of Singapore's traffic problems. Luckily, Sir, I also remember reading much material on the fallibility of governments to interfere with the free market, especially quotas, which restricts supply. Eventually, for one reason or another, such interference throws up more problems than it solves. And I believe that if the quota system is accepted, we will probably come to the same messy end. Sir, the Report tries to put across the proposition that the quota system is price-neutral, ie, it neither pushes up nor lowers prices, but that the price level will eventually depend on the demand vis-a-vis the number of new cars permitted. In theory, Sir, this is not wrong. But we all know that given the reality of the situation in Singapore, under this system, prices will increase. The argument that an economic slowdown will reduce prices under the quota system is not relevant because, in any case, under our current system without the quota, we already have seen this happening during the last economic recession in 1985/86. I remember the prices of used cars then dropping to very low levels but, more significantly, I also remember that the prices of new cars were effectively lower - through larger discounts, more free extras and cheaper or even interest-free financing offered by motor companies. Therefore, I would put across that the economic argument of a free market mechanism for car pricing based on a fixed quantity to justify the quota system is a spurious argument. Because even under our present system, we do and we have also seen prices fluctuating as they did between 1985 and the present time. Instead, Sir, what we may eventually get under a quota system would be a car market with a high degree of volatility in prices, speculative content, possible cornering by groups working as informal cartels and eventually an unhappy population. Experience has shown often enough that such systems normally work towards the disadvantage of the man-in-the-street. However, Sir, this does not mean that I am advocating that we retain our current system if, by that, it means perpetually increasing the Additional Registration Fee (ARF) because I believe that this will ultimately just increase the price content of the car. On the contrary, I would like to urge the Government to reduce the price content of cars while adopting a more aggressive posture on measures to restrain usage. Sir, I do not think we should restrain ownership. We should let the people own cars, if they want to and if they can afford to. Why should the Government tax this ability to own cars out of existence? After all, car ownership does not create traffic congestion. It is car usage which creates the congestion. We all know that ultimately car usage will be best served or best restrained by a system of road pricing. But since the electronic road pricing system is still some way off, I would like, for the time being, to propose the concept of increasing "operating costs of car ownership" as a proxy. To put it in another way, until the ERP is available, I would like to advocate a policy based not on increasing the "price content of cars" but rather on increasing the "operating costs of cars". Sir, as long as the demand for cars is more than what can be supplied, whatever the reasons for the restriction of supply, the economics of scarcity will prevail, ie, the price content of cars will go up, whether through a quota system or an increase in ARF. This means that for most purchasers, cars will be viewed as a partial investment. Hence, high prices are not really a deterrent because an owner can expect to recover the investment in the future. This, in general, has summed up the situation in the past where increasing prices do not really deter ownership. However, Sir, if a potential owner realises that the high cost of owning a car is through "high operating costs" which once expended will not be recovered, then perhaps the marginal owners will think twice before embarking on ownership. Some measures of such "high operating costs" policy could be higher road taxes, higher ALS fees, higher petrol duty and much higher city parking fees. Here, I must stress that these measures should be used to encourage Singaporeans to rely more on public transport rather than on private cars. Hence, such measures should not apply to public transport. If they do, they would not be effective as the cost differential would not be great enough to encourage switching from private cars to public transport. There is, however, one more important factor in my proposal and that is the system of increased operating costs translates into extra revenue for the Government. On the other hand, increased price content, whether through increased ARF or quotas, translates into windfall gains for existing car owners. Normally, this would not be too bad. After all, enabling our people to be richer is not really a bad thing. However, we must remember that car owners are still a minority in Singapore. Should we therefore tolerate a land transportation policy which enriches the minority who are, in general, already the richer segment of the population? What of the majority of Singaporeans who are not car owners? Who speaks for them? Though seemingly uninvolved, Sir, I believe they pay a very high price to enable car owners to enjoy a higher quality of life in land scarce Singapore. Some of the high price paid are noise pollution, especially for those living near roads, breathing in air contaminated by leaded exhaust fumes produced by cars, and loss of public land which could be used for everybody's enjoyment, such as parks, because such lands are used instead for roads and car parks. At least, Sir, with the higher revenue for the Government, the majority non-car owners can have some benefits in return through better housing, education, medical services and a host of other public services provided by the Government at a subsidised cost. Moreover, let us also not forget that the lowering of income tax rates all these years is only possible through increases in indirect revenue, such as those from car ownership. Sir, as for the other recommendations, it is clear that I do not agree with any easing of the ALS hours, even those in the evening. I support the rest and would like to comment on two of them. One is on city parking. City parking charges should be drastically increased and perhaps one way to encourage this would be to allow, without extra cost or at low cost, owners of office blocks to convert some car parks into offices. After all, it would also help to alleviate the office space shortage presently being experienced in the city. Second, on public transport. I fully support the concept of looking at various modes of land transportation system as complementary and not competitive. In particular, I fully support the suggestions on how to divert more commuters to the MRT. In addition to this, I would also like to renew my earlier appeal for a reconsideration of building car parks, wherever possible, next to MRT stations.

Mr Speaker, Sir, I shall confine my remarks to the most controversial recommendation in the Select Committee's Report, ie, the recommendation to impose a quota system on car ownership. Sir, I will be stating the obvious if I say that car ownership is a very sensitive and passionate subject. Each time this issue is raised, there is a sudden increase in the number of new cars. I understand that since the release of the Select Committee's Report, new cars are being registered at the rate of 250 a day. This is more than 6,000 cars in one month. Last year, a similar debate also resulted in such a significant increase. This indicates nothing less than a strong desire to own a car before the Government implements additional curbs and restrictions. Any hint of control gets people into a frenzy into the car dealers' showroom. Owning a car, which says a great deal about who you are, is a passion which may not be easily doused. Ask any young Singaporean. After, or even before he owns an HDB flat, the ownership of a car is a very high priority. Such an aspiration can only be curbed at great political cost. It is also a great potential loss to the country in the form of a strong rationalisation for emigration. A number of people have emigrated because they say they cannot own cars. The recommendation for a quota system seems to run counter to the Government's stated emphasis on measures to curb usage. I favour control on usage. Control on usage has its great advantage of being equitable. It falls under the principle of equal misery. All car owners and potential entrants are equally affected. But not so for a quota system. It will be naive to argue that a quota system will not be an effective tool to control the number of cars. It will be equally naive to argue that a quota system can be made equitable. It cannot be equitable and therefore places those without cars at a disadvantage. There is an argument put forward by the Chairman of the Select Committee that new entrants into the car market is presently equally disadvantaged. This is not so. In the present system, they are not disadvantaged in relation to the present car owners, because the vast majority of cars are owned after the implementation of the PARF scheme. Therefore, almost all car owners are at one time or another first-time car owners. Since the quota system is by definition a restriction, hence demand must be greater than supply, this must inevitably lead to a sudden steep increase in car prices, despite what the Chairman has said. It will lead to higher residual prices and it is this high residual value which makes a car a bankable asset and a worth-while investment. A quota system can only accentuate this. It will only make it worse. Moreover, a quota system is fraught with all possibilities of speculation and the possibility of someone cornering the market cannot be dismissed. It is a real possibility. I am disappointed with the work of the Select Committee. The Select Committee should have focused more on the alleviation of congestion rather than car ownership. Alleviation of congestion means a detailed look at car usage control measures, the possibilities of an electronic pricing system, the use of roads on even or odd days, and even more expensive parking charges at congested areas instead of a two-tier flat rate system. This is in addition to a plethora of other possibilities. The Select Committee should have made strong recommendations to extend the MRT network even to population and other centres which may now not appear to be economically viable. For example, a line should now be built to Changi Airport even though it is not likely to be viable. If you take into account the number of tourists that will be coming, and the number of people living in the East Coast area, it makes sense now to plan for such a line. Therefore, some cross-subsidy is inevitable and necessary if we wish to encourage more effective and wider usage. The Select Committee should have recommended a dramatic improvement in the quality of the bus service through special capital allowances or tax breaks to air-condition and upgrade all present buses. Furthermore, some of the money collected from car owners should be used to subsidise more feeder services to public and private estates after the bus service has been upgraded. This may be done again through the tax system. With a comfortable and convenient bus service, travelling on public transport will not be a tedium. The Select Committee should have taken a more detailed look at a full integration of the bus and MRT system, instead of treating them separately. Presently, Sir, because of competition between the organisations, the bus companies are not enthusiastic about feeding more passengers into the MRT system. When I respond to requests by residents for a bus service to serve the MRT system, the inevitable answer that comes back is no. I understand that because they are in competition, the bus companies are not quite prepared to feed more passengers into the MRT system for the long haul routes. By feeding more passengers into the long haul routes, It seems the bus compamoes will lose out. So if they can be integrated more fully, I think then the system can be better utilised. In fact, the Select Committee should recommend some form of cross equity ownership - MRT owning some equity in the bus companies and vice versa - so that this integration can be further promoted. Alleviation of congestion must also mean that no further land should be released for tender by URA in areas which are already perceived to be congested. In fact, the Select Committee should have envisioned and encouraged the setting up of alternative large scale business centres complete with full infrastructure. Control of traffic congestion must be a total approach. It calls for good land planning, a quantum improvement and integration of the public transport system and stiff measures on car usage. I am afraid I can only give the Select Committee a very low score for missing out on an otherwise golden opportunity to imprint a comprehensive solution. It instead opted for small measures to solve what may be a short-term aberration. After all is said and done, Sir, I humbly submit that we have all missed out an all-important point in the entire debate. I refer to this insatiable and incorrigible desire by Singaporeans to own a car, come what may, whatever the cost. Perhaps, the Select Committee and the Government should, in addition to considering all other measures to curb car ownership and usage, direct their attention to Singaporeans' value system and find out why car ownership remains at such a premium. Why do Singaporeans continue, despite our good and vastly improved public transportation system and the prohibitive cost of car ownership, to aspire to car ownership? The reasons, of course, are historical and an unavoidable part of our improved economic conditions and greater affluence. But why is car ownership still so important despite the overwhelming costs and reasons against it? Think of countries like Britain. A car does not cost as much as in Singapore, yet many middle income Britishers do not own cars nor crave for one. Many attired in bowler hats and high executive fashion still commute to work by train, travelling shoulder to shoulder with the lowest paid office boy. There is no shame attached to non-ownership of a car by most people, and few people drive to the office because it just does not make sense. I suggest that as a long-term solution to this perennial and intractable problem of consistent increase in the car population, the Select Committee should have studied this aspect of the car ownership question. Perhaps, we should think of a new public education campaign - to change our people's value system and attitudes, and reduce the inordinate pride and status attached to car ownership. Why not a campaign to show travel by MRT and buses for what it really is - a smart alternative to driving to work? Or reduce the negative image of travelling on such public transportation. We can at least convince our people - through a massive PR campaign - to show that you are not a failure because you did not own a car, or to show that you were smart enough to give up your car to opt for something far more sensible. Sir, I support the motion in so far as adopting the Report. But I would urge the Government to go slow, real slow, on the recommendation to impose a quota.

First, let me say that I am somewhat surprised that the House has been asked to adopt this Report of the Select Committee so very quickly, soon after it has been made public. Many people have discussed the recommendations but there are also many more people who have not yet studied this voluminous Report. A few days ago, our Minister for Trade and Industry said that the Ministry of Communications and Information would study the recommendations and follow up in a few months. Now the few months would appear to have telescoped into a few days. Probably the Minister also has a hand in and oversees the Ministry of Communications! I am just wondering, Sir, if the Ministry has really studied the recommendations and has already come up with a decision just in a few days. It creates the impression that all this is merely a part of the usual shadow-boxing between Frontbenchers and Backbenchers of the PAP Government. And does the Government really wish the people to be given some time to study the Report well? I also find the words, "adopt" and "serious consideration" a bit confusing. If the Government adopts the Report, then my understanding is that the Government accepts the Report. If it accepts the Report, then it may be assumed also that the Government has already seriously considered it. Probably Dr Hong Hai could explain all this. Now, let me come to the Report itself. I wish to say, at the outset, that I support most of the recommendations in the Report in principle. But there are important omissions in the Report. Moreover, some of the arguments in the Report are based more on assumptions than on the actual survey of the traffic situation or the various factors that lead to traffic congestion in Singapore today. For instance, how much of the traffic congestion is due to car accidents, car breakdowns, road construction, road repairs, inconsiderate parking, and so on? If traffic flow is smooth and unobstructed, assisted by green waves of automatic traffic lights, will more cars on the road necessarily cause traffic congestion? This has not been answered. Do more cars going into the CBD mean that the same number of cars are on the road all the time? And how many of the cars going into the CBD are parked in parking lots and are not on the road again until the evening hours when the car owners leave office for home? "If somebody goes out, drives the car on the road and causes one minute of congestion on the road", I quote from the Straits Times, (presumably because of a car accident or breakdown on a narrow road), the cost to him, according to Dr Hong Hai, is one minute of his time. But I must ask: does this necessarily follow that there are half a million commuters on the same narrow road trailing behind somebody's car at the time? Although I agree, in general, that more cars on the road may cause more congestion, how does the ALS relieve road congestion as a whole in Singapore? Is it not a fact that the ALS could only relieve congestion in the CBD at the expense of the non-CBD areas, and transfer the congestion which might have been there - not necessarily true - in the CBD onto the fringe roads? Therefore, a proper investigation and survey should first be carried out. Only then can appropriate measures be implemented for our land transport policy in Singapore. Unfortunately, such an investigation and survey has not been carried out by the Government. I agree with Mr Heng that car ownership does not cause congestion on the roads, nor car usage. We must not forget that though Government Ministers often tell us that certain policies are pursued to ease traffic congestion on the roads, nevertheless, such policies have in fact been implemented with the main aim of increasing Government revenue. Millions and billions of dollars of taxes have been imposed on car owners through road taxes and the additional registration fees. Today, cars in Singapore are the most expensive in the world. And we may also ask, how has traffic congestion come about in Singapore? First, it must be said that traffic congestion is generally a product of the free enterprise system. As production increases and the income of workers also increases somewhat, and the general standard of living improves, more and more cars will appear on the road, especially if more and more cars are being imported. But in Singapore, Sir, road congestion has been compounded by Government so-called urban renewal and the disruptive evictions and resettlements of large sections of our population from the city. People have been driven from the city and their usual places of work to outlying satellite towns and from one district to another. All this has created the need for the people to have more and more cars to travel long distances, from their new homes to their old work-places, or to Jurong and other industrial estates. Therefore, traffic congestion in Singapore is in fact a problem very much created by the PAP Government itself. It is a problem not simply of so-called affluence, frequently stressed by the PAP Government. It is a problem which has caused our people great economic losses as well as hundreds of injuries and deaths year after year. All this has not been given any mention in the Select Committee's Report. Though I agree that the recommendations of the Select Committee be accepted in principle, as I have said, by Government as a whole, nevertheless the Workers' Party has reservations as follows. The proposed ERP is a measure that is unfair and inequitable. It penalises those who have to use their cars over long distances to go about their business or their work. With the ERP, the more they use the car the more they have to pay in taxes, although they have already paid their share of car taxes and road taxes. This could mean, Sir, difficulties for many people who can hardly balance their monthly budgets. Those who are well-off of course will not feel the pinch. If Government insists on having the ERP, will road taxes and the ARF then be reduced? Could the Government Ministers give us an answer? Therefore, the proposed ERP should not be implemented. It should certainly not go hand in hand with any quota system, as suggested by Dr Hong Hai. On the quota system, the Report states: 'The rate of increase in the car population can be effectively controlled by means of a quota system'. I agree fully with that. But the bidding for a licence to buy a car will put the less well-off at a big disadvantage, as has already been stressed by many people before me. Those who can afford and are better off will be able to out-bid others and be at an advantage, just as in the bidding for HDB shops. It will certainly increase the price of cars somewhat and therefore it is very unfair to those who are not so well-off. To be fair, the quota allocation should be based not on bidding, but on the person's need for the use of car transport, and not on how much a person can afford. The PAP Government seems to believe that money should decide on every policy it pursues. Those who are in the essential Government service, Sir, and those who need a car for their businesses should be allocated permits to buy cars. Whether or not a person has a car presently should not affect the allocation of the permit. The present non-owner will not be "squeezed out", to use the words of Dr Hong Hai, to have a car later on. Those who own cars today will not qualify for a permit to buy a second car. The disadvantage faced by the first-time owners inherent in the present pricing system, to quote from the Report, will thus be considerably minimised. Existing car owners may use their cars for any period up to the limit of the present PARF 10-year period, and scrap the car after that or sell it for re-export before they can qualify for a permit to buy a new car. This means, Sir, that each person is entitled to only one car at any time. What is an essential service? A Government special study must be carried out to find out how many people need the car for their business, how many people merely use the car to go to the office and leave the car parked until the time to go home, whether we need to restrict car usage to certain groups of people, to certain hours of the day and so on. A special committee will have to list the points for qualification as an essential service. The public will have to be consulted and should help on this before the Committee decides accordingly. Government has the resources to help bring this about if it wanted to do so. The ARF should be greatly reduced. Government has repeatedly said that the ARF is intended to limit car population growth. But it has been clearly and repeatedly shown that the ARF does not limit car growth. Therefore, if the Government should be honest with itself and with the people, it should scrap the ARF completely. Will the Government do that? Will it be honest with itself? The PARF, however, should be retained for all existing vehicles for a total period of 10 years. The PARF may vary with the age at which the car is disposed off as recommended by the Select Committee. But if it is only an option, as quoted from the Straits Times, then car owners who exercise the option to scrap cars from the fifth year should not be allocated a permit to buy a new car, unless the present car is proven to be not road worthy. Scrapping cars from the fifth year is a great waste of funds. Only the car companies benefit. Cars are made to last more than 10 years and the PARF should in fact be extended to 15 years. This has been suggested by many trade associations in the transport business over the last 10 years. In addition to two-yearly inspections, Government has also imposed a smoke emission limit for cars. So there should be no fear of pollution from older cars. Keeping the PARF would cut down foreign exchange loss through the unnecessary purchase of expensive new cars. It would also greatly help our Singapore spare-part dealers and other services connected with car repairs. The evening ALS has caused great inconvenience to many people. It should be scrapped, not just the shortening of hours. Entry of cars into the CBD does not necessarily cause congestion on the roads. Cars entering the CBD could be parked away in car parks. Cars already parked since morning will leave the CBD for home from 4.30 pm onwards. So there is no real congestion in the CBD if traffic flow is smooth and unobstructed. The morning ALS should also be scrapped. But as the charge is now lowered to only $3 per entry, perhaps it could be retained for a little while. Recent increases in parking fees in the HDB estates should also be scrapped. Parking in the HDB estates does not cause traffic congestion on the road anywhere. Clearly this is another revenue collecting measure despite all the talk about the cost of land and so on. Finally, Sir, I fully agree with the recommendations listed in the paragraphs on Public Transportation and Infrastructure. Public transport should be comfortable, convenient, cheap and pleasurable. There are great fears, however, that bus fares and MRT fares may soon go up. So let Government give us an assurance that the fares will not go up. All in all, Sir, I believe that the Select Committee has done a good job. With the reservations I have mentioned, I give my full support to the Motion. Now it is up to Government to carry out some of the recommendations therein.

Order. I suspend the sitting and will take the Chair again at 3.30 pm. Sitting accordingly suspended at 3.10pm until 3.30 pm. Sitting resumed at 3.30 pm

Resolved, That the proceedings on the item under discussion be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Wong Kan Seng].

Debate resumed.

Mr Speaker, Sir, I rise to support the motion of Dr Hong Hai. After listening to some of the speakers, particularly the last two, Dr Lee Siew-Choh and Mr Chng Hee Kok, I am just wondering how many Members have read the Report in toto and also how many have even read the recommendations listed in the Report. Or have they merely read the Straits Times or the Lianhe Zaobao? Dr Lee Siew-Choh complained a lot about the congestion in Singapore by cars. He has come a long way from being Chairman of the Barisan Sosialis. I am just wondering if the Barisan had taken power in Singapore and been in power all these years, whether there would be any congestion at all. Would Singapore be like Moscow or one of the Eastern European countries where there are only a few Ladas around and certainly no congestion to speak of? He says it is because of the PAP's successful economic policies and rising incomes. Well, a few years ago, we had a severe recession and it was through the strong efforts of the Government led by the Minister for Trade and Industry that got us out of that recession and we have had very strong growth for the last three or four years. Perhaps, Sir, Dr Lee is asking that the Minister engineer another recession and keep Singapore in a perpetual recession. That is one way to solve the car population problem. Sir, the car ownership problem is one that has certainly generated tremendous emotions in Singaporeans and that is well reflected in this House. It is unfortunate that this is so, because the land transport problem of Singapore is more than just car ownership or even car usage. Even Dr Lee Siew-Choh, a man who is supposed to be a socialist or one-time socialist, spent 99% of his speech on car ownership and usage. He has become very bourgeois indeed. What we need to do is to look at our land transport in toto. As the Committee looked at what has been done in Singapore in terms of various measures to promote land transport policy, we have been heartened to find that we have provided a very modern system of transportation with various modes available to the public and certainly an outstanding means of transportation via the MRT. It is the total system of transportation that has not only kept pace with our economic development but has also facilitated it. Let us not forget that in a well functioning economy, people and goods must be able to move efficiently in terms of time and cost, and congestion conversely increases the cost to producers and to consumers in terms of both time and cost. At the same time, we have been able to enable more and more people to own their own cars. In fact, the rate of increase in car ownership, as pointed out by Dr Hong Hai, has far exceeded the rate of population growth. We need to keep the total perspective in view, because if we focus only on car ownership and usage measures, we will miss out on what is necessary for our future economic development. There are half a million vehicles on the road and less than half of those are represented by motor cars. The rest are commercial vehicles. We must make room for commercial vehicles. We must devise a system that will enable commercial vehicles to function efficiently in Singapore in addition to cars. And not only commercial vehicles that move goods but commercial vehicles that move people, like buses and the MRT, and commercial vehicles that move both goods and people, like taxis. I think we should pay attention to each one of these categories. The question is: will we be able to accommodate a similar rate of growth of all kinds of vehicles in the future without severe congestion? This House has focused on car ownership because that is something which affects a rising proportion of the population, especially the young and upwardly mobile portion of the population, people who reach middle-class status. Sir, the point is that the car is the most convenient form of transportation and, in addition, it is an important status symbol so that with rising incomes more people aspire to own them. But there are at least two implications that arise out of these rising aspirations. No. 1: If we are to accommodate the rising aspirations, more land and more resources must be allocated to roads and to the expansion of roads. It is a social choice that Singaporeans must make. There is a cost to be paid for more roads. Secondly, more congestion will result even if more roads are built. There is always a physical limit to the actual number of cars given the number of roads. Unless, therefore, a rationing measure is introduced, severe congestion will result. Government could, as some Members are advocating, allow car ownership to increase freely without restraint. The result would be severe congestion for everybody. Of course, if the congestion gets severe enough, this in itself will serve to limit the growth of car population. I am always amused when people refer to London or to other big centres like Munich and big cities like New York City and so on, and they try to draw parallels for us, saying, "Look, they can accommodate a lot of car owners without congestion because people leave their cars at home and then commute to work." That sounds very good until one realises that Singapore is not like New York City or London. Singapore is a city state. Where is the country side? Where is the hinterland? Where is the open space where we can take our cars for a weekend enjoyment? It is unrealistic to expect that people will buy cars for the purpose of keeping them in the garage, polishing them every so often, admiring them every now and again, purely for the sake of a status symbol. People buy cars to use them. And I am not convinced that improving feeder services, good as the idea is, is going to persuade many car owners to give up using their cars to go to their place of work, for the simple reason that you need not only a feeder service to get to the MRT station but you need a feeder service from the MRT station at the other end to get to your place of work. And more than that, many people need their cars in the course of their daily work to go from one appointment to another. So let us be realistic. We cannot allow car ownership to increase freely without hindrance and hoping that usage measures by themselves alone will achieve the result. Sir, the present system has worked well up to now. But there are inadequacies which are becoming more and more obvious. The first one is that the ARF is based on a percentage basis and the Government would have to keep on increasing this percentage in the future if it hopes to use it as a car ownership restraint measure and this will distort the buyers' preferences even more than it has already. If we look at the car prices, we now have a wide range and what we have seen is a substitution of better quality cars for inferior quality cars. I never thought I would live to see Ladas on the roads of Singapore, or even Skodas. An hon. Member: Why?

Because if you know these cars, they are rather antiquated in terms of their mechanisms and inferior in terms of their features. The ARF system has led us to substitute poor quality cars for better quality cars on our roads. Secondly, the ARF system is already an implicit quota system, whether one sees it or not, whether one admits it or not, because at the back of the Ministry of Communications and Information's mind, there has to be a limited rate of growth in terms of car ownership and therefore every few years the ARF is adjusted upwards and the market has been expecting this from some time last year. That is why there was all the speculation. Furthermore, the present system has got some very irksome measures which are quite unnecessary, for example, having to increase road taxes and petrol taxes from time to time. A quota system makes it unnecessary to increase road taxes and petrol taxes. In fact, both can be decreased, if necessary or if desired, without increasing car ownership. Will the quota system raise prices? I think that is something at the back of everybody's mind. The answer is yes if the ARF is not lowered and quota holders are required to pay the ARF. If you take the chart presented by Dr Hong Hai, on the left hand side, you will see that the quota holder has to pay the ARF. But the price will only go up if the ARF is not lowered. But he recommended the ARF to be lowered simultaneously when a quota is introduced. That could lead actually to a lowering of new car prices. An alternative to his suggestion is to allow the quota holder to pay PARF rather than ARF. In other words, just like a scrap car owner pays the PARF rather than the ARF, so a quota holder can be allowed to pay PARF rather than ARF. But it is a matter of choice and it is quite simple for the Ministry of Communications and Information to engineer the quota to either result in a net increase in prices, stationary prices or even to lower prices. And if I were the Minister I would teach the speculators a lesson by making such a generous quota in the first place and lowering new car prices in the process. The speculation and the windfall gains are already there in the present system. Dr Hong Hai mentioned that some time last year the market was anticipating an increase in ARF and therefore used car prices were going up and scrap car prices were going up. Immediately after the Select Committee tabled its Report earlier this month, the scrap car prices went up in anticipation of a restrictive quota that will raise new car prices subsequently. Windfall gains. I am surprised that some MPs think that owning a car is an investment. It was just a quirk of the market in the last few years because of the Yen and the Mark appreciation that gave a temporary increase or windfall gain to some people who own Mercedes-Benzes and such expensive cars. It was due to the Yen appreciation and the Mark appreciation. But the ARF itself only slows down the rate of depreciation. A car is a depreciating asset. A car is not an investment. So do not rush off to buy a new car in the hope of making a profit. You are more likely to lose than to gain. And you only gain if the exchange rate moves in your favour. What about the objection that the quota system will endow people who get the quota to have a perpetual right to own a car? That is not inherent in the quota. It is inherent in the PARF. Eliminate the PARF and you eliminate this problem altogether. The reason why the Committee advocated the PARF was, firstly, to be fair to all the present car owners who were promised the PARF when they bought their new cars, and Government must honour its commitment. Secondly, we recommended PARF even for new cars after the quota is introduced in order to encourage a younger car population on the road. We happen to recommend for new cars a sliding scale from five years onwards. People do not have to scrap their cars. Even now they do not have to scrap their cars after 10 years. They can continue to keep their cars, but there is an incentive for them to scrap if they wanted to. And the people who buy these cars need not scrap them, they can export them if they refurbish them. So I think the matter must be put in perspective. The question of bidding, I believe, that is a matter for the Ministry to sort out how exactly the process is to be done, but it can be done in a very orderly way. People who want to buy cars do not have to actually go and bid. The dealers will do all the job and, I believe, that the dealers between themselves will even out whatever price fluctuations there may be. You simply go to any car dealer and say, "I want to buy a new car." And you have a choice. A scrap car costs so much of this capacity, a quota licence costs this much. Take your pick. And I believe it will be predictable within a month or so, if that is the time within which a quota is allocated. What about usage measures? Some MPs believe that we can rely upon usage measures alone without ownership measures. Well, if you increase usage cost exorbitantly, of course you will limit car ownership at the same time. But you are hitting out at all the 250,000 car owners simultaneously, and to what purpose? If only to get rid of the marginal car owner, there are better ways and less costly ways of doing so. Measures like the ERP. What does the ERP actually do? First of all, bear in mind that ERP, if Government adopts it, will take about five years to implement. So it is five years down the road. We need something in between. What does the ERP do? It simply charges you for using certain stretches of roads. What it does to the system of transportation is that it will divert traffic to other roads and instead of congestion in one place, it will be spread out to other roads. So if you can imagine that you allow free car ownership, imagine if you could pack cars bumper to bumper all along expressways, along every road in Singapore, that will be the maximum number of cars you can put on the roads, but they cannot move. So usage measures cannot prevent that kind of congestion. It is the same for ALS. It merely diverts traffic, space-wise and time-wise. You do not believe me, just try to drive into the city area after 7 o'clock and you will see tremendous congestion. We have merely postponed the congestion from about 5 to 7, to from 7 o'clock onwards. And also the ring roads get affected in the meantime. Dr Lee Siew-Choh asked about whether surveys should not be done for some of these measures like ALS. If he had read the Committee's Report carefully, he would have noticed the submission by the PWD which has been monitoring the system. Surveys have been taken and surveys are still being taken. Mr Speaker, Sir, I recommend that Members read the Report in toto and consider our proposals very carefully before they dismiss any of them.

Mr Speaker, Sir, land transportation is a very critical part of the physical infrastructure of a city. We all depend on road transportation for everyday activities, whether they are social, recreational or business. Hence, we need to maintain an efficient road transportation system in Singapore. System that really works. The Report by the Select Committee has articulated the main issues very well. I must commend the Chairman and the Members for a well thought-out and well-prepared Report. Unlike the comments made by some other Members, I do appreciate the good Report put up by the Committee. In general, I agree with the main thrusts of the Report. In particular, I am in agreement with the need to impose both ownership as well as usage restraint measures. In addition, usage restraint measures must also be supplemented or compensated by the provision of better, more affordable and more convenient public transportation; ie, further improvement in our bus services and MRT lines. This is a very crucial point indeed. However, Sir, on the proposed quota system, I would like to reserve my judgment, purely because the final details of the implementation of this quota system have not been clear yet. Like other Members, I would like to voice a concern that the quota system should not be biased towards the better off or the rich. The Report is silent about this point. But from what I heard from the Chairman's speech, Dr Hong Hai, he seems to suggest that there should only be one class of quota. That means there is no allocation of quotas between different capacities of cars. This is a point that I do not feel very comfortable about. I believe that the idea of having one class of quota would drive up prices, because those who can afford better cars naturally can afford to bid higher prices. Therefore, the average price of the quotas would be definitely higher. This bidding process, therefore, will drive up the whole cost of owning a car, which should also make it probably out of reach for the ordinary people. This quota system then becomes very inequitable. Many people, such as salesmen, small merchants, shopkeepers and fledging entrepreneurs will need private cars to get around. Hence, they too should have access to a share of the quota. Extra care therefore should be taken to ensure that the quota system, if implemented, does not cause an increased cost in the ownership of cars, whereby the roads would become only the private playground or freeways of the rich. I would like to suggest that if the quota system is being seriously considered by the Government, it should look into the sub-classification of the quota. The quota can then be allocated to different capacities of vehicles. For example, we can have four classes: those below 1,000 cc; those from 1,000 to 1,600 cc; those from 1,600 to 2,000 cc; and then those from 2,000 cc and above. In this manner, at least if there is a quota in place, the pricing of the quotas will not be biased towards those who can afford more expensive cars, and therefore you will see more flashy, more expensive cars on the road. The road should be accessible and used by all classes of people. On this note, I therefore suggest that the Government seriously consider how the scheme should be implemented before they implement the quota system.

Mr Speaker, Sir, I support most of the recommendations proposed by the Select Committee on Road Transportation Policy. However, I am not really persuaded by the arguments put forward by my parliamentary colleagues who have advocated the car quota system. I am not convinced for a number of reasons. Firstly, we must not forget that there are about 35% of our population who are between 18 years and below 35. And with rising aspirations and increasing affluence, this group of people are likely to assert demand on the car market. Hence, the car system will be overheated and prices are likely to be exorbitant. Sir, the quota system aims at how we can control car population growth. The quota syatem limits the number of cars to be made available on the road. It does not in a way solve the problems of usage and congestion. You may control the number of cars but by rampant driving around and other factors affecting, it will generate congestions too. So to think of the quota as a mere solution to wht whole problem may not be realistic. What one should look at is the implementation of immediate measures and whether we have exhausted all possible measures in term of curbing road usage and relieve road congestions. Sir, I am not in support of this proposal to implement the car quota system. This proposal may on the surface appear attractive but it does not solve the car usage problem. The quota system sticks out like a sore thumb. It produces more negative consequences rather than relieve congestions on our roads. The proposal will make some happy and many frustrated in meeting one's need for a car. It does not make sense as it would set us back. We will be attacking the symptom rather than the cause of increasing congestions of our roads. Sir, the car quota proposal will create a number of problems. Firstly, there will be serious price distortions in the market for new and used cars. Black marketing and excessive profiteering will arise as competition for licence to purchase new cars increases. Both buyers and sellers of new cars will not be subjected to rational market behaviour. Members have suggested that the market is going to be corrected by rational behaviour. But I think in this issue, the market is never rational at all to some extent by pricing. Because there are a lot of reasons why people want to acquire cars. And unless we can appreciate these desires, it is really not possible through rational policies to deal with some of these desires. Secondly, the hopes of young professionals to acquire cars for transportation will be dashed. They will have to pay more for owning a car in future. They will feel that they are discriminated. In the long run, they will be frustrated as their middle class aspirations to some extent is dampened. Thirdly, people will tend to keep their cars longer as future car prices are likely to be very high. And we may see an increase in the number of older cars on the road. As a result, the overall car population will increase and road congestions will remain a problem. Fourthly, the quota will certainly penalise the new entrants into the car ownership as it is seen as less equitable. Unless an equitable system of balloting is devised, new entrants into car ownership will have to pay a high premium. May I suggest, Sir, the HDB style of balloting system be implemented in this case. This is because everybody who needs a car would get an access. This will be an equitable approach to working out a solution for those who really need a car. Sir, we have been rated to have the best transportation system in the world. Road congestion is still tolerable. Until its implications are fully studied, there is no serious urgency to implement the quota system. We must first implement as many measures as possible to reduce car usage. We can introduce measures such as providing more car parks around MRT stations with parking rebates. This has not been fully explored and I think that in many new towns, we can provide car parks with a better rebate system. We may also introduce a step increase in road tax for cars over 10 years. This would be one solution to get old cars off the road. People who tend to keep older cars for a longer period of time would be deterred. this could reduce frequent breakdowns and congestions on our roads. Further increase in parking charges in the city area could be looked into because the charges are still not high enough to deter people from getting into the CBD areas. Sir, there are two other immediate measures which I think may produce results and these need to be explored. We have been talking, discussing and implementing schemes which are centered on disincentives. Why do we not talk of incentive schemes? I wish to propose that rebate on road tax be considered for people who prefer not to drive into the CBD area, or if they drive less into the CBD area. A rebate system could be considered and worked out. Before the ERP is introduced, one could possibly look at road tax rebate system. We could always look at tamper-proof mileage meter. The Government has introduced a law regarding half-tank rule. The Government could perhaps try to look at tamper-proof mileage meter. Most cars are inspected at the ROV once in three years. People could be allowed to record their mileage and after a while they could be assessed at ROV when they send their cars for inspection. If they are using less mileage, give them a rebate. That could probably be one incentive that we could explore. I suggest that these incentive schemes be looked into critically so that we need not have to introduce the quota system at this stage we should examine whether these are feasible steps to curb road usage. Sir, I urge the Government not to accept the proposal to introduce the car quota system until it is assessed that our car usage measures have proved to be really ineffective. We still have a lead time to first try out other recommendations proposed by the Committee. So I hope that the Government would study the proposal on the quota system seriously before it is introduced. 4.04 pm

Mr Speaker, Sir, first of all, I would like to congratulate the Select Committee headed by Dr Hong Hai for doing a good job of getting widespread views from the public on our land transportation policies. After considering the written submissions and oral evidence of the Committee, the Committee has also made some recommendations. I would like to take this opportunity to comment on some of these recommendations. The most significant and also most controversial recommendation is that of using a quota system to control the increase in the private car population. Let me say from the outset that I recognise the need to keep our roads free from severe congestion so that the movement of people and goods would be free and efficient. The number of vehicles on the roads must therefore be controlled. There are basically two ways of doing this. Firstly, by raising the price of vehicles through higher taxes and then letting market demand determine the final number. Secondly, controlling the numbers through the quota system and letting market demand determine the price. From an objective and unemotional point of view, I agree that the quota system is the most effective as it addresses the basic problem of numbers squarely. I consider the Committee's recommendation to change from the pricing system to the quota system as radical but bold and worthy of serious consideration. The quota on private vehicles can be economically allocated in several ways. The one suggested by the Committee is that of bidding for licences through tenders conducted at regular intervals. It can also be done through balloting, as suggested by some of my parliamentary colleagues, on a first-come-first-served registration system or a mix of both, bidding and balloting. The greatest concern of the middle and lower-middle income class who aspire to be car owners is that the bidding system would push prices up so high that only the upper middle and the very rich people would be able to afford. Another fear is that dealers and other speculators may come together and corner the market leading to profiteering and high prices. I do not support the balloting of quota for cars. We should leave that to the issue of shares in the share market. Neither do I support the first-come-first-served registration system. Both systems cause distortions to the market as they do not make the buyers and users of scarce commodities pay the market price for them. This means that the demand for them will continue to increase and a black market for private cars will be established. I support the allocation of quota by bidding for licences through tenders. Bidders should also pay the actual prices bid, not the lowest or the average successful tender price. In this way, aspiring car owners would submit serious bids. However, I do not support the recommendation that the Government permit the purchase of new cars by allowing the scrapping of a used car eligible for PARF. This is tantamount to giving every used car on the road, now eligible for PARF, not only concessionary replacement prices but also a licence in perpetuity. A car not eligible for PARF now will get neither privilege. This is inequitable not only from the point of view of the non-PARF car owners but also first-time car owners. I would like to suggest that the Government addresses this equity problem by divorcing car licences from scrap cars. All those wanting to buy new cars must buy a licence valid only for the life-span of the car. So those with a scrap car can then pay the PARF prices. Those without will have to pay the ARF prices. The PARF system should continue in order to encourage owners to keep their cars new. However, I do not think it is necessary to have a sliding PARF from year 5 onwards. This will give rise to an unnecessary loss of foreign exchange. Most cars which are well maintained can last 10 years without much serious mechanical problems. Vehicle inspections can be made more stringent and frequent, if necessary, to ensure this. I would also like to support the recommendation that ARF be reduced at the introduction of the quota system. Thereafter no further adjustment is necessary as the licence price will move up or down depending on the quota set. There should also be just one type of licence for all cars. The Government should best leave to the market to decide what size of cars people wish to buy. The ARF system already makes it much more expensive to buy big cars. Having one type of licence and one price means the scrap car should not be used as a substitute for a licence. Otherwise the scrap car prices of different engine capacities will collapse overnight to that of just one common price, that of the price of the licence. Some of my colleagues have mentioned that the Government should divide the licences into categories according to the size of the engine of the car. I do not see any reason for this. Because if a person does not get a licence in the big category, this person will move down to the lower category and bid a higher price and so eventually the same situation will occur. The person who is willing to pay more will still get a licence to buy a car but he will end up buying a smaller car, and that is the only thing that would happen. The Government should also set the quota on a yearly basis, taking into consideration the number of cars that have been scrapped. Licences should go with the car and not the owner, and should only be transferable upon transfer of ownership of the car. No hoarding of licences would therefore be possible. Successful tenderers of licences must be given a reasonable time frame of, say, six months to purchase a vehicle. In summary, the quota system should be simple but still addresses the equity issues confronting existing car owners and first-time buyers. With the introduction of a quota system for private vehicles, the public transportation system must be improved so that commuters can still enjoy a comfortable, convenient and efficient mode of travel. A lot has been done and is still being done by the public transport providers to achieve this. However, the Government should assist by improving the infrastructure for public transportation. I would like to suggest that to expedite the integration of public transportation, covered walkways be built to connect MRT stations and bus interchanges, bus stops and taxi stands. All bus stops and taxi stands should eventually be sheltered so that waiting for buses or taxis in our harsh climate becomes much more tolerable. In order to encourage people to leave their cars at home, feeder services must be made convenient and affordable to the residents. It is unlikely that individual private operators would be able to run them viably. I would suggest that feeder services be made part of the MRT bus integration network so that those who do not own cars or those who do, but wish to leave their cars at home on weekdays would have a comfortable and convenient alternative to use. The Committee has been silent on the issue of company or "Q" registered cars and rental cars. In my view, company cars are really private cars and should be subject to the quota system. After tender- ing for the licence, the owner will have to pay the ARF and the cost of company registration as in the present system. Rental cars are public vehicles as they are available to members of the public. However, because of the availability of long-term leases, this makes them good substitutes for private cars. So not subjecting them to the quota will provide a loophole which may be exploited. With these comments, Mr Speaker, Sir, I support the Motion.

Mr Speaker, Sir, our land transport policy has always been committed to keeping our roads relatively free of congestion. Most of us agree with that. The problem is, how do we maintain this policy and at the same time try to accommodate the rising aspirations of Singaporeans to own cars? We recognise the call for and the possibility of allowing a good proportion of the population to own cars as long as they restrain their usage. However, how do we arrive at that desired stage? We may get to that stage by either of two ways. The first is to have no further ownership restraint, as advocated by Mr Heng Chiang Meng and Mr Chng Hee Kok, and try to discourage usage by increasing its operating costs, and improving the attractiveness of the public transport system. But in view of our present circumstances of car growth and the strong desire of Singaporeans to own cars, and also the types of measures that are available to us to effectively discourage usage of cars, not just at the CBD but also at the ring roads, highways and certain other congested areas, to take the first approach is to invite trouble. Mr Heng suggested increasing operating costs, such as road tax, petrol tax, ALS fee, etc. before the ERP comes on stream. He feels that these interim measures of increasing the operating costs can curb car usage and therefore buy us time until the ERP is available. But, Sir, let us look at the measures he suggested. Road tax is, first of all, not selective in that everybody, whether he uses the car or not, will be charged road tax. Secondly, road tax is actually an ownership restraint measure. When I buy a car I will do my calculations. If I buy on hire-purchase, I will calculate how much I have to pay each month and road tax will be part of it. So road tax is an ownership restraint measure. Road tax will probably have to be increased by a substantial amount before it can also have an effect. What about petrol tax? Petrol tax again is not selective because it does not differentiate whether or not it has caused congestion. Also, Members know that we have the problem of the half-tank law which means that it will aggravate this problem if we increase substantially our petrol tax. ALS fee. At the moment, without the computerised ALS or the ERP, we can only do it at the CBD. What about places in the ring roads, on the highways and other congested areas? ERP, according to our understanding, will take four to five years before it may come on stream. In other words, we are still uncertain whether ERP is workable. At the end of the day, we may find that the ERP is either not technically feasible or administratively workable. Sir, if we were to take no ownership restraint at all, very soon our traffic congestion may deteriorate to an extent that it is unbearable. Sir, the second approach, which is a more judicious one, in my view, is to implement an ownership restraint mechanism straightaway which will ensure a predictable and adjustable growth rate of cars. And as additional usage measures are implemented and found to be effective and as the public transport system continues to improve and more people are attracted to it, we can then allow a higher growth rate of cars without endangering traffic conditions. Sir, in this regard, the proposed quota system fulfils this requirement better than the existing ARF scheme and should therefore be seriously considered by the Government. Sir, the many concerns expressed by the public about the quota system have already been addressed by Dr Hong Hai and Dr Augustine Tan, fellow Members of the Select Committee, and I do not propose to repeat them again. I would like, however, to just comment on what Mr Lew Syn Pau has suggested. I am not averse to his suggestion, but I think his proposal will mean that existing car owners would in fact have to pay a higher price, compared to now, to get a new car. Let me illustrate by giving some figures. I seek your indulgence, Sir, to allow me to bother you with figures. Supposing the ARF rate at the moment is 100% of the cost of a car and the PARF rate is 50%. Under the existing scheme, I can buy a car by paying the ARF. In other words, I pay the full 100%. If we were to implement the quota system and if we adopt the suggestion of the Select Committee by reducing the ARF to 50% of the cost of the car, that means if everything else is the same, ie, the demand and the growth, and the quota is set to the natural growth of cars at the moment, the bid price would probably be around 50%. This means that a person who buys a car without a scrap car would have to pay a total of 100%, equivalent to the pre-quota price, which is the ARF rate. If the ARF is reduced to 50%, the PARF rate, suppose it is 50% of the ARF rate, would be 25% of the cost of the car. If a person with a scrap car has to pay the bid price, ie, he is paying another 50%, it means that he has to pay a total of 75%. But the existing practice is that if I have a scrap car I pay only 50% to obtain a new car and therefore effectively he will be paying a higher price. When considering our recommendations, we were very careful about equity. That is why we recommended that PARF be retained because we feel that, if it is not retained, it is unfair to the existing owners. Therefore, I think his proposal, firstly, would increase substantially the cost of new cars for the existing owners and, secondly, there would be some difficulty in controlling the exact number of the net increase of cars. Under our proposed system it is straightforward. For the bidding, it is this number of cars which is the allowable growth rate. Whereas in his system it means that everybody has to bid and, therefore, we do not know at any one time how many new car purchasers are actually buying cars without a scrap car and how many are buying with a scrap car. As such, we cannot effectively determined what the quota should exactly be. Maybe a more equitable approach, as a start, is to impose a fee, not as high as the bidding fee, on those people who use a scrap car to buy a new car and that fee can be, say, a percentage of the average bid price. This scheme is actually consistent with what we now have at the moment. At the moment, if the Government ups the ARF rate to reduce the car growth, the person who has got a scrap car, when he scraps it and purchases a new car using the PARF rate, he would have to pay a higher cost because of the increase in the ARF rate. This means that if we adopt the bidding system, then the bidding system should act like a variable ARF and the market would decide what that ARF should be. Therefore the existing car owners with a scrap car should be made to pay a portion of that variable ARF. Otherwise he will have an unfair advantage because perpetually he will just paying a fixed rate, which is the current PARF rate. Let me now come to the evening Area Licensing Scheme. The Committee has proposed that the scheme be shortened to 6.30 pm with good reasons. From the traffic volume data submitted to us by PWD, we discovered that the traffic peaked at 6.00 o'clock. And if you look at the outbound traffic after the ALS change, after 7.00 o'clock there is no substantial increase in outbound traffic. What does it mean? It means that after 6.00 o'clock most of the workers in the CBD would already have gone home. Therefore, by shortening the ALS time to 6.30 pm, we feel that the inbound traffic will increase because more people are going in. But the outbound traffic will probably still be the same and therefore it would not delay workers from going home after work. The positive effect is that it will increase business in the area and also the evening and night life in the area. With that, I urge the Government to consider the recommendations by the Select Committee and, in particular, to adopt the change to the evening ALS.

Mr Speaker, Sir, may I make a point of clarification? Regarding my proposal, the PARF need not be a fixed figure. When we make everybody tender for a licence when buying a new car and when we reduce the ARF, the proportion of PARF to ARF can be reduced so that nobody actually suffers a loss in the process.

Mr Speaker, Sir, I support the motion of Dr Hong Hai. We should commend the Select Committee for its level-headed Report. It has done, in my opinion, good work. There are, of course, many items left untouched, eg, the status of Q-company cars and technical studies and details of implementation are yet to be worked out. But this should not detract, or distract us, from the intrinsic merits of its basic proposals. Sir, most encouraging of all are the proposals to retain the PARF, though with modifications, and the shortening of the evening ALS from 7.00 pm to 6.30 pm. Many car owners, dealers and finance company directors probably heaved a sigh of relief and slept better with this recommendation, though they may not be out of the woods yet. The shortening of the evening ALS will be welcomed by shopkeepers, parents and school children alike. This, in my opinion, should be implemented as soon as possible once technical studies are completed and evaluated. I support the recommendation by the Select Committee for further improvement to the public transportation system. The Government has done the right thing to fund and construct the MRT. It should go one step further and make doubly sure that the MRT and buses are fully integrated and their usage is maximised. All MRT stations should be supported by frequent feeder bus services. Buses should be more spacious and air-conditioned. Perhaps tax incentives could be given to encourage the buses to switch to air-conditioning. The most significant and controversial of all recommendations of the Select Com- mittee is that on the quota system. To quota or not to quota, that is the question before this House. The quota system actually involves two separate questions. First, the rationale and method for setting the quota and, secondly, the mechanism for the allocation of the set quota. I think the rationale is clear. I support the quota system in principle. Basically, there is a limit to the total number of cars on the roads in view of our land size and road capacity. It is a matter of finding the best way or a mix of measures to discourage car growth beyond a certain target or limit. The main method at the moment is to increase the taxes drastically through the ARF at undetermined times to dampen car sales. This may not work well in times of prosperity and the Government carries with it the odium of imposing heavy taxes and dashing the aspirations of many young Singaporeans or those who aspire to own cars. The quota system will, I think, set the target car growth rate per year rationally, with the assistance of technical studies on road capacity and traffic congestion, and allow market mechanism of demand and supply to set the price of a new car licence. It will be market mechanism at work, and not the strong hand of Government that will primarily determine the price of new cars. We should let market forces decide. If the people want a car, they should pay for it. It is in line with the overall trend towards privatization and market initiative. Once the quota system is accepted in principle, we would then have to settle the question of how the set quota is to be allocated, whether by public tender or some other mechanism of allocation. It is not possible at this stage to come to a firm conclusion without detailed studies, but open bidding appears to me to be the most practical method at the moment. However, I would urge the authorities to take into consideration the needs of the handicapped and the charity organisations in the possible allocation of such quota. Some handicapped people, for example, need a car to ferry them from place to place. We should also consider some form of differentiation for cars of high and low cc. Perhaps a standard price may be pegged at, say, 1,000 cc, and higher cc cars would then have to pay higher percentages based on this. Sir, overall, the quota system may not be the ideal. I think it is impossible to have an ideal where we need to limit car growth and restrict car growth. But it is a better alternative. We should think about it and consider it seriously. It may work fairly well once the practical details are sorted out. 4.32 pm

Much obliged to you, Sir. Transportation is one of the necessities of life like food, shelter and clothing. Everybody needs transport to be mobile, to go about their social and economic life. Having said that, what we are discussing is a very complex and difficult issue. I think there is no one single answer to the problem. It is a very difficult problem that we are tackling. At the moment, of course, the Government has basically used the price mechanism to solve the problem. It has put up the cost of a car, such that Singapore has now the highest car price in the world. One car here costs as much as four cars in Los Angeles. We have 45% import tax, then we have a registration fee of $1,000, 175% of ARF, and on top of that, we have to pay high road tax, car park fees, not counting the fines. If the Government is really serious about keeping the car population down, I think it can solve the problem to a certain extent if it makes financing difficult for would-be car purchasers. I think there was a witness at the public hearing of the Select Committee on Land Transportation Policy who advocated this. I take his point. If financing were to be difficult, we can have a very substantial drop in the purchase of cars. At the moment, it is easy to get financing, even for second-hand cars. So if the Minister is really serious about keeping the car population down, he has to get the Minister for Finance to introduce a measure which will make it more difficult for people to get a car loan. Perhaps Government servants should also be discouraged from getting car loans. What is the solution? Actually, as the Member for Tiong Bahru GRC has said, we must have total planning, and I entirely agree with him. If we really want to solve the problem, we must have total planning. I think this planning should involve not only the transport people but also property developers who take up a lot of land. I think they should pay a tax for taking up land. We should have measures to control the movement of school children. Perhaps schools should be built close to housing estates or within walking distance. Members will note that whenever there is a holiday, the traffic also goes down. We have got about 500,000 school children using our roads during the school term. We need to decentralize our economic activities. And perhaps we should try to get the aid of modern science, using more electronic devices, like Fax. We have got electronic shopping and other modern devices which could cut down the unnecessary travel of people. But I think the ultimate solution is really in public transportation. We should not have a Select Committee just on Transportation. We should have a special group of people just to study public transportation. I think ultimately that is the key to the solution of our problem. We cannot have every person owning a car. I think that is not possible. We must have good public transportation. Like Dr Lee Siew-Choh, I also agree very much on the recommendation to have efficient and comfortable buses. I think there is a point about feeder services, and it should be studied at greater length. So, ultimately, if people can be encouraged, can be persuaded, and also value systems can be changed to get people to use the public transport system like in Munich and Hamburg, I think probably that is our ultimate answer. Everybody wants to own a car, and I think there is nothing wrong in owning a car. Perhaps if each family could own a car, I think it speaks well for Singapore. Why not? Singaporeans like to travel and I think they have got no way to travel except to Malaysia. And what is wrong with having a car and going to Malaysia? I think it is good for both countries. [Encik Yatiman Yusof interrupted]. Well, there will be more causeways by then. Much has been spoken about the quota system. It is a pity that the Select Committee has not come up with more details. I think everybody is still --- An hon. Member: You are on the Committee.

Well, it has got no details. That is really the main problem. Because unless we have got more details, I think most people will feel uneasy with a new idea. But in the long term, probably one day there will be some kind of quota system. So even if the quota system is not accepted now, I think the Committee has contributed much in the sense that it has made people aware that in fact one day ownership of cars will be a bit more difficult. The Committee has done good in that sense. And even if the recommendations are not wholly accepted, I think credit has to be given to Dr Hong Hai for making the public at large aware of this very difficult issue. I have been in Parliament for five years. But I cannot remember any issue or any problem that has been more widely discussed as this one. We had two days of public hearings and we met the mass media. There was news over the TV. I also understand that Dr Hong Hai gave an interview, and then we had many comments. I wish that in future if other issues are so exhaustively discussed in public, I think it will make people aware of this difficult problem. I do not agree that cars should be scrapped at five years. I think it is a terrible waste. It is just my own personal philosophy. To me, it is unthinkable to scrap a car at five years. I am using a 20-year old car. It is still going strong, and starts at the first turn of the key. Why should I scrap it? It is a national waste. Our young leaders, I think, should be made aware that our resources are not limitless. We have to conserve and to practise more economy. Although Singapore has been said to be an affluent society, but I still think we should practise thrift and be more conservative. The PWD has highlighted 14 congested areas. Perhaps for the short-term, they should look into these 14 congested areas to see whether they could ease the traffic flow. Also, as Dr Lee has mentioned, I think this question of overall planning of our different Government departments has been discussed before. It should be brought up. There must be coordination between each department. Even the little side-road where I live, they have been digging it up almost ritually once every year without fail. I do not know what they dig it up for. It is almost like a ritual exercise. I do not know whether it is to keep the economy going or for what reason. I am sure with overall planning, we could keep down the digging of our roads and causing unnecessary obstacles. I think the Cabinet should address this very important question of coordination of the work of different Government departments.

( In Mandarin): Mr Speaker, Sir, the Land Transport Committee has made recommendations to the Government. What has attracted most people's attention has been the quota system. This system basically is to curb the car growth. Of course, such a system once implemented will cure the problem. But I hope the Government will not implement such a measure unless it is absolutely necessary. Because this will lead to people, developing a sense of loss and particularly the younger people think the measure works against them. As the details have yet to be worked out, please ensure giving the people a fair and a better opportunity so that they may purchase a car if they wish. We must not totally make car purchase out of reach of the common people. I hope the Government will work on aiming at car usage policy rather than on setting a quota on cars. I believe this will lead to realising the objective of controlling road congestion. As to other points I share the same views and I see that our public transport system needs to be improved. Because it is only with a more complete and better public transport system that our people will change to the use of public transport more readily instead of driving their own cars into the CBD during peak hours. This will cut down on the congestion during peak hours and reduce people's use of private cars and reduce car congestion as a result. I am sure Singaporeans who have been overseas will share the same experience because when you are in Taipei, Bangkok and Hong Kong and places like that, for the same distance you may get to your destination in (r) hour in Singapore but in these cities, people often spend from one hour up to three hours just to get to where they want to go and we should put ourselves in their shoes and try and imagine what life would be like under that circumstance and in that sort of society. Perhaps people do have the ability to get used to the situation and they get used to it after a while. To me, this is a great wastage to the society and economy. Therefore I hope the people will give Government measures every support and encouragement because such a situation can easily happen in Singapore. Singapore is a tiny country. What I have query for the Minister here is that the Report presented by Dr Hong Hai and the Committee aims at the car growth that if the policy, once implemented, would it create other side effect? Would it lead to people not buying their own cars but go more for other means of transport and thus creating other traffic problems? 4.46 pm

Mr Speaker, Sir, I rise to join the debate on the motion standing in the name of the Chairman of the GPC on Communications and Information, Dr Hong Hai. First of all, let me thank all the Members of Parliament for their participation in this debate and for the many suggestions that they have put forward. I would also like to thank members of the public who have engaged in this on-going discussion on land transportation. We have been talking about land transportation ever since the early 70's. I suspect we will continue to discuss this matter for many more years to come. In particu- lar, over the last 15 months, since November 1988, the Government has encouraged the public to engage intensively in the discussion on land transportation; on how we need to manage it such that it does not become a problem for us. The public have responded enthusiastically to the Government's invitation to discuss this matter. The media has been very helpful and ahs published a lot of different points of views in the forum pages, and over television. Many other members of the public have also submitted points of views and ideas, to other discussion groups. Many community groups have also been involved. Most important of all, the Government appointed a Select Committee chaired by Dr Hong Hai to go into this matter in-depth. I would like to take this opportunity to thank Dr Hong Hai and Members of his Select Committee for doing an excellent job. Over a period of five months, they received some 71 written representations and heard oral evidence from 28 different groups. Sir, as we encourage greater participation from the public, we must of course expect widespread points of views. This is something which we encourage and this is something that we indeed have received. With your permission, Sir, I would like to circulate a list of some of the suggestions that the Ministry has received over the past 15 months. [Copies of list circulated to Members of the House]. Sir, Members will note from the list and this is not a comprehensive list; this is only a partial list - that there are more than 75 ideas suggested on how we can manage our land transportation. If Members go through the list carefully, they will find that many ideas are at odds one with another. For example, the first proposal is to scrap PARF. The second proposal asks that we should not scrap PARF. In other words, every point of view has got its supporter and its opponents, its critics. So regardless of what we do eventually, after all the detailed discussions, there are bound to be some people who will be unhappy with Government's proposals. Sir, I mentioned earlier that the Select Committee has done a thorough job over a period of five months. They have submitted their recommendations. The Government will consider all their recommendations seriously, all of them. I do not need to go through all the discussions that we had last year when I emphasized in the budget debate the importance of the four key features in Government's overall land transport strategy -

Thank you, Mr Speaker, Sir, for allowing me to join in this debate. I wish to say that originally I found the Select Committee Report on Land Transportation Policy quite acceptable. But after listening to the debate this afternoon, I seem to find that Members of the Select Committee have got confused positions. Nonetheless, I would like to concentrate on the quota system for new cars and I feel it is basically a good measure. I also feel that several other important points need to be considered together with this package. Otherwise the outcome may not be what is desired as wrong signals are given in the market or as loopholes which exist in this Report may be exploited to the detriment of all concerned. Our policy on cars in land transport must give a manifestly clear signal to the market that the car must be treated as a consumption good and not as an investment good. Just now, the Member for Whampoa, Dr Augustine Tan, mentioned that the consideration of a car as an investment good is purely because of the rise in the value of the Yen and the Mark. I do not think so. I think it is inherent in the PARF policy that the car has a certain element of investment good in our road transport scheme. Our policies must be geared to make it extremely unwise and costly to purchase a car for investment consideration and that all such purchases should be only for consumption, as it should be. Unless this aim is clearly manifested, perceived and received by all, there can be all sorts of distortions to efficiency by wrong measures. The overall objective of our land transport policy will be lost in the morass of tariffs, duties, preferential discounts, road tax, ownership cost, usage cost measures and now licence bids. Firstly, I think it is necessary to forestall the inevitable speculation in the bidding for licences. I suggest we can introduce two features. The first is to put in a currency period to the licence bid so that there is a time limit by which the licence will be operational with the car. The quota release should be constant throughout the year. Otherwise a secondary market in licences would be created for speculation. Secondly, the licence must go with the car, not the owner, on the road. It should have a life span, say, for 10 years. The moment we make the licence perpetual, we are treating one part of the ownership of a car as an investment good which is not desirable. Here again, I wish to stress that the perpetuity of the licence has nothing inherent to do with the PARF, as pointed out by Dr Hong Hai and Dr Augustine Tan this afternoon. All existing cars on the road, when the policy is implemented, should be deemed to have a licence whose life will expire by, say, the tenth year from registration date based on our present PARF scrap car policy. At the end of this period of 10 years, the car will be scrapped and the licence will lapse. Owning a car should not be compared to owning a house. The moment we do that, we run the risk of treating the car as an investment good which is not a desirable objective in our land transport scheme. If we allow a car licence to be perpetually given life with a new car when scrapping an old one without having to bid for a new licence to go with a new car, we will be allowing the ownership of a car licence as a birth right to be handed down from one generation to another. It would be inequitable for those who do not own cars presently. The present proposal places the burden of the implicit tax arising from the licence bid exclusively on the new owners of cars so that the new owners are punished and the existing owners will gain. The argument that they can alternatively own a car by getting a used car does not hold water. If they do, the overall effect of the action will be to drive the second-hand car market upwards and that the outcome would still be inequitable as the existing car owners make windfall gains from the rechannelled demand. The burden of adjustment should be placed on all owners of cars, not on new entrants. One of the most important reasons why people want to drive a car, quite apart from the available means of public transport, is the mobility status such ownership bestows. Transport economists and social scientists have accepted that when you are mobile you have arrived. In a modern society, people want mobility. The paradox of owning a car in cities is that while mobility is desired, the end result of every- body wanting it at the same time in the same area results in huge traffic bottlenecks. The Government's policy is to ensure that our roads and expressways do not choke up so that the mobility desired will not be achieved, with the resulting economic wastage. Hence, it is crucial for us that the roads are generally free of bottlenecks by targeting the number of vehicle growth. We should make the implicit tax on owning a car equitable on all so that the joy of mobility is equally available to all, subject to a charge applied to all owners, new and existing ones. Otherwise the inequity of the existing proposal will not be acceptable. The bid for the licence can be expressed as a percentage of the ARF price. In this way, it gives the full range of car owners, from the high-end owners to the low-end owners, equitable bidding. Alternatively, we can set a minimum bid in dollar terms to each range of size of cars based on a common percentage of the ARF price and the bid for the licences can be in dollar value above that minimum limit. It would be wrong, I feel, following from what Dr John Chen has said just now, to suit the desired price level of the car by adjusting the ARF. For example, he was proposing that we should lower the ARF in case the licence bids go up. If we do this, we will exactly repeat the errors that Dr Hong Hai mentioned this morning. We are missing both the price and the targets and, more, we can cause a lot of uncertainty in the car finance market because then the ARF value will be fluctuating. So the proposal to let the quota system on cars impacting on to the licence bid should be decoupled from the PARF scheme. That is the best way to tackle this quota system on cars. Finally, the Committee recommended keeping the existing PARF scheme. If the purpose of the preferential discount is to give incentives for scrapping older cars, then the Government should work out a progressive scheme so that the preferential discount applies to cars scrapped in less than 10 years beginning, for example, from the sixth year and working up to the present discount rate by the end of the tenth year. Such a scheme can be worked out and announced in advance of implementation together with the other measures to avoid uncertainty. Finally, Mr Speaker, Sir, I wish to support the recommendations in the Report subject to the considerations mentioned. 5.15 pm

Point of clarification, Sir. The proposal to reduce the ARF rate at the point of introduction of the quota system is a recommendation of the Select Committee. The reason why we say that is because it will allow the market to actually determine the price of owning a car, and it could result in a reduction of price rather than it will always be more than what is the existing price.

Mr Speaker, Sir, to begin with, I would like to express my gratitude to the House to allow me to serve on the Select Committee on Land Transportation Policy. I have also enjoyed working with the other Members on the Select Committee, in particular Dr Hong Hai who chaired the Committee. Dr Hong Hai is a hardworking Chairman. Under his stewardship, the Committee was able to make very good headway within a very short period of time. The Committee is unanimous in agreement with its recommendations. Of course, of these recommendations, the proposed quota system for cars is obviously the most controversial one. The Committee supports the quota system because it is the most reliable method of controlling the car population on the road. Given the recent emphasis on usage measures, I think the general public are a bit surprised that the Committee is seen to take a 90 degree turn when it proposed the quota system which is an ownership measure. The Members of the Committee, after going through all the submissions and all the oral evidence presented, came to the conclusion that the primary mechanism for controlling traffic congestions on the road would be through ownership measures, and that usage measures will and can only serve to permit a slight increase in the car population, maintaining the same level of congestion on the road through distributing the traffic more evenly. To expect usage measures alone to manage traffic congestions on our road is unrealistic. Moreover, when people talk about usage measures, many of them assume the existence of a comprehensive and operational ERP system. Of course, as we all know, even the most rudimentary ERP system will not be ready for at least four to five years. Even with the ERP system, the car population will still need to be controlled since there is no stopping the occurrence when car owners of Singapore all decide to go to the same place at the same time. It is already happening to a limited extent on festive seasons when a large number of Singaporeans decide to go to Malaysia at the same time. Several of the Committee Members also started with strong preferences for usage measures as well, like other Members of the House. But as we delved into the matter deeper, we all converged to the same conclusion, ie, car ownership measures would work, and not usage measures alone. Since Committee Members are all rational, logical like everyone else, I would urge Members of the House to weigh the pros and cons of the recommendations carefully in evaluating them. The beauty of the proposed quota system is that the number of new cars on the road can be controlled precisely. Price will then fluctuate according to demand. Of course, as the Minister has mentioned, before the quota system can be implemented, there are many issues which we must address. Dr Hong Hai earlier distributed a diagram showing how the quota system would work, ie, one can buy a new car in two ways: bid for a licence which the Government will auction regularly, or scrap an existing car. Unfortunately, I think the diagram is a bit misleading as it conveys certain assumptions and certain implications which already lead to specu- lative activities on the car market right now. Let me go one step further in analyzing these assumptions. If we allow an existing car to be scrapped for a new one, while it seems logical since doing so does not contribute to an increase in the car population, however, if that is true, then when the very first auction is held in future under the quota system, we will know what is the bid price for the quota. If existing car owners can buy a new car by scrapping their old cars, then it is equivalent to giving all existing car owners a windfall gain equal, if not greater than the lowest bid in the auctions. I think to many people this will be very unfair. Of course, this can be overcome by requiring all existing car owners to bid for a licence as well when the quota system is introduced, ie, only new cars registered under the quota system can be scrapped one for one. If that is the case, I do not see why people should speculate now by buying old cars. There is also really no reason for old car prices to increase since the Report was released. Even with this one-time limitation, the question of fairness still remains when an existing car can be scrapped in exchange for a new one under the quota system in a steady state. As several Members and also the Minister have mentioned, it is equivalent to a perpetual licence. In other words, once a person obtains a licence, he gets to keep it for life. Not only that, he will be able to pass it on to his children. That would be just like buying a house in the private market. Clearly, a perpetual licence will be worth a lot of money in 10-15 years' time. Under the proposed quota system, if that is the way it will operate, if a person can afford it, it will be wise for him to lock in the market early by buying several cars as soon as the quota system is implemented so that he can keep it for his own use or to ensure that his children can be assured of driving a car. As such, Mr Speaker, Sir, a lot of people will see the proposed quota system to be very unfair and only benefiting the rich. Quite unlike real estate investment, if a person cannot afford to live in a private property, he can live in an HDB flat. But in car ownership, either he owns a car or he does not. There is really no equivalent substitute. An hon. Member: Motorcycle!

I do not think a motorcycle is an equivalent substitute for a car. One way out is not to grant a perpetual licence under the quota system which is equivalent to saying that if a person wants to drive a new car, he or she would then have to obtain a licence by bidding for the licence every time he wants to own a new car. This modification would be equitable. Mr Lew Syn Pau has already proposed this, and I agree with him thoroughly. The quota system, Mr Speaker, Sir, in my opinion, is a good one and should be implemented in Singapore. There are of course many details which the Committee has not touched on. Rightfully, they fall under the ambit of the MCI. If the Government accepts the recommendations, then MCI would have to study all these alternatives thoroughly before introducing the system so that it will be fair and equitable to all concerned. Mr Speaker, Sir, I support the motion standing in the name of Dr Hong Hai.

Mr Speaker, Sir, I have read the Report and I appreciate the good work put in by the Chairman, Dr Hong Hai, and his Select Committee Members. But more importantly, I believe the public, like Mr Chiam, appreciate that this is a good exercise of the Government's commitment for dialogue, consensus building and participation in decision-making on major issues that confront the nation. I agree with the sentiments expressed in the Report, and I detect a genuine concern to tackle the problem of excessive car growth in land-scarce Singapore. This concern cannot be but the concern of every serious-minded Singaporean. The problem of traffic congestion could become an insurmountable problem if left unchecked. But solving the problem with hastily proposed measures could generate or create further problems, perhaps more serious ones. On the various social, political and economic implications in the Report before us, I am assured by the Minister for Communications and Information that he will look into these carefully before implementing any of the recommendations put up by the Select Committee. Solving problem, yes, but at what cost, is a question none of us in this House could afford to ignore. Sir, Singaporeans are a pragmatic lot. They will agree and even accept the need for further control measures to free our roads of traffic congestion but not at all costs. They would expect, I think, that any measures to be implemented must not be unnecessarily harsh or inequitable. The Government must be sensitive to the threshold of tolerance which is already very high. The PARF and the Area Licensing Scheme together with the very significant improvements in our road infrastructure have given us respite from traffic congestion in the past years. But today, because of new heights of prosperity, the two schemes are becoming less effective, and it does appear that we have no choice but to come up with another major control measure. In principle, I agree with the use of the quota system. We have practically developed to the full capacity of our road system. Any major expansion is no more possible. This must mean that there is an ultimate number of vehicles that our road system can take without causing massive congestion at any one time and at any one place. I do not know what this number is. Today the experts tell us that a 3% growth rate is acceptable. But when the ultimate number is reached, we will have to settle for zero growth rate. The quota system will bring discipline to our total transportation policy. It pre-determines the limit of growth and gives clear directions and leeway in planning our infrastructure and localise controls to facilitate greater mobility of the people. It is a long-term measure and will have a permanent salutary effect on our traffic flow. Setting a limit to our car growth rate also means, as has been mentioned by the Minister, that the various usage restraint measures can become more effective and hopefully less painful. So I am for it, but only in principle. The mode of implementation suggested by the Select Committee is by way of auction with a price tag. This I have apprehension. And if my instinct is anything to go by, the average car consumer may be worried of adverse consequences. The quota system will inevitably lead to a higher demand for both new and old cars. The sentiment of the market is such that even an announcement of the proposal by the Select Committee, although yet to be accepted by the Government, has already pushed the demand in the sales of cars. Even if the ARF is initially reduced to allow for the introduction of the licence fees, in the long term, due to sheer increase in demand created by restricted supply, the cost of the bidding licence will be artificially pushed up. A car consumer may be held to ransom by unscrupulous car dealers who may well form themselves into a cartel in order to raise the price of cars, both old and new. The quota system using the auction procedure is also inequitable in that it favours the better off who are able to pay more. As the majority of Singaporeans who aspire to own cars are not necessarily the well to do, they may feel disenchanted. In other words, a car which is very often a necessary evil has now become the exclusive domain of the rich. Finally, the quota system in an auction with a price tag may well appear to confirm the impression that the Government is using the mechanism of the quota system to generate revenue. Substance is of course more significant than appearance, but it is also true that the Government must not only do justice but appear to do justice. This is an inescapable fact of life. So with my apprehension explained, I now wish to suggest a modified quota system. I suggest that the Government sets the quota periodically, but implementation in the balloting scheme without a price tag. The purpose of achieving the desired growth rate is unaffected, but without the infamous stink of penalty of a higher price. Consequently, it is more equitable in that every qualified ballottee stands an equal chance before the same opportunity. Whether well-off, not so well-off, you are given an opportunity to fulfil an aspiration to own a car. I am not suggesting that the balloting system is not exploitable or subject to abuse. I believe that the Select Committee is not in favour of this balloting system at least for two reasons. (1) There is a gambling element; and (2) Many non-serious buyers can also ballot and sell the licence for a profit. Sir, although we like to pride ourselves as being absolutely rational in our ventures and actions, in the final analysis the elements of chance still play a part. In fact, it is my belief that life itself is a gamble. Going into politics is a gamble. Choosing your life partner, that too is a gamble. The balloting system has been compared by the Select Committee to the Singapore Big Sweep. But is anybody raising a hue and cry about the Singapore Big Sweep? Sir, I believe the man in the street will be more agreeable to a balloting scheme than an auction scheme. As to non-serious buyers exploiting the system, I am sure we can look into safeguards and disincentives. For example, we can find ways to pre-qualify the ballottee. For example, he or she must own a valid driving licence, shows financial ability, place a heavy deposit, and be disqualified after one successful ballot. Sir, like all measures, no single measure is exempt from possible exploitation. The question is, which is the less exploitable. It is a question of which is the lesser evil. If all things are regarded as necessary evils, we need to decide on which are the lesser evils. Sir, admittedly, in as much as the Committee is faced with time constraint to come out with details of implementation, I am also suffering from the same fate, lack of time. But notwithstanding the time factor I urge this House to consider my proposal sincerely and seriously.

Mr Speaker, Sir, first, I would like to say that I feel very reassured from the Minister's statement that he would study the document further and that there would be no hasty decisions, and that he would take into account Members' views and that equity would take an important part in his consideration of the future transport scene. Sir, in the last year we have had the half-tank Bill, had the caning Bill, and today I think we have the great debate on the quota Bill. The Report of the Select Committee on Land Transportation Policy is an invaluable document. I must commend those who have taken the time to share their views with the Committee, and the Committee for its detailed study. Sir, I would first like to highlight some of the representations which I feel are worthy of mention and of further study. I hope that the First Deputy Prime Minister would be convinced that with the good quality presentations made in this Select Committee, that there is no need for NMPs, non-elected MPs. The importance of the submissions and recommendations have been side tracked by the controversy of the quota system, and thus in the process confusing everyone, leading to the self-fulfilling prophecy of increasing car sales. This morning I was told that today one is unable to buy a scrap car and the price of second-hand cars has already gone up. Sir, with your permission, I would like to draw attention to three papers. First, Paper No. 30. This paper has made sensible recommendations as to what our land transportation policy should emphasise on: (a) Emphasis on restraint of car usage rather than car ownership. (b) Control of car ownership (as the last resort) through pricing and not through the quota system. (c) Priority for public transport and pedestrians in the central area coupled with restraint of car traffic. (d) Maximisation of public transport accessibility to all users. (e) Protection of the environment from the negative impact of traffic. Sir, these are very sound principles on which to base the land transport policy and they should be studied further. This study by academicians from the Nanyang Technological Institute also emphasised that "no urban transportation system anywhere in the world is designed to be free of congestions at all times." That is, there will always be peak hour traffic congestion. This is relevant especially in our context of land scarce Singapore where optimal use must be made of all land, including land for roads. The aim emphasised is for optimal utilisation and not for "free-flowing traffic all the time in urban land transport planning." The question, of course, that needs to be addressed by Ministry officials is: what is the acceptable tolerance level? Even if we turn to bicycles, there will be peak hour bicycle traffic congestion. The paper also addresses Car Usage. The authors note that the Electronic Road Pricing is "more equitable" than increasing charges on car ownership, petrol tax, or imposing kilometre tax." I totally agree with them on this. Next, Sir, Paper 55. This paper, in mathematical terms, has shown that "price and cost elements exert marginal influences on car ownership as compared with other variables such as income." The authors also emphasised the importance of improving the efficiency of the public transport system. Here, I am in complete agreement with the Select Committee that the public transport system must be better improved. Turning to Paper 59. This paper also emphasises that usage measures are better than ownership ones. The author states that "the present mix of measures for cars are heavily weighted towards discouraging ownership rather than usage." The author also stresses that "the more severe the usage measures, the greater the number of people who can own cars." I believe that the Chairman of the Select Committee has also made this statement and is in agreement with this. Mr Speaker, Sir, the Government has always exhorted our people to work hard. Singaporeans have worked very hard in the last 25 years. In the recession of 1985, they have sacrificed much to help pull the nation out of recession. Today we are all working harder and upgrading our skills. Sir, as Singaporeans become better educated and more affluent, the desire to be to able to choose their own life style and priorities in life becomes more important to them, especially the younger generation. Having worked hard, served the nation in national service, and reaching the stage where they have enough disposable income to set their own priorities, we in the Government must try to help them reap the rewards of their labour. Choice is very important in their life. They are, I believe, responsible and mature adults who will not make foolish choices. To many, the priorities appear to centre upon the family, ie, owning a home, starting a family, and also owning a car. Owning a car to some may be a luxury, whilst to others may be an economic necessity. I cannot disagree more with my colleague, Mr Chng Hee Kok, who calls this an incorrigible desire for car ownership. Car ownership, to some, is an important economic necessity. Car ownership is both a social and an economic desire, and not an incorrigible desire. We cannot deny the social convenience that a car provides. In summary here, the element of choice must be made for our young people and those who intend to go into the car market. Sir, as national leaders, we owe it to our next generation to act responsibly. My belief is that the Government must now clearly chart the path upon which we will address the problem of traffic congestion to ensure that our quality of life, as mentioned by the Minister, is not compromised. The cost of car ownership and utilisation today is by no means cheap. Despite this, the aspiration to own a car has not been dampened. Why is this so? Let us recognise that this, in my opinion, will not change. But what we can change and persuade is the utilisation of cars. We must not heap cost upon cost to frustrate this desire. It will not do us any good. Let us state clearly that there is hope for all who want to own a car. But that the car must be used judiciously and responsibly so as to minimise traffic congestion. I reiterate my belief that if the cost of car ownership is made more reasonable, this coupled with a good public transport system will convince the rational Singapore car owner that it makes sense to have a car but not to use it to add to the peak hour congestion. As I have mentioned before, if the cost of car ownership is so great that it will not make any sense to leave the car at home, then no one will use the public transport system. But if the cost of car ownership is realistic and it makes good sense to use the public transport system to offset travel, then it will be done. Sir, I feel that the electronic road pricing is still a good alternative to car ownership restraint. I am not as pessimistic as some of the other Members and I have more faith in the Ministry of Communications and Information in that I feel that they will be able to come up with a good system of electronic road pricing. At this point of time, whilst awaiting the implementation of the ERP, we need to address ourselves to the other recommendations of the Select Committee, such as improving the feeder system and the integration of the BUS/MRT Service. Buses can be upgraded and we should take a relook into the role of taxis as an integral part of the public transport system. Paper 25, presented by my colleague, Mr Lew Syn Pau, submitted by NTUC Comfort, deserves further thought and study. The paper has made up a case that taxis should not be treated on par with private cars and made to bear the full cost of ARF and road tax. In his submission and oral presentations, Mr Lew has explained to the Committee the difficulty of running a cost effective feeder system using taxis. If the operating cost of taxis can be reduced, then taxis can be made use as part of the feeder system as has been looked into by the Select Committee. Enough has been said by both protagonists and antagonists to the quota system, and I will not add to it. I urge the Minister and the House to give due consideration to the other suggestions made in the submissions to the Select Committee. One cardinal principle must be borne in mind in the implementation of any transport policy, ie, all measures implemented must be equitable to all Singaporeans. We must provide them with a measure of choice and, most importantly, it must give them some hope.

Can I urge Members not to repeat points which have been made by previous speakers? Otherwise I will be forced to impose a quota on speeches. 5.45 pm

Mr Speaker, Sir, thank you for giving me this opportunity to comment on the motion. You have just eliminated about four pages of my speech. First of all, I too would like to congratulate the Select Committee for their very comprehensive Report. Some of the 71 submissions to the Committee have provided some very enlightening directions and suggestions on the various aspects of our land transportation policy. I would like to comment on the Select Committee's recommendations in the order as they appear in the Report. Ownership Restraint The Minister for Communications and Information has quoted the Committee as affirming the continued need for rigorous measures to control car ownership and attributed the total vehicle population as being the single most important determinant of congestion levels on our roads. However, I feel that a more important determinant of congestion levels is the proportion of car owners who do not make use of public transport to commute to and from work. The total vehicle population need not be a critical determinant of congestion levels if the vast majority of vehicle owners use public transport for work. The Chairman of the Select Committee, if I heard him correctly, has endorsed this view. I think we should aim for a situation where it is conducive for car owners to switch to public transport without having to give up their cars. I therefore support the recommendations of the Committee on upgrading the comfort and speed of buses and the expansion of the MRT system to all major public housing estates and feeder services to the private estates. Usage Measures Usage restraint measures, such as the ALS, have proven to be effective in reducing congestion on our roads. Conceptually, the electronic road pricing system appears to have potential as an equally effective road usage restraint measure. However, I fully agree with the Committee's recommendation that the underlying principle for usage restraint measures should not be for the sole purpose of making it economically painful to drive to work as to make it a pleasure to take a bus or MRT instead. Quota System I do not think that it can be disputed that the quota system is the most effective way of controlling the car population. Introduction of the quota system may make all other car ownership restraint measures obsolete. But despite the fact that it is the most effective method, we should consider whether it is the most equitable or acceptable method. The quota system will have little impact on existing car owners who already have cars to scrap in order to buy new cars. The quota system therefore would in all likelihood be considered acceptable to existing car owners. The same, however, cannot be said, under all circumstances, for the first-time car buyer. He will not know for certain what price he may have to pay for his new car but will have to study bidding trends and quotas. To compound his uncertainty, he is not even sure if his tender will succeed. If he tenders too low, he will not get his car. If he tenders too high, he would have wasted his money. If car dealers had to tender, a similar situation of uncertainty would arise. If they tender too low, they may end up with no cars to sell for that particular month. However, it would be likely that they would tender on the high side in order to increase the chances of getting their supply. The additional costs would invariably be passed on to the consumers. The Chairman of the Select Committee has implied that with the introduction of the quota system the Government need no longer have to guess when determining the price of new cars under the pricing system. I agree with this view as the guesswork will now have to be done by the consumer trying to guess what his competitors will be bidding. The Select Committee has asserted that the quota system does not necessarily lead to higher or lower car prices. Theoretically, this is true. Car prices would depend basically on supply and demand. However, the current state of the economy, the high demand for new cars and the expected constraint on supply under the quota system, leave very little to the imagination as to which direction prices would go. The Select Committee has advised car buyers to acquire some savvy in the timing of their purchases. Would-be car buyers should wait for a period of low demand before making their purchases. The figures indicate that the period of low demand normally coincides with economic recession. It is therefore my hope that we do not have too many periods of low demand. Mr Speaker, Sir, the present system of vehicle ownership restraints, such as road tax, ARF and PARF, imperfect as it is, has proven over the years to be successful in regulating the growth of vehicles over the long term. I am glad that the Minister for Communications and Information also agrees with this view. It is also perceived by many, especially the potential first-time car buyers, as being more equitable and less restrictive than the quota system. There is price certainty before a purchase is made and anyone who is prepared to pay the posted price is assured of a car whether or not he has a scrap car. Difficulty may also arise over distribution of quota for cars with different engine capacities. If no distinction was made between high and low engine capacities, then a lower income earner aspiring to purchase a one litre car may have to tender in competition with a high income earner going for a three litre car. It would be like pitting a flyweight boxer against a heavyweight with the results being quite predictable. As mentioned by the Member for Tanglin, even if the tenders take into consideration the capacity of the car, there is nothing to stop high income earners outbidding lower income earners for lower capacity cars. Where then would it leave the lower income earners as far as car ownership is concerned? PARF I support the recommendations of the Select Committee on the retention of PARF. I also agree that refinements to the PARF system could be introduced. However, I too do not agree with the implication that we should encourage the scrapping of cars as early as five years if they are in still in good condition. I am not in favour of creating conditions conducive to spawning a new industry of refurbishing cars that are still in good condition. Cars that are in good condition should be left on the roads. Cars that are not in good condition are the ones that should be refurbished or removed from the roads. The annual vehicle inspections currently accomplished on older cars provide us the opportunity to ascertain which cars meet standards we would like vehicles on our roads to achieve. Rather than vary the PARF with the age of the car, we should consider varying the PARF with the condition of the car. After all, the basic objective of the PARF scheme is to reduce the breakdown rate of cars on highways and the reduction of pollution from exhaust fumes. Both these situations are more related to the condition of the car rather than its age. Area Licensing Scheme I support the Select Committee's recommendation that the evening ALS should be changed to 4.30 pm till 6.30 pm. I am in complete agreement with the reasons given for this, as stated in the recommendations by the Committee. Parking On the issue of city parking, I would like to urge that the under-provision of parking opportunities in the city should never be used as a usage restraint measure. In cities where there are insufficient parking opportunities, illegal and indiscriminate parking has resulted, adding further to traffic congestion. In some cities in Europe, I was amazed at the ingenuity of some motorists in parking their cars. Cars are parked practically on sidewalks, on traffic roundabouts and in every conceivable and inconceivable space. In London, rather severe methods are being used against illegal parking. Cars are immobilised with wheel clamps and illegally parked cars are lifted by cranes onto trailers to be impounded. These measures have not solved their traffic congestion problems in the city. In Singapore, even with ample parking opportunities, the level of indiscriminate parking is still unacceptable. Imagine what it would be like if there are insufficient parking lots in the city. On the subject of home parking, I agree fully with the Select Committee's statement that the pricing of car parks in HDB estates is not a car control measure. Consequently, HDB car park pricing should be determined by real estate considerations and not by traffic control objectives. Public transportation I am in complete agreement with the recommendations of the Select Committee on the upgrading of our bus services and the expansion of our MRT system and feeder services to cover public as well as private housing estates. I also support the recommendation that both private companies as well as bus companies be encouraged to provide feeder services in the private estates. On the subject of bicycles, these have been effectively used in countries like Holland and in Scandinavia. But I have also seen congestion caused by bicycles in China. However, until such a time when the driving habits of some of our motorists improve significantly, I think many car owners will feel compelled to drive cars, if only for self-defence. I therefore support the recommendation on the provision of bicycle tracks that do not interfere with other traffic and that are safe to ride on. Infrastructure Finally, on the subject of infrastructure for road transportation, I am gratified to note that the Select Committee has recognised the rising aspirations of our population to own private cars. Many of our young people include car ownership in their vision for tomorrow. The Select Committee has endorsed the creation of self-contained regional centres as a means of alleviating traffic pressure on highways and recommended better road planning. It has also identified challenging objectives such as the construction of double deck highways and underpasses, whilst acknowledging our limitations such as lack of land area and other resources. I feel that we should not consider our many limitations as being something completely insurmountable. Consequently, we should not divert all our ingenuity and energy into finding ways to curb the growth of our car population. But rather towards the creation of a road and transportation system that can accommodate as many cars as possible without adverse consequences. Thus satisfying this rising aspiration for car ownership for as many of our people as possible. However, in order for us to have the best possible chance for success, we would need to develop and evaluate our options carefully and to act quickly. We should not delay the implementation of long-term infrastructural improvements until the need becomes apparent. We should not take the 10 years it took us for evaluation and consultation on whether we should or should not build the MRT. Perhaps there were more urgent priorities then. However, Mr Speaker, Sir, in order for us to turn our vision for tomorrow into a reality we will have to act today. In conclusion, although I am not in full agreement with all the Select Committee's recommendations, I strongly support the second part of the motion that urges the Government to give the Committee's recommendations (many of which in my opinion are excellent recommendations) serious consideration.

Mr Speaker, Sir, I would like to thank Members of the House for the great interest they have shown in the subject of our Report and for the many valuable contributions they have made to the ideas for the solution of our land transportation problem. I would also like to thank the House for having appointed Members to the Select Committee because it has given us an opportunity to learn from the public and to put our minds to some of the more pressing issues that face us. Sir, the Members of the Select Committee are not experts in land transportation. We do not have either the technical expertise nor the resources to go in depth into every issue that was raised. We felt that was more in the province of the Ministry of Communications and Information. We did, however, learn from the views of the public and from other Members of the House in the course of our deliberations. We have tried to come up with recommendations that are broad in nature and we hope that the Ministry will consider these carefully for more detailed implementation. In the course of the debate, it may have appeared that various Members of the Select Committee may not have been in total agreement on some of the issues. That has inevitably been the case on some questions. There were some differences of opinion. What is stated in our Select Committee's Report has been the majority view. This applies only to a few of the recommendations. I would say that there was unanimous agreement for the large majority of the recommendations. There was unanimous agreement on the recommendation of quotas. Because we were not totally agreed on every detail of implementation, and because we did not have the time to go into the details of implementation, we had withheld comment on detailed implementation. Indeed, as Members can gather from today's discussion, there are many ideas and many ways by which the quota system could be implemented. And we are very grateful that these ideas have been put forward, not so much for our consideration as a Committee, but really for the consideration of the Minister for Communications and Information. Mr Chay has suggested that perhaps the Committee was a little bit confused in some places in that several Members had different ideas on how the quota system would fit with ARF and PARF. I agree that this is a complex issue and I do not intend today to go into these details as it would require more time than we have. Suffice it to say that when Dr Wang suggested that the diagram was a little confusing, I should point out that the diagram is completely consistent with the Report of the Select Committee. It may be worth pointing out that in the footnote at page 6, we did mention that if the ARF is lowered at the point the quota system is introduced, it would be necessary to adjust the PARF rate so that existing owners do not have a large windfall gain. Sir, because the quota system has drawn so much attention, there has been a tendency not to have noticed many of the recommendations that we have made which Members of the House are fully agreed with and which have a great deal of support from the public. In fact, I think the interest in the quota system has been so great that one Member of the House, Mr Chng Hee Kok, focused entirely on it and failed to read the rest of the Report, which completely agreed with all the recommendations that he made and which he said we did not. We did in fact make recommendations on the MRT, infrastructure, integration of bus and MRT services, and so forth. I thank him nevertheless for endorsing our views and recommendations. Sir, we agree with many members of the public and Members of the House that there should be more usage restraint measures. But we remind everyone that usage measures cannot replace ownership measures. And as long as they cannot replace ownership measures, there must continue to be ownership measures. The question is: in what way ownership measures should be implemented? We also agree that the infrastructure should be expanded. We agree that we should improve the public transportation system. On the question of quotas, I do not think a single Member of this House disagrees with the idea that it will be effective. There is no question that it will be effective. The reservation has been on the implications of the quota system. Some Members have suggested that although it is effective, we should only use it when we really need it, maybe only as a last resort. Mr Chin Harn Tong has given an example from Chinese gongfu practice which is you do not use your most powerful weapon until you really have to. I happen to be an avid watcher of gongfu serials too. And I cannot help wondering why at times the grandmaster withholds his heavenly sword and sees his underlings killed one by one, until at the very last he pulls out his last weapon, and he saves the day. The poor underlings have to be destroyed in the process. I think that if the quota system is effective and if it can be implemented fairly, it should be used even if there were other methods that were less effective and easier to implement. Sir, there have been many Members of the House who agree with the quota system but have reservations about some of the consequences. I would like, if I may, classify their reservations into three categories. The first reservation is that quotas will squeeze out middle income earners and young people who aspire to own cars. Sir, I would like to point out again that as much as that appears to be the case, and as much as that is the initial reaction of many members of the public, I would like to point out that the rate of population growth in Singapore is something under 2%. The rate of growth in the car population, historically, I think over the last 13 years, has been about 5%. [Interruptions] 4 point something. Well, it depends on whether you do an arithmetic or a compound average. It is about 5%. If the quota system is implemented, and if the quota is set on average at, say, 5%, then we have a much higher rate of growth in the car population than in the rate of population growth. Mathematical logic would force us to conclude that it means that an increasing proportion of Singaporeans will own cars. That has to be. Sir, unless the Minister for Communications and Information is going to be so stringent on quotas as to keep it below 2%, which I hope is not the case, unless that was the case, and if quotas are 5% or thereabouts or more, or only slightly less, then we should see an increasing proportion of Singaporeans owning cars. If that was the case, it cannot possibly be true that middle income and aspiring owners are going to be squeezed out. There have to be an increasing proportion of car owners. So I would like to assure Members that if indeed the quota system is implemented, there will not be an increasing number of people being squeezed out. There will in fact be an increasing proportion of Singaporeans who will own cars. The second category of objections, Sir, to the quota system is that it is inequitable to new owners. I agree that there is an element of inequity in the quota system if PARF continues to exist. It is inequitable in the sense that PARF gives existing car owners an advantage, in that they can buy future cars at a concession rate. As I pointed out earlier, the problem is PARF, the problem is not quotas. Yes, it will be possible to implement a quota system without PARF. If we scrapped PARF altogether and went on a pure bidding system without the concession of trading in your used car for scrap value to buy a car, then we remove this element of inequity. I am persuaded by the arguments that Members have put forward that perhaps we should retain PARF for existing cars and possibly for new cars, I am persuaded that we should examine PARF much more carefully to see whether we can gradually remove this inequity. In saying so, I would like to point out that PARF does serve a function, which is it keeps cars young and in good condition on our roads. So I would urge the Minister for Communications to consider this point very carefully, whether there was a way whereby we could make the quota system more equitable and whether PARF could somehow be modified to be less inequitable. Sir, Dr Koh and others have pointed out that perhaps we should use the balloting system to remove inequity. I can understand that a balloting system will be popular in the sense that psychologically everyone feels that he has an equal chance, regardless of his income. But the balloting system, I am afraid, has other problems in that it will not necessarily allocate the ownership or use of a car to people who value it most. The good thing about the pricing system is that people purchase goods based on the value they place on it. And the value they place on it is best reflected in the price they are willing to pay for it. As much as I like the element of fairness in a balloting system, I am afraid that at this time I personally do not think it will be a very practical measure. Perhaps on further consideration and study, there is a way to make it fair and reflect better the needs of the people. I personally would not want to rule it out altogether. And I would urge the Minister to consider it, and see if there is a way to incorporate it without some of the undesirable features that are attendant upon balloting as a system. Sir, the third category of objections to the quota system is that it will cause prices to increase very sharply, ie, the quota system instead of the pricing system will cause sharp price increases. I think perhaps the best way of addressing this concern is to consider the following scenario. Supposing that because of the very sharp increase in demand for cars in the last year or two, supposing as a consequence of that, the Minister had decided at the end of last year to increase the import duty on cars. Supposing instead of 45%, he had raised it to 100%. And supposing as a result of that, demand drops very sharply so that today we see only a 1% growth rate in the car population. Supposing that was the case. And supposing six months later when the growth rate is still about 1% or 2%, the Minister introduces a quota system and says that the quota will be 5% from here on. Would Members of the House agree that with the introduction of a quota system at a time when the growth rate is only 1% or 2%, and if the quota was 5%, that the prices of cars would fall? It has to, because supply exceeds demand. Sir, I paint this scenario mainly to point out that rising or falling of prices with the quota system has nothing so much to do with the quota as to do with demand and supply. It is true that today when demand is very high, it will be rational to expect that under any system, whether quota or pricing, that at some stage prices may go up, if indeed we want to moderate demand from 9-10% to, say, 4-5%. Prices have to go up under any system. The quota system is able to achieve this in a more accurate way and we think in a smoother way, in that we bite the bullet once, bring the system to a rational mode, so to speak, and in the future prices will only adjust gradually according to demand and supply. I would like to assure Members that it is not the quota system that would cause the price to rise. It would be demand and supply. If we never adopted a quota system and if we stuck to the present tax-based pricing system, and if demand continues to be high, I believe the Minister will have no choice but to raise either import duty or ARF and prices will go up anyway. Sir, if I may briefly address the Minister's remark on the quota system and on the success of the pricing system, it is true that the pricing system has been quite successful in the last 15 years or so. The Select Committee did consider that and recognised that. However, we noticed two things. The first is that under the pricing system, as much as the average rate of growth over the last 15 years has been acceptable, about 4-5%, there have been very sharp changes in different years. Whenever a tax increase was introduced, there would be speculation, demand would rise, there might be some panic buying and when the price finally goes up, the demand drops very sharply. The result is that there is some distortion in consumer behaviour and it is also somewhat traumatic for people who are trying to buy cars to face this kind of very sharp uncertainties. That is one problem with the system, even though it has been successful like keeping the average acceptable. It has these problems in particular years. The other observation we made was that in the last two years demand has been very high, the growth rate has been very high. It will probably take fairly draconian measures to bring it back in line. As I have mentioned, it is only understandable that the Government would usually slap on a higher price increase or tax increase than is necessary at that time to bring it really down so that it has time to come up again to the target level. So we felt that, on balance, considering these two factors and also considering the fact that the quota system will in fact give a more predictable and a gradual price system in the future, we decided to recommend the quota system to the Government for serious consideration, recognising many complications, problems and problems that are attendant upon such a system by having complete faith in the Minister for Communications and Information that if he adopts the quota system he will find satisfactory solutions to these particular problems. Sir, finally, I would like to address the point raised by Dr Lee Siew-Choh as to what it means to adopt the Report. As I understand it, to adopt the Report is simply to tell the Select Committee that its work is completed and it does not have to go back and do more work and produce another Report. We would be very grateful, Sir, if the House could adopt the Report and we would also urge the Government to give serious considerations to the recommendations, not only of the Select Committee but of all the Members of this House who have very sincerely and thoughtfully looked at the recommendations and have come up with proposals. Thank you, Sir. [Applause.]

Question put, and agreed to. Resolved, That this House adopts the report of the Select Committee on Land Transportation Policy and urges the government to give the committee's recommendations serious consideration.

Resolved, "That Parliament do now adjourn to a date to be fixed." -[Mr Wong Kan Seng.] Adjourned accordingly at Twenty Minutes past Six o'clock pm to a date to be fixed. chart - PURCHASE OF NEW CARS UNDER A PROPOSED QUOTA SYSTEM (Cols. 1023 - 1024)