Hansard, 1990-02-26

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 Parliament to which they have been appointed) for the periods stated:- Mr Bernard Chen (Pasir Panjang GRC) - from 27th February to 1st March, on 5th March and from 12th to 15th March, 1990. Mr Peter Sung (Buona Vista), Minister of State, Ministry of Foreign Affairs and Ministry of National Development - from 8th to 14th April, 1990. Mr Lee Kuan Yew (Tanjong Pagar), Prime Minister - on 26th February, 1990. Encik Yatiman Yusof (Tampines GRC), Parliamentary Secretary to the Minister for Foreign Affairs - from 3rd to 7th March, 1990. TAN SOO KHOON Speaker Parliament of Singapore

Order. On behalf of hon. Members, I welcome the Honourable Kaya Erdem, Speaker of the Grand National Assembly of Turkey, and Members of the Turkish Parliamentary Delegation, who are present in our gallery. [Applause].

asked the Minister for National Development whether the Housing and Development Board will still be describing its flats by their existing names, e.g. 3-room flat, 4-room flat, after renovation and upgrading; and, if so, whether the HDB will consider describing them similar to the way private apartments and flats are called, so as to reflect a more up-market image.

Mr Speaker, Sir, the Housing and Development Board differentiates the various flat types for sale into 3-room, 4-room, 5-room and Executive flats. This classification has become familiar to all Singaporeans and provides a good guide to applicants of the size and design of the flats they are applying to purchase. The classification has served HDB applicants well. HDB will continue to use this classification for describing the various flat types available. In the future, however, for flat designs that allow flexibility for partitioning into rooms, HDB will classify these flats by area rather than room types.

Sir, after upgrading, will HDB allow the neighbourhood to give a new name to their own neighbourhood?

Mr Speaker, Sir, it is a perfectly reasonable request. If neighbourhoods or precincts that have been upgraded make the proposal to HDB, I will certainly ask HDB to consider it and, where possible, to grant the request for the neighbourhood to have their own name to add to the identity.

asked the Minister for Communications and Information whether he is aware of the refusal by the Malaysian Government of airspace over Malaysia to planes from Singapore's flying clubs and if he will make a statement.

Mr Speaker, Sir, from 17th August 1989, the Malaysian Department of Civil Aviation stopped giving the Singapore Flying College clearance to fly in Malaysian airspace. From 28th October 1989, flights by the Singapore Flying Club were also stopped. However, so far the Malaysian government has not officially informed the Singapore Government of the closure of its airspace to the Flying Club and the Flying College, or of its reasons for doing so. The Flying Club is a private hobby club. The Flying College is a commercial undertaking for training pilots. They are both not government organisations. They have informed the Government that until the ban, each time they used Malaysian airspace, they had notified the Malaysian aviation authorities in accordance with the requirements of the Malaysian Aeronautical Information Publication. The Flying College has requested the Civil Aviation Authority of Singapore (CAAS) to appeal to the Malaysian authorities to allow flights to resume. CAAS has done so, and is now awaiting a reply from the Malaysians.

Has the Minister of State noted the reported reasons for refusing permission for the Flying Club to fly in Malaysian airspace, Sir?

Sir, the Government has not received any complaint from the Malaysian authorities about Singapore aircraft flying over Malaysian airspace. It does not, as a matter of policy, comment on press reports on this matter.

These reports were made very public and normally the Government's PR representatives are very quick at noting these things down and giving a reply in the newspapers. How is it that nothing has been done on this matter?

Sir, as I indicated just now, we have not received any official complaint, so we cannot comment on this matter.

Sir, in view of the seriousness of the allegations in the press reports, does not the Government think it would be advisable to make a statement as silence might indicate agreement with whatever that has been said in the newspapers?

Order. Dr Lee, I think your question is out of order. According to Standing Orders, a question shall not be asked as to whether statements in the press are accurate. Do you have any further questions?

No, Sir.

asked the Minister for Home Affairs whether plans have now been finalised to set up a Neighbourhood Police Post along Pasir Panjang Road.

Mr Speaker, Sir, the implementation of the second Neighbourhood Police Post (NPP) along Pasir Panjang Road has been delayed as the redevelopment plans for the area have not been finalised. However, the Police plans to set up a temporary NPP by the end of this year.

asked the Minister for Home Affairs, on the progress report on National Service trainees in the Construction Brigade, how many of them continue to work in the construction industry after completion of their full-time training.

Mr Speaker, Sir, the Construction Brigade (CB) Scheme was introduced in December 1981 with the objective of building up a regular pool of National Servicemen who are trained in the various construction trades to meet Civil Defence needs in the event of an emergency. It was revised in December 1985 to improve the standard of discipline and trade training for those enlisted under the Scheme. To date, a total of 10,205 CD National Servicemen have been enlisted under the CB Scheme. Currently, there are 2,488 full-time servicemen. The performance of the CB men has improved considerably as more have been sent to the Construction Industry Training Centre (CITC) for training. The number of servicemen qualifying at the multi-skill level has increased from 26.7% in 1986 to 42.6% in 1989. Correspondingly, the percentage of servicemen trained only at the general worker level has dropped from 23.9% in 1986 to 9.8% in 1989. This reflects the effort of the Singapore Joint Civil Defence Force in motivating our servicemen to take their training more seriously and to upgrade themselves to higher skill levels. The response of contractors is positive, with some even introducing incentive schemes to reward and motivate the servicemen deployed to them, while others have appointed the National Servicemen to be their site-checkers. The Construction Brigade servicemen have also shown substantial improvement in discipline. The absenteeism rate at worksites at one time used to be more than 30%. Over the last three years, this has improved under the revised scheme to an absenteeism rate of 14.2% in 1987, 5.4% in 1988 and 4.2% in 1989. A recent survey of Construction Brigade reservists shows that about 22% of them remain in the construction industry.

asked the Minister for Labour whether he will consider reviewing the Workmen's Compensation Act with a view to increasing the ceiling of compensation in the light of improved wages of workers.

Mr Speaker, Sir, my Ministry is in the final stage of reviewing the Workmen's Compensation Scheme. Amongst other items, the maximum amount of compensation payable under the Workmen's Compensation Act will be revised, taking into consideration wage increases over the years since the previous revision in 1980.

asked the Minister for Trade and Industry whether the objective of the Government in deregulating petrol and diesel pump prices, i.e. to promote competition among the six oil companies operating in Singapore to bring benefits to motorists and consumers, has been achieved, and, if so, with what results.

Mr Speaker, Sir, as the Minister for Trade and Industry informed this House last month, the Government deregulated the petrol and diesel markets last December, in line with its overall policy of allowing market forces to determine prices for goods and services. 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 to prevent profiteering. This is economically efficient and fair to both the companies and the consumers. There is no reason why the same market mechanism should not work for petrol and diesel. In the longer run, consumers will benefit, especially if they continue to demand better service, higher quality products and competitive pricing. The companies will have to compete more intensely among themselves. They will no longer be protected by the Government, which in fact they were, because under the previous arrangement, with price control, the Government was effectively guaranteeing the oil companies a fixed margin of profit on their business, regardless of their cost level and the quality of their service. The petrol and diesel markets will take some time to find their level, since they were only deregulated recently. Nevertheless, some encouraging signs have already appeared in the market: Oil companies have adjusted their prices in line with world prices of petrol and diesel. They have not always raised prices; but recently, when wholesale diesel prices fell, they also lowered the pump prices of diesel. There is no longer uniformity in pricing: different oil companies have begun to charge slightly different prices for petrol and diesel. Higher octane gasoline is now being offered at the same price as a lower octane grade of gasoline. This is what the Government expected would happen if deregulation worked.

Has the deregulation really promoted competition so that the consumers benefit?

Mr Speaker, Sir, the objective of the deregulation exercise is to ensure that customers get the best service at the best possible price. We have seen in recent weeks that the deregulation is working out along the lines that the Government has planned in the sense that prices are now being offered by different oil companies at different levels. Also, as I indicated in my reply earlier, diesel prices, in line with the lowering of the wholesale price for diesel, have actually come down. I think the answer to the Member's question is yes.

The Minister has not mentioned anything about petrol prices. Have they gone up or down?

Sir, the deregulation has only recently taken place. I think we should let the market work itself through.

If the prices should continue to go up, what would the Government do under those circumstances?

Sir, if the posted prices of petrol go up and the oil companies raise their prices accordingly, I do not think there is anything that the Government can or should do. But if it happens in the reverse, we would expect the prices to also go down accordingly.

asked the Acting Minister for Health if he will give a preliminary assessment of the services rendered by Singapore General Hospital since it was restructured.

Mr Speaker, Sir, the Singapore General Hospital has, since its restructuring on 1st April 1989, been able to properly staff and manage departments, and to reorganise and streamline work methods and procedures in many areas, thereby improving the level of service to the public. These improvements have been appreciated by its patients, as reflected in the results of a patient assessment survey involving more than 600 patients carried out early this month. The survey showed that: 83% of the repeat outpatients felt that the outpatient clinic services have improved. 55% of the first time outpatients rated the clinic services as good or very good. 70% of the repeat inpatients said that the level of ward service has improved. 78% of first time admissions rated the ward services as good or very good. Let me give Members a brief description of some of the improvements that have been introduced: In the area of recruitment and reorganisation of manpower, as an autonomous organisation, SGH has been able to recruit badly-needed personnel, and to redeploy manpower for better efficiency. For example, it has employed additional clerks and nursing assistants, thereby freeing the highly skilled nurses who were previously engaged in clerical and minor nursing duties to concentrate on direct patient care. SGH has also been able to simplify and streamline many of the operating procedures and systems. These have reduced the number of queues and waiting time for patients. For example, the average registration time at the Specialist Outpatient Clinics has been reduced by more than half, from 30 minutes to 12 minutes now. In most outpatient clinics, the average waiting time to see the doctor after registration has also been reduced, from about 90 minutes to 45 minutes. SGH will be looking into improving the Accident and Emergency (A&E) Department this year so as to reduce the waiting time for emergency cases. In the Medical Records Office, improvements have also been introduced. Following the reorganisation of the Medical Records Office, 98% of the 1,500 medical records needed daily in the Specialists Outpatient Clinics are now readily available when needed, compared to 92-95% previously. This means that the number of outpatients experiencing long waiting times while waiting for their medical records to be located has been reduced from an average of 80 each day to only 20 today. The hospital is working towards further reducing this figure. The Laboratory Services have also been improved. These are key support departments. After restructuring, SGH has been able to reduce the reporting time for laboratory tests from an average of three days to one day. For the very commonly requested tests, reporting time has been reduced from one day to only three hours. This means that diagnoses that are dependent upon these tests can be made that much sooner, and treatment initiated quicker. All these and other measures have led to improved service levels to the patients and to the public.

Sir, this is an improvement obviously. I would like to ask the Minister whether he is aware that there is increasing difficulty of the lower-income group to use SGH medical services. I would want to find out whether he would be prepared to introduce class C wards in the Singapore General Hospital.

Sir, the original plan was to introduce class C wards into SGH together with the re-building of the other older hospitals. However, in view of the many requests from colleagues in this House and from members of the public, I have asked SGH to consider whether this can be done earlier.

Sir, may I ask the Minister whether he would consider SGH as a Government hospital or not a Government hospital.

Sir, SGH is a Government-owned hospital.

Sir, would he then explain why CPF would not recognise the rate of fees of SGH as the official rate so that Medisave can be used to offset the costs incurred by the patient?

Sir, for the purposes of Medisave reimbursements, Medisave itself has a schedule of fees that can be used for deductions or for reimbursements from Medisave accounts.

Sir, in view that there is an urgency for the lower-income group to use medical services in the Singapore General Hospital, would the Minister consider introducing class C wards by the end of this year.

Sir, SGH is looking into it. Let us give them time. 12.50 pm

Mr Speaker, Sir, on the 3rd January 1990, the Parliamentary Select Committee on Land Transportation Policy submitted its Report to Parliament after a lengthy 5-month study. Among its many recommendations was the proposal for a quota system to ensure the free movement of people and goods in Singapore. Sir, this House debated at great length the Select Committee's Report, in particular the quota system, on 15th January. On 30th January, the Government announced that it accepted in principle the Select Committee's recommendation for a quota system. As pointed out during the parliamentary debate and also in the Report, the quota system would be a more effective, more predictable, and more reliable method of restraining vehicle growth compared with the present system of regular increases in road tax and ARF. During the debate, many MPs spoke. The Ministry of Communications and Information had looked at the views of the MPs very carefully. I am happy to report that many of the proposals and suggestions made by MPs during the debate have been found acceptable by the Government. Today, I intend to give the details of the quota system. Sir, the quota system, as recommended by the Select Committee, is simple in principle. In practice, it is very complex. The Government has to take into consideration the interests of all Singaporeans. One of the most important considerations is to be as fair as possible to all road users - existing owners of vehicle, prospective owners, and non-vehicle owners. This objective is extremely difficult to achieve. Why? Because what is good for existing owners may be bad for prospective or non-vehicle owners, and vice versa. Similarly, what is good for owners of one type of vehicles may not be good for owners of another. Every group of vehicle owners has persuasive and compelling reasons as to why they should be treated differently, indeed, why they should be exempted from the quota system completely. Many MPs had made pleas on behalf of their constituents. I appreciate the MPs' pleas. But because all vehicles share the same road space, if we allow more motorcycles on our roads, then it must mean we will have to allow fewer vehicles of the other type, and so on, for whatever category of vehicles we exempt. The more categories of vehicles we exempt, the tighter we have got to squeeze the remaining vehicles. So looking at the problem in toto, on balance, the fairest solution is to exercise restraint on all. Restraint on all also means that only the mildest restraint is required. So the resulting system that we have put together is a system that is fair to all and hence, paradoxically, most likely to be welcomed by very few. Because to be fair to all, it means all will have to sacrifice a little. Sir, let me now go into the details of the quota system. (1) Should the quota system apply to all vehicles? In the preamble, I have explained why it should. Indeed, in the last debate, Mr Lim Boon Heng rightly pointed out that all vehicles use road space and contribute to congestion. Hence, we will apply the quota system to all types of vehicles with two exceptions -scheduled buses and school buses. Why scheduled buses? Sir, it is the Government's objective to encourage greater use of scheduled buses because they are the most efficient users of our roads. School buses also provide a very valuable service in transporting young school children, particularly the primary school children, between home and school safely and efficiently. (2) Should the entitlement or the right to own a vehicle be given in perpetuity or should it be for a fixed period only? An entitlement in perpetuity will give owners the right to own a vehicle indefinitely. What does that mean? It means that the premium for the entitlements for the first time buyers of vehicles will rise sharply over the years. Similarly, the price of vehicles with that perpetual right or entitlement will rise, because the first time buyer will have to buy out the existing owner of that vehicle with that perpetual entitlement. That will obviously be unfair to future generations of Singaporeans, our younger brothers and sisters, and our children. At the same time, the vehicle will become an investment. That is obviously undesirable. The Government has therefore decided that the entitlement will be for a fixed period only, and we will fix that period at 10 years, beginning with the registration of the vehicle. Ten years is an appropriate time and it is in line with our existing limit for PARF benefits. If such a vehicle is scrapped or exported before the 10-year period is up, then the owner will receive a rebate on the premium that has been paid for 10 years. And this rebate will be pro-rated to the number of months left before that entitlement expires. Then if he wants to buy a new vehicle, he will, together with other first time buyers, have to bid for a new vehicle. But if the owner prefers to keep his vehicle beyond 10 years, then he will not have to bid for the new entitlement. He will have to pay the "prevailing quota premium" in order to revalidate his entitlement for another 10-year period. The "prevailing quota premium" will be the average of the premiums for that particular category of vehicles for the last four quarters. It is an average to smoothen out any fluctuations. Obviously, for the forst three quarters the operation of this scheme, we will have to take the prevailing quota premium as the premium for the first quarter, the average of the first two quarters'premiums, and the average of the first three quarters,' premiums respectively. Sir, the certificate of entitlement, which the buyer has tendered for, would be valid for a period of six months. In other words, within those six months, he will have to exercise his right to buy his vehicle. If the holder does not exercise that right within that six months, his deposit will be forfeited. Why six months? A shorter validity period may be inconvenient for buyers. Some of them may not have made up their minds as to the exact model, and colour vehicle, etc. A longer period will encourage speculation and hedging, which are undesirable. (3) Should existing vehicle owners also be included in the Quota System? Sir, many Members of this House have reflected the sentiments of the public. They are against the idea of granting existing owners the right in perpetuity, to replace their vehicles with new ones. Many MPs have spoken on this subject during the last debate. For example, Mr Chay Wai Chuen was of the view that the burden of adjustment should be placed on all owners, and not just on new ones. Mr Loh Meng See said that existing owners should be given notice that after a period of time, they too should be treated like all other new owners. Sir, I agree with this views. We have looked carefully at the views expressed by the different MPs, because they reflect the views of the public. Mr Peh Chin Hua suggested that we give existing owners a grace period, after which they will be treated just like new owners. He suggested a grace period of two to five years. Mr Chay Wai Chuen suggested that we give a grace period that is given by a simple formula (10 - X) where X is the age of the vehicle. His argument goes something like this. Each of the existing vehicles on the road will be deemed to have a permit whose life will expire by the tenth year of registration. And at the end of that 10 years, that vehicle will have to be scrapped. Having looked at the various possibilities, my Ministry came to the conclusion that each of these possibilities can be used. It is valid, it is practical and can be justified. The Government decided to adopt the formula used by Mr Chay which is to give a grace period of 10 - X years. Furthermore, the Government goes one step further, namely, any vehicle that is 8 years or older will enjoy a minimum 2-year grace period. If I can give an example: say, a year old car; that year old car will have a grace period of 9 years. All existing owners of vehicles will be unaffected by the quota system for a minimum of 2 years and a maximum of 10 years. If existing owners do not wish to scrap their vehicle at the end of the grace period, they still do not have to tender. But they will have to pay the prevailing quota premium to revalidate their entitlement for another 10 years. What if an existing owner wishes to scrap his vehicle within the grace period? Since the existing owner did not pay the premium, in other words, he paid zero premium, he will obviously not be entitled to any rebate. (4) Should all vehicles be grouped into one single category for the quota system or should we have sub-categories for the different types of vehicles? Again, we listened to MPs' views during the debate. Many MPs argued that putting all cars into one category would be inequitable. It would be unfair. Why? Because it will permit the owners of big cars to squeeze out owners of small cars. Mr Loh Meng See and Dr Ong Chit Chung suggested that we should have some form of differentiation, maybe based on the engine capacity of the cars. Mr Leong Horn Kee went further. He suggested four categories for cars. For the Ministry, for land transport management, having one single category, a large common pool, for the quota system for all vehicles, with minor adjustments for differences of road space each type of vehicle will use, is obviously the most efficient approach. However, the Government has chosen an approach that is of greater benefit to the lower and middle income owners. We have decided to have the quota system applied to six different categories of vehicles: (a) Small cars, with engine capacities less than 1 litre; (b) Medium-sized cars, with engine capacities from 1,001 cc to 1,600 cc; (c) Big cars, with engine capacities from 1,601 cc 2,000 cc; (d) Luxury cars, with engine capacities larger than 2,000 cc; (e) Commercial vehicles, including goods vehicles and private buses; and (f) Motorcycles. Having these six different categories will give some protection to owners of motorcycles and small cars. They will not have to compete with owners of big cars. Since company cars enjoy tax benefits, they will pay double the premium for private cars. This is what they presently do for road tax and other fees, eg. ALS fees. If we do not have this additional proviso, then we will create a loophole for individuals to buy cars on the cheap in the name of companies. At the moment, heavy goods vehicles (HGVs) pay only $15 for registration fee, in contrast to light goods vehicles (LGVs) which pay $7,000 for registration fee, even though the heavy goods vehicles occupy more road space, because of their size and their lack of manoeuvrability. The Government has decided that heavy goods vehicles (HGVs) will pay double the quota premium of light goods vehicles (LGVs). This is to ensure greater fairness between the light goods vehicles and the heavy goods vehicles. (5) Taxis Sir, Ministry officials have met with representatives of NTUC Comfort and other taxi operators led by Mr Lew Syn Pau, Dr Wan Soon Bee and Dr Wang Kai Yuen. We have listened very carefully to their concerns. We have taken their very special circumstances into consideration, while at the same time maintaining fairness to the other roadusers. My Ministry will make two concessions for taxis. Firstly, many taxis have engines of 2.3 litres. But quite obviously these are not luxury cars, like private cars with large engine capacities. I have therefore decided to put taxis in the category of 1.0 - 1.6 litres, in other words, medium-sized cars, regardless of the engine capacities of taxis. This particular category of vehicles is the largest category. Therefore a few taxis in that category to allow for taxi increases over the coming years will have minimal or no impact on the premium to be paid. Secondly, unlike private cars, taxis are required by law to be scrapped before they are seven years old. Many taxis are owned by individuals. Some of them have indicated through their representatives that they are worried that if they are required to tender for the entitlement to buy a taxi to replace their scrapped taxi, they may not be successful. I have therefore decided that owners of existing taxis need not bid for replacement taxis. In other words, if they scrap a taxi, they will be allowed to register for a new one. But to be fair, they will have to pay the prevailing quota premium for vehicles for cars in the category of the 1.0 - 1.6 litres. If taxi operators, sensing that the market demands more taxis, wish to have more taxis without scrapping old taxis, they can do so. But this time they will have to tender like everyone else in the 1.0 - 1.6 litre category. (6) How do we ensure some flexibility in the distribution between the different types of vehicles in Singapore to meet the changing needs of our economy? Some people have pointed out that the most efficient mix of vehicles should be determined by the market, and not by the Government. I agree whole-heartedly. But to get the quota system going, we want to start off on an equal footing. We would therefore set the rate of growth of all vehicles at the same percentage. And this percentage will be based on the population of each category of vehicles on the 31st December 1989. To allow for some leeway for market forces to operate, we can take 20% of all vehicles that were scrapped and put it into a special category to be referred to as an "open category". Then the remaining 80% of vehicles scrapped will be replaced and put back into their respective categories. Let me try to illustrate with a simple example to make it easier to understand. Let us suppose 1,000 motorcycles, 1,000 commercial vehicles and 2,000 cars were scrapped. Then, for replacement, we will allow 800 more motorcycles for tender, 800 more commercial vehicles for tender, and 1,600 motorcars for tender in the next cycle. The remaining 20% , or 800 vehicles, will go into an open category. And when people tender for an entitlement in the open category, they can take that entitlement and buy any type of vehicle they like. This open category provides some flexibility, so that the economy can respond to the transportation needs. For example, if we have a building boom when there is a lot more construction activity, then it is quite obvious that the need for lorries and trucks will increase. And this open category will permit that flexibility, to be built into the quota system. To make sure that motorcyclists are not disadvantaged in the open category, any successful tenderer in the open category will need only pay one-third of the premium if he wants to use that open entitlement to buy a motorcycle. Quite obviously, for the people wanting to buy company cars and heavy goods vehicles, they will have to pay double as they do in their respective categories. (7) How large should the quota be? Here I want to give a bit of historical background. Over the past 15 years since Government systematically applied restraint measures, the overall growth of vehicles has averaged 4.2% per annum, compounded over the last 15 years. During that period we were building the PIE, the AYE, the CTE, ECP, SLE, TPE. We were building all the expressways that we now have in Singapore. We were building flyovers; we were building by-passes. We introduced computerized traffic lights, we introduced real-time traffic management. In spite of all the new roads, the expressways that were built, in spite of all the new technology and in spite of all the restraints, we are experiencing growing congestion. Already 17 major traffic junctions in Singapore experience congestion during peak hours, where the flow of traffic exceeds the ability of the road to handle. I want to state clearly, Sir, that the Government intends to continue to develop the road network. Where possible, the Government will build more flyovers, more underpasses, more expressways, more tunnels. We will go to the limit that land and technology permit. The Government will also conduct a careful study on the possibility of using new technology to build a network of roads underground, under the city. But we have to be realistic. It would take us some years before all these new roads, this network of underground roads and expressways, these flyovers and tunnels, will be available for use. In the meantime, we must manage the growth of our vehicles. So, for the first year of the quota system, the Government will allow a net increase of 22,000 more vehicles. What does that translate into? 22,000 vehicles is approximately 4.3% of the vehicle population. That is very close to the figure of 4.2% over the last 15 years. Then next year we will slow the growth of vehicles slightly, maybe down to 2 1/2-3%. But we must remember that even with 2 1/2-3% growth, it means that congestion will get worse because we are only able to build roads at less than 1% a year. Road building takes a long time, however hard PWD tries. As an illustration, for the Central Expressway, a section of 5 km through the city will take us nearly four years to complete. We hope to introduce the Electronic Road Pricing (ERP) system in about four years' time. If the ERP succeeds in helping to spread the vehicles on the roads, both with respect to space, geographically speaking, and with respect to time, then we may be able to relax the growth rate of vehicles a little. We will review the situation when the ERP is ready. (8) How frequently should we have the quota system? Mr Lew Syn Pau has suggested that the bidding for the quota system should be by way of a tender. I agree. It is a good idea. This is a fair, time-proven and economically efficient method of allocating scarce resources, ie, the opportunity to use our roads, which is a scare resource, because land is scarce in Singapore. Tenders will be called quarterly. We will give the number of entitlements, in other words, the number of vehicles that we will allow to be added, two-quarters in advance. This will give individuals who want to bid for the entitlement time to know what is ahead. In other words, people will be able to make their careful calculations and make their bids accordingly. We want to move on, if we can, to a more frequent period for tendering. Instead of doing it quarterly, after the system has settled in, we will probably have tenders on a monthly basis. What that means will be that the prices for the quota will show less fluctuation. Sir, last year there was a net increase of 28,725 vehicles. To start the quota system smoothly, we will allow 7,000 more vehicles to be available for tender when the quota system is introduced. 7,000 for one-quarter works out to 28,000 for the year. It is very similar to last year's figures. After the first quarter, we will then slow down gradually to 6,000 and 5,000 and 4,000 for the next three quarters. Last year a total of 28,503 vehicles that were scrapped. As it turned out, that is coincidentally also approximately 7,000 vehicles per quarter. We expect a similar number of vehicles will be scrapped each quarter. So again to help the quota system get off as smoothly as possible, we will add 7,000 more entitlements for tendering. This is to enable existing owners who are scrapping their vehicles and tendering for a new one, to have enough entitlements to tender for, so that they will not squeeze out the first time buyers. If I could put it this way, 7,000 allocated because we expect 7,000 people to scrap their vehicles and buy new ones and 7,000 allocated because we expect 7,000 new buyers. So all in all, it means that for the first quarter of the quota system we will have 14,000 entitlements. This will decrease over the next three quarters to 13,000, 12,000, and 11,000 entitlements respectively. These replacements will be spread evenly among the different categories. I have circulated a table (Cols. 1279 - 1280) to illustrate the details of distribution. table - QUOTAS FOR THE DIFFERENT CATEGORIES FOR THE 1ST 4 QUARTERS (Cols. 1279 - 1280) Sir, Members will see in the first column that there would be 14,000 entitlements available for tender in the first quarter, going down to 13,000, 12,000 and 11,000. Then if they look across they will see the exact numbers allocated for each of the individual vehicle category. Agter 1st May 1991, one quarter of the actual users of vehicles scrapped in the preceding twelve months in each category will be used for the replacement quota. (9) How much will the Quota Premiums be? Sir, many people have asked, when the quota system was suggested, how large will the quota premiums be? I do not know. Because with the quota system, it is the public that decides the premium and not the Government. Still they press on, they want an answer. Is it going to be very large, or is it going to be very small? Many people fear that it will be very large. Sir, I stated very categorically that I do not know what the premium would be. But it is possible to make some inference on the magnitude of that number. Because if we can get some feel for that number, then it would put the quota system into some perspective from the financial point of view. Let me give some figures so that Members can also follow the deduction process. For the first three weeks after the interim increase of registration fees, the net increase in vehicles was 1,346 vehicles. If you work on the basis of 13 weeks for a quarter, then you get 5,832 vehicles. This number of 5,832 vehicles is smaller than the net increase that we would allow for the first quarter, which is 7,000 vehicles. So it means that if vehicle owners take a logical and a commonsensical approach to the quota system, then in the first instance, we would not expect the quota premium, on the average, to be higher than the interim increases in registration fees; namely, $1,000 for motorcycles and $5,000 for the other vehicles. We should remember also that many dealers were giving very hefty discounts because of their large profit margins. So that further indicates that it does not seem likely that the initial quota premium will be higher than $1,000 for motorcycles or $5,000 on the average for the other vehicles. But I want to stress that the Ministry is not in a position to know what the exact premiums will be. It will be the public that will decide on the magnitude of the premium. At $1,000 and $5,000 for motorcycles and other vehicles, what does that work out to be? Sir, some people say the increase will destroy the international competitiveness of Singapore as a transportation and tourist centre. I think we should try to examine these statements to see if there is any basis for it at all. I have therefore provided Members of the House with a very simple table to show the magnitude of the increase as far as cost is concerned. If we assume a hypothetical, and I stress it is hypothetical, quota premium of $1,000 for the motorcycles, then knowing that on the average a motorcycle travels a total of 120,000 km over a 10-year period, the increase works out to be only 0.8 cents per km. If you look at the column for commercial vehicles; the increase works out to be only 2 cents per km. Two cents to be shared by 30 - 40 tourists on a tour bus? Will that drive away tourists from Singapore? You will see that by restraining all, the restraint on any one individual owner has been kept small, small but effective. In other words, a little restraint, applied to all, goes a long way. (10) Tender Bids Sir, tender bids will be on the basis of a fixed dollar preimum which the tenderer is prepared to pay. This premium will be on top of all the existing fees and taxes for the different categories of vehicles. And all successful tenderers will need to pay only the lowest successful tender price, whatever sum they bid. This particular method of tendering has been used before by Government, and successfully, for the tendering out of textile and CFC quotas. Date of implementation The quota system will be implemented on 1st May 1990. We expect to call for tenders in early April. In other words, beginning 1st May 1990, all new vehicles will be registered only if they are accompanied by a valid entitlement. Sir, there are other operational and administrative details not of a policy nature. Therefore I would not go into the details today, details such as the type of forms to be used, the quantum of deposit to be paid, and so on. I will ask ROV to meet with the press and the trade community to go into the details. And if there are useful suggestions that the motor trade community has, we will be happy to look into their suggestions to make sure that the administrative aspect of the quota system will be as smooth as possible. Road tax surcharge Sir, over the past three years, the number of vehicles older than 10 years has grown very sharply, from 55,000 in 1986 to 93,000 in 1989. This is an increase of 70% over a three-year period. At the moment one vehicle out of six is 10 years or older. Last year, half the number of vehicles 10 years or older failed their first inspection. Obviously, Sir, this trend is undesirable and must be slowed down. Older vehicles are more prone to breakdowns. When this happens on a busy expressway or road, particularly during peak hours, they cause severe traffic congestion and a lot of wastage of time to all road users. This was pointed out by Dr Vasoo during the last debate. We know that vehicles vary enormously in their initial quality, in their maintenance, in the mileage travelled. The age of a vehicle is a very poor proxy for actual road worthiness. However, it would be invidious and impractical to require individual vehicles to be scrapped at different ages. Therefore, to discourage owners from keeping their vehicles way beyond 10 years, the Government has decided to impose a 10% road tax surcharge on old vehicles for every year exceeding 10 years, subject to a maximum of 50%. This surcharge will be phased in gradually. In the first year, beginning 1st May 1990, all vehicles 10 years or older will pay a 10% road tax surcharge. This will be increased in steps of 10% for the next four years, so that when the scheme is in place in five years' time, the vehicle that is 10 years or older will pay 10% surcharge, and this will go up progressively to vehicles 14 years or older paying a 50% surcharge. Removal of interim increase in registration fees Sir, when the interim increase in registration fees was announced, I indicated that Government will reduce this by at least 50%. With effect from 1st May 1990, the Government will remove completely the interim increase, that is, it will remove completely the $1,000 for motorcycles and the $5,000 for all other vehicles. Reduction of ARF/PARF and/or import duty Sir, I now want to move on to another subject. This is ARF and PARF. The Select Committee recommended that the existing PARF scheme be kept, although not necessarily in its current form. The Committee also recommended that the Government reduce the ARF when the quota system is introduced. My Ministry has looked at this problem in depth. The ARF/PARF scheme is another problem that is simple in principle, but when we seek to apply it, it turns out to be extremely complex. Let me give an illustration. A reduction in ARF will obviously be beneficial to new car owners. But the reduction in ARF means that the value of vehicles presently on the road, in other words, existing owners' assets, will go down. So we want to approach this very carefully to make sure that we are fair to all again. My Ministry will further study this particular problem. After the quota system has been in place will modify the PARF scheme, in a manner that will remove some of the undesirable investment effects. The Government is determined to ensure free movement of traffic on our roads. But the Government does not intend to price cars beyond the reach of the population, or to use land transport policies as a means of generating revenue. That is not the intention of the Government. I will say that again. The Government does not intend to price cars beyond the reach of the population, nor does it intend to use land transport policies as a means of generating revenue. After the quota system is in place, I intend to reduce the ARF and the PARF or the import duty rates, or both. A reduction in these areas will partially offset the additional revenue generated by the quota system and will help moderate the cost of owning a vehicle in Singapore. I expect to make the announcement on such reductions before the end of the year. These reductions will be announced and implemented in such a way that future tenderers will be well informed of the change before they make their bids and therefore can do their calculations properly. The Government is also conscious that the quota system will increase business costs, although the effect would not be large. The Government will monitor this impact and, if necessary, take other measures to contain business costs. Weekend vehicles Sir, my Ministry will continue to explore all ways and means to allow the maximum number of vehicles on our roads, without severe congestion or restriction to the free movement of people and goods. We will allow the maximum number of vehicles that our existing network of roads can bear. To do otherwise is stupid, because we would not be making the best use of our limited land. We shall do our utmost, using all possible technologies, to increase the network of roads in Singapore and to increase their capacity. Whatever new technology is available in any country, we will study, and if it is relevant and applicable, we shall bring it back to Singapore and use it. Sir, listening to grassroots leaders and MPs, we have noted over the years a call for Government to allow a special category of vehicles, referred to as weekend vehicles, ie, vehicles that will be used only during the weekends when there is no traffic congestion and during the off-peak hours, such vehicles should be taxed at a lower rate. I welcome this proposal. Therefore, I would appreciate any suggestion from Members of the House on how we can design and administer such a system in a manner that will not contribute or aggravate the congestion during the peak hours. Summary Sir, let me try to summarise briefly the various points of the quota system. We have tried to be fair to all. So the quota system will apply to all vehicles. First time owners will tender to own a vehicle. They will pay only the lowest successful tender price. Existing owners will be given a grace period, ranging from two years to 10 years. We will have six categories of vehicles. That will give some protection to owners of motorcycles and small cars, in particular the lower and middle income owners. The seventh category, which is the open category, will allow some flexibility, to respond to economic changes in Singapore. The expected increase in cost is likely to be small, averaging a few cents per kilometre. We shall begin the quota system on 1st May 1990, with an initial net increase of 7,000 vehicles for the first quarter. And we will also put in place on 1st May 1990 a road tax surcharge on old vehicles to slow down the rapid growth. On 1st May 1990, the Government will remove completely the interim increase in registration fees. I expect also to make some reduction in the import duty or the ARF/PARF or both before the end of the year. My Ministry will also study the possibility of having a new category of vehicles, the weekend vehicles, which can be taxed at a much lower rate. Sir, land transportation is a national problem. The roads, the vehicles, the congestion, are there for us to see. What we have tried over the years is to anticipate all possible problems and circumstances. In particular, for the quota system, we have tried and tried very hard to anticipate all problems. But it is not likely that we have anticipated all possible problems. We are putting in place a transparent system that every Singaporean can see. It will take some time for Singaporeans to understand fully the system. But the important thing is that the system is transparent. We will provide the data, the numbers, and Singaporeans will make the decisions themselves. The transparency of the system will ensure its fairness. We will improve the system with experience and with feedback. Therefore, I welcome suggestions from fellow MPs and from members of the public on how we can make this quota system even more convenient and fairer to all roadusers. Sir, let me conclude by quoting a few statements from Mr Chiam See Tong. He was a Member of the Select Committee which studied the land transport problem for five months. In the last debate, he said: 'There is no one single answer to the [land transport] problem. It is a very difficult problem that we are tackling ....' He went on to say: 'We cannot have every person owning a car. I think that is not possible.' Then he concluded later on by saying: 'I cannot remember any issue or problem that has been more widely discussed as this.' Sir, it was an invaluable insight and the Member of the Opposition has been candid enough to express it. His five months spent studying the problem has provided him with that insight. I want to thank him for having the courage to express those views. For the past 16 months, we have witnessed an example of public participation in shaping public policy. Everyone participated, the man-in-the-street, academics, professionals, trade organisations, political parties, and, of course, Members of this House. I want to record my grateful thanks to all of them. They have all made valuable suggestions which have guided the Government in the final formulation of the quota system. Every suggestion, every view, was considered. Many of them have been accepted and integrated into the total system that I presented earlier. Let me now express my heartfelt gratitude to fellow Members of this House, to Members of the Select Committee on Land Transportation Policy, and most of all, to Dr Hong Hai, the Chairman of the Select Committee, for their invaluable contributions. Collectively, they have all helped to ensure that life for all roadusers in Singapore will continue to be a pleasant one for many years to come. Thank you, Mr Speaker, Sir. [Applause].

Order. I think hon. Members will appreciate it if I give them some time to study the Ministerial Statement. In order to give hon. Members sufficient time to gather their thoughts and formulate their questions, I will now suspend the Sitting and will take the Chair again at 2.50 pm. Sitting accordingly suspended at 1.50 pm until 2.50 pm. Sitting resumed at 2.50 pm

Order. Members may now proceed to put their questions to the Minister on his Statement.

Mr Speaker, Sir, I have three questions for the Minister concerning today's statement on the quota system. Before that, I would like your leave to spend one or two minutes covering the background to these questions.

That will not be permitted, Dr Hong Hai.

In which case, I shall proceed directly to the questions. I presume there is no quota on the number of questions I may ask! Sir, in proposing the quota system, the Select Committee had opted to leave all implementation details to the Ministry. In order to give our proposals some concreteness, we did give a simple example which was to leave existing owners alone since they had previously bid an entry price and to let new owners tender for licences to purchase their cars. We did not say how long this would be for, and we did emphasise in our Report that this was only one way of approaching the problem. We also recognise that there would be windfall gains which the Government should minimise by adjusting PARF rates. Sir, I dare say that if the Select Committee were to meet again ---

Dr Hong Hai, could we have your question, please?

Yes, I am coming to it. Would the Minister not agree that if the Select Committee were to meet today, we would probably agree that the broad framework of implementation which the Minister has unveiled would probably be quite acceptable and agreeable to the Committee. The framework appears to be well thought out and comprehensive. However, the GPC would like some time to evaluate the details before giving further comments. My questions specifically are: First, in starting the first year quota at 4.3% and reducing it to 2.5 - 3% in the second year, would this not create a rush to buy cars in the first year in order to beat the lower quota in the following year? If this were to happen, first year prices would be pushed up and the result would be paradoxical, ie, the year with the higher quota would also see higher vehicle prices. Would the Minister kindly comment on this possibility? Second question, Sir. If at the end of the first year, we find that - thanks to the excellent traffic management of MCI and PWD - traffic flow is still at a fairly comfortable level, would the Minister be prepared to maintain the quota at around 4%? If, however, traffic congestion were to go up significantly, but was still not serious, would the Minister consider introducing more rigorous usage measures, such as higher city parking charges and higher CBD charges in order that the 4% quota may be maintained? Sir, my third and final question is: the Minister has decided that all vehicle owners, new and old, will have to tender to purchase new vehicles. This, as he explained, would be fairer to future generations of vehicle owners, in the sense that everybody pays the same price, whether to enter or re-enter the market for vehicles. The question is: whilst it is fairer, does it make it cheaper for the first-time owners, compared to a situation in which existing owners are not required to tender? If existing owners were exempted, new aspiring owners need only compete among themselves. With existing owners thrown into the fray, so to speak, competition would be keener.

Dr Hong Hai, are you making a statement?

I asked if it was going to be cheaper.

Could you ask your question?

Yes. With existing owners thrown in, would it not be the case that competition would be keener, in the sense that existing owners, as a group, are older and they are richer? But because of the superior purchasing power of existing owners, the large majority of whom are determined to remain car owners, would it not be possible that the resultant bid price be pushed up? Sir, if this were to happen, would new owners not be disadvantaged? And if they were disadvantaged, could it still be said that the system was fairer to them? Sir, I realise that this is a complex exercise in micro economic analysis and the Minister might need more time to study the data. If the Minister thinks that this could be a problem, could I ask him if he would consider exempting existing owners from bidding but requiring them instead to simply pay the quota premium on registering their cars? This would remove them from competing against new owners. At the same time, it would ensure that they pay their full share of the quota premium.

Mr Speaker, Sir, allow me to ask a few questions. First, concerning the taxis. Now that the taxi operators are required to bid for a licence or entitlement to register a new taxi, would the Government remove the control over the number of new taxis to be registered? In other words, let the market determine the supply and demand. My second question is: if that is the case, if the Government decontrols, can an individual come in and bid for a licence to own a taxi? Or can a group of individuals come together, register a company and bid for licences to own taxis? My third question is about motorcycles. In the open category, the motorcycles are lumped together with all other categories of vehicles. By so doing, would that not result in motorcylces being squeezed out? Because I do not think the motorcyclists are able to bid the same price as the car owners. Is it the intention of Government to squeeze out the motorcycles?

Sir, I question the necessity of having the road tax surcharge on vehicles older than 10 years. Under the new policy, vehicles older than 10 years will already have to pay the prevailing quota premium to keep his vehicle for another 10 years. Furthermore, this prevailing quota premium is expected to go up over a period of time. It may also be aggravated by any reduction of the ARF mentioned by the Minister.

What is your question, Dr Chen?

Can the Minister consider removing this double whammy surcharge? The Minister also mentioned that he would reduce the ARF by the end of the year. My question is: what kind of quantum is he talking about? Because any reduction of ARF would eventually be transferred to the quota premium and therefore it would be seen as increasing the quota premium.

Can I remind Members that under the Standing Orders, they can only ask questions on a Ministerial Statement. If they want to debate the issue, they can always give notice of motion.

I would still like to ask the Minister a more fundamental question, ie, whether the Minister agrees that the sole objective of implementing the quota system is to control the vehicle population growth. If that is the case, whether there is any reason to include the taxis in the quota system, and that by including the taxis in the quota system, the operating cost of the taxis will fluctuate and escalate tremendously, especially when the diesel tax has just been raised seven-fold from $1,100 to $7,700, and that all these increases will threaten the livelihood of the taxi drivers. My second question is whether the Minister is aware that if the ARF is reduced, the quota premium will increase tremendously and therefore the cost of buying taxis will also increase tremendously, thus threatening the taxi trade altogether?

Sir, I have three questions to ask the Minister. First of all, the Minister mentioned that if a potential motorcyclist would like to buy a motorcycle from the common pool he has to pay 1/3 of quota premium. The question is, on what basis is he fixing the amount at 1/3 of the quota premium? Can it not be 1/5 of the quota premium, bearing in mind that the cost of motorcycle is a lot lower than 1/3 of the average motorcar price. The second question is: The Minister has introduced a surcharge of 10% for a car which is more than 10 years old. Since the Minister has, in his statement, indicated that the target objective of this exercise is to prevent cars from breaking down, is his Ministry not contemplating on looking for other more effective alternatives, for example, imposing heavy fines for cars which are more than 10 years' old whenever they break down? The third question is, since the Government policy is to find the source of traffic jams and penalising those responsible for causing traffic jams, would the Minister or his Ministry consider the possibility of being a bit strict to impose a ruling against the parties which are responsible for causing traffic jams, such as PWD and PUB, because of their frequent digging of the roads? They too cause traffic jams.

I thank Members for their various questions. Sir, I thank the Chairman of the Select Committee for agreeing generally with the overall structure of the quota system. His first question is, should we not maintain the increase of vehicles at closer to 4.2% which is the overall long term increase? We can, Sir. But it means we pay a higher price in terms of congestion. What we are trying to do is to start off at close to the long term trend and then gradually bring it down. Because as I emphasized earlier on, even at 2 1/2-3% growth, in the long term we will still be seeing heavier and heavier congestion on our roads. If I could give simple illustration. In traffic engineering terms, what does a 3% increase of vehicles on the road mean? If the 3% more vehicles are spread evenly, traffic junctions which are experiencing traffic congestion at the moment will see an increase in waiting time for vehicles using those junctions. Motorists using those junctions will now have to spend, on the average, two more minutes per junction. So if you are going to work and you use three of such junctions, where the traffic already exceeds the capacity of the road or junction, then you have to add, on the average, six more minutes for that trip, if you make it next year with a 3% increase in vehicle population. So we have to strike a balance. If we want to allow a large increase, then we must be prepared to live with even greater congestion. Sir, I think the range of 2 1/2-3% is something that we can probably live with. To go any higher means that we will have to have more people on the roads wasting more time going to and from work. Dr Hong Hai asked whether it is possible to exempt existing owners of older vehicles from the tender system. Again we can do it that way. It will make very little impact on the land transport policy itself. But I think it will be unfair to first time owners because then existing owners will be free from the need to tender together with everyone else. I think the larger the pool of vehicles there are for people to tender, the better it is and the smoother and smaller will the fluctuations be. If I could illustrate. If existing owners do not have to tender, then we will start off with only 7,000 vehicles for tender, and not 14,000. Then in the fourth quarter, if existing owners do not tender, the number will be reduced to only 4,000; instead of 14,000 in the first quarter under our existing scheme, 11,000 in the fourth quarter. So requiring existing owners to tender will be fairer for first time vehicle owners. Mr Goh Chee Wee asked whether Government can remove the controls for the number of taxis on the roads. The Government does not control the number of taxis on the roads. The taxi operators are allowed to have any number of taxis. What they need to do is inform the Ministry. Indeed at the moment the allocation to the various taxi operators far exceeds the number of taxis on the roads. We have left it to taxi operators to decide whether they want to use up the full quota that has been allocated to them or whether, looking at the overall market circumstances, they prefer not to move too rapidly in that direction. Mr Goh also asked the question of whether the motorcycles will be edged out in the open category. We have taken cognisance of that possibility. That is why we require anybody with an open entitlement to pay only one-third of the premium instead of the full premium. This is if he wants to buy a motorcycle to provide some measure of protection to future owners of motorcycles. Sir, Dr John Chen asked why we need to impose the 10% surcharge for old vehicles. As I have explained earlier on, over the last three years we have seen a very rapid increase in the number of old vehicles, an increase of 70%, growing from 55,000 to 93,000. I think all Members will agree that this is not a healthy trend. Therefore we need to do something just to moderate that particular rapid growth. As to the quantum of the ARF or import duty or both that we would be reducing, can I ask for a little time to study this problem rather than to make any announcement at this stage. I hope to be able to make the announcement before the end of the year. Sir, Dr Wan Soon Bee has spoken up very eloquently, as he has always done in the past, on behalf of taxi drivers. Yes, the operating cost will go up. But as I have shown in the table circulated earlier, it is not a cost increase that will make taxis not affordable to Singaporeans. For taxis, we are talking of an increase of about 0.4 cents per km. Dr Wan also suggested that by reducing ARF we will in effect be increasing the quota premium. If that is so, then I take it that Dr Wan is not in favour of the Government reducing ARF in the longer term. Sir, Encik Yatiman Yusof asked whether it is possible for people wanting to buy a motorcycle with the open entitlement to pay a premium lower than one-third. He suggested a figure of one-fifth. Sir, the Ministry has explained on a number of occasions the issue of the road space that a motorcycle occupies on the road. The Government knows that owners of motorcycles are normally from the lower and middle income group. Therefore we have brought the figure down from seven-tenth to a third. We have done that for the ALS fees. It has worked well. I think we should start off with a third. And maybe over the longer term, we can have a review to see whether this is indeed a reasonable ratio to use or whether we could bring it down a little further, as suggested by Encik Yatiman, to something like a fifth. But let us operate the system and see how the flexibility that is built in can cope with the changing circumstances and the different demands of the economy. Encik Yatiman Yusof also suggested heavy fines for vehicles that break down on roads, to tackle the problem at its root. Sir, this is a good suggestion. It is somenting that is worth considering. What we really want is to encourage individual vehicle owners to exercise a sense of responsibility, of maintaining their vehicles in a manner that will not break down on the expressways or on busy roads. I am sure Members must have travelled on the expressways and have seen on the othe side, three, four, kilometres of vehicles not moving at all or hardly moving at all because a vehicle in front had broken down. His other point is congestion caused by PWD. Sir, we will encourage PWD to carry out as much of its work in a manner that will minimize inconvenience to the public.

May I ask the Minister whether under the quota system the premium to be paid by a taxi operator under the prevailing rate will be for a 10-year period. I am sure the Minister is aware that the taxi has a mandatory lifespan of seven years. Would he consider allowing the taxi operator only to pay 70% of the prevailing rate rather than 100%? I have another question for the Minister. To prevent speculative bidding by individuals, would he consider levying an administrative charge every time a bid is tendered?

I just want to clarify regarding the quota premium. I am not against reducing the ARF. What I mean is that if this is reduced and the taxi has to pay for the quota premiums, that means taxis are going to pay more and more and, in the longer term, the taxi will be so expensive that I do not think they will be able to afford it.

Sir, the Minister did not answer the question. Is he aware that the figures that he gives on the rapid increase of old vehicles were under the old circumstances? But under the new policy, you are going to have this prevailing quota premium that is to be levied on the old vehicle owners. So why then do you want to have these double measures? That is the question. I believe that the quota premium will be effective enough.

Sir, I have several questions. I think here I would like, with your indulgence, just to preface one question with a suitable quotation from the Minister's statement.

Could you get to the point and ask your question, Mr Heng?

Here the Minister said: "The Government does not intend to use the transport policy as an excuse to collect more revenue." I believe he said that twice. In that case, would the Minister be prepared to consider the concept of direct subsidy for bus services as a very, very special case, and that is, perhaps to ask SBS and TIBS to provide a better, more comfortable, and really a first-class service, at very affordable prices, so that the difference in the revenue and cost could be subsidised from the quota premiums collected? Sir, the second question is: would the Minister consider another system of tender bids other than the Dutch system of the lowest successful bid? Because I believe that the proposed system would encourage irresponsible sky-high bids by persons who think that they would not be the highest. And if sufficient number of people think that way, then the lowest successful bid could be very high. Sir, the third question is: when the quota system is in place, and since the quota premium will be double for company and commercial vehicles because of tax benefits, would the Minister consider the removal of the $35,000 limit ratio for tax deductible items for all expenses relating to such vehicles or, at least, increase it? The rationale for the $35,000 may no longer be there since it is not a tax collection item, but more for control of loopholes. The fourth question, Sir, is: would the Minister permit the existing owners of cars with PARF a grace period of 10 years, instead of (10-x) years, and let them decide at the end of the tenth year of the life of their car, whether they want to scrap their vehicle, take advantage of the PARF value and bid for a new car, or to continue retaining their vehicle until the end of the grace period, so that they do not have to pay for the quota premium and lose, in that case, the PARF value? If these owners opt for the first alternative, effectively they are back to the (10-x) years system. The fifth question is: would the Minister tell Parliament the additional revenue to be collected as soon as it is feasible or as soon as the information is known to the Ministry? Could he also tell Parliament the effect on inflation for this year as a result of this new quota system, although he did, Sir, stress that the effect will be minimal. I am sure most Parliamentarians here would like to know the actual effect.

Mr Speaker, Sir, I am asking a question regarding the taxi business. So I would like to declare my interest. Would the Minister consider giving the taxis a totally separate quota without having to link it to the private car category of 1.0 to 1.6 litres? Let the taxi drivers themselves and the taxi organisations bid and set the price.

Sir, Dr Wang Kai Yuen has got a very good point, namely, since the taxis have got a mandatory lifespan of seven years, is it possible for the quota premium to be pro-rated to seven years. It is possible, but there are also other categories of vehicles with mandatory lifespan. So I would like some time to consider this possibility. I do not think the taxis are in any way severely disadvantaged if they were to pay a 10-year premium like everyone else. If they scrap their vehicles after five or six years, they will get the rebate. Whether there should be an administrative charge for the tender. We can look into it. It is a good suggestion to ensure that those who tender are serious. Sir, Dr Wan Soon Bee came back to mention that taxis will be affected if we reduce the ARF. That is true. But we should remember that taxis pay very small ARF. In fact, taxis do not pay any PARF at all, particularly if they scrap their vehicles early. So some adjustments of ARF for other vehicles will have an impact on the taxi drivers. We will have to look at that carefully as we make the adjustments. Dr John Chen believes that the measures under the quota system would be adequate to contain the rapid growth of old vehicles. Let us look at the actual figures and see whether it does or does not have that salutary effect. Mr Heng Chiang Meng has five questions. Whether we should have direct subsidy for buses to make bus fares affordable - I believe, Sir, at the moment, bus fares are very affordable. They start off at 15 cents for feeder services and 40 cents for trunk services and they go up to a maximum of 80 cents. I believe it is very affordable. Some 2.8 million passenger trips are made on buses every day. Assuming eash passenger takes two or more trips daily, that means that avout 1.2 - 1.3 million people use buses everyday. That represents a very sizable proportaion of the population. Government has already made subsidies in a number of different ways. We have built the bus interchanges, we have built bus stops, and we have kept the scheduled buses out of restraint measures such as ALS and the quota system. We have indeed been giving special preference to the buses. As for subsidy, the Government has already made a very massive subsidy for the MRT system. Government has already spent $5 billion. We intend to spend more in due course, when the need for more extensions of the MRT system becomes clearer. Mr Heng suggested that the scheme where everybody pays the lowest successful tender price, regardless of what the bids are, may lead to irresponsible tendering. Sir, let us give the system a try. It may lead to a more rational bidding where pople bid what they are willing to pay. This approach, we believe, is fairer. Because it means that at any one time all the people bidding in one particular category will pay the same price, rather than different people within the same category at the same tender paying totally different prices. But I will bear in mind the proposal of the Member and look at it in due course. Should we remove the restrictions on the quantum that companies can deduct for tax purposes by way of expenditure on "Q" cars? We can look at that. But my belief is the present allowances are adequate. It is a matter that I will ask the Finance Minister to review, if necessary. Mr Heng has also suggested a more generous scheme of giving all existing owners a 10-year grace period. We can be more generous, but, as I said earlier, when we are generous to one group, we in effect are being less than generous to the others. We have to strike a balance. I think giving (10-x) years means that existing owners do not have to worry about the quota system immediately. It will give them time to adjust to the quota system, because even the owner of the oldest vehicle is unaffected by the quota system for at least two years. Whether Government could give figures of revenue collected, yes, these figures are indeed given every year when ROV reports to Parliament. Similar figures are also available, I think, in other reports from the Ministry of Finance and also the reports on customs duties. They are available to the public. Mr Lew Syn Pau suggested that we have a separate category for taxis. Sir, we considered that possibility also, except that taxis represent an extremely small group. There are only about 11,000 taxis at the moment. Even if we assume that they have got an average lifespan of six years, we are talking about a replacement level of about 2,000 per year, which means about 500 per quarter. That is a bit small. There are too few players in the market - four or five players - and the opportunities for collusion are high. I think it is fairer to all to put them together with the large category of 1.0 to 1.6 litres of cars.

I have some points of clarification because I think the Minister has misunderstood me on some points. Sir, on the question of subsidy, I am aware of the various forms of mini-help that has been given to the bus services. But I am talking about a major one like if the Ministry were to tell SBS and say, "Look, we like you to air-condition all your buses. We like you to provide better frequency. How much will it cost?" Say maybe $100 million. If so, the Ministry could say: "However, we like you to only charge $60 million to commuters and the other $40 million will be subsidized by us". I am talking about that type of subsidy so as to encourage better usage of buses. Sir, on the other point about (10-X) years, again I think the Minister has misunderstood me, because I am not talking about all vehicles. I am talking about car owners with vehicles having the PARF value, which means that if they opt for the full 10-year grace period, they lose their PARF. So it is not a more generous concession. The concession depends on whether the owners of these cars want to take advantage of it or not. Finally, I am aware that the revenue figures would be available in the annual report. But I did say that I hope the Minister will give to Parliament the revenue figures as soon as they are available, and not to wait until the following year when the annual report comes out. I think he has also missed out the question on inflation.

Dr Yeo, do you want to take that first?

Sir, as I mentioned earlier, the bus fares are affordable at the moment. Should we air-condition all buses? I think it is a question best decided by the market, rather than for Government to impose that all buses in Singapore should be air-conditioned. The danger with subsidies is that when you are subsidizing something, you lose a sense of what the market needs and what the market is prepared to pay, and then you may end up with wastage. The Government is prepared to subsidize major infrastructure, such as MRT extensions. But when you are subsidizing direct consumption, I think the Government prefers to move more cautiously. There is this fallacious belief that Government's money is nobody's money. Government's money belongs to the people. The more we spend Government's money in one area, the less of Government's money we have left to spend on other things. So if we subsidise airconditioned buses, when people may not really want to have airconditioned buses, then it means that we have got to spend less on health, on education and the list of other things which the Government is already subsidising.

It is incidental and not the main purpose.

Money collected for use of roads is a national asset. It belongs to the people and it should be managed carefully in a manner that will benefit the largest number of Singaporeans. Sir, I apologise for not understanding completely Mr Heng's suggestion of 10 years for all vehicles with PARF eligibility. In other words, he is saying that all cars less than 10 years old, ie, eligible for PARF, would be given this very special privilege. I think it is very invidious to say that this group of people ought to be given something extra special, a 10-year grace period, whereas all the other vehicle owners will only get 10 -X years. I think it is not fair. Revenue figures to be given as soon as possible, yes, we will provide that as soon as the data is available. The Member can always ask an Oral Question whenever he thinks that the answer should be forthcoming. Yes, the quota system will add to the cost of operating a car and therefore eventually will feed back into the total economy. But as I have shown with the figures earlier on, the increases are small, in the order of cents per kilometre. The Ministry of Trade and Industry will be monitoring business cost carefully. Sir, Dr Hong Hai has also earlier on mentioned two other points which I failed to go into at some length. He asked whether by reducing the quota from 4.3% overall growth to 2 1/2-3%, we would cause a rush in the first few quotas. I do not believe so. As the numbers are made public, the public will make their own calculations. We will be providing the figures at least two quarters in advance. We start off by figures for four quarters, the figures available to Members of the House. Then we will give figures two quarters ahead of the tender so that members of the public can do their own calculations. He also asked whether existing owners will force up prices for the new owners. Again, I do not believe so. The more people there are tendering in the pool, the more likely it is that we will get a more even price. If we exclude the existing owners, then it will be the new buyers wanting to tender. Numbers are smaller but the quota is also proportionately smaller. I gave as an illustration the figure of 7,000 for the first quarter, if we only require new buyers to tender. If we allow a total of 14,000 for the first quarter and those who want to scrap their vehicles will also have to tender, then it will be a much larger pool. I think having a larger pool is more likely to lead to a fairer tender system, than having a small pool and exempting the existing owners from that requirement of having to tender.

Mr Speaker, Sir, I have three questions. (1) Should the certificate of entitlement be made non-transferable for a certain period within the 6-month validity period, eg, a 3-month period, as I also share the concern of other Members of the House regarding speculation? (2) Will the Minister reconsider the necessity for a quota system if the ERP and other methods of utilisation control and traffic management are successful in controlling traffic congestion? Sir, I ask this question because I support the quota system only as an interim measure. (3) Does the Minister not agree that the quota system is not that fair after all as the payment for vehicle owners is now up-front? The hypothetical examples given may seem reasonable, but it is in fact an upfront payment. This is a cause of concern for those in the lower income group buying motorcycles and for the taxi driver. The taxi driver is in fact paying tax on money yet to be earned, ie, money to be earned for the next 10 years. Will the Minister consider allowing instalment payments for taxi drivers?

Sir, may I ask a few questions as well? First, I think the Minister has not said this, but I presume that the quota that is being bid is transferable during the 6-month period. In this case, in the initial stage of the implementation of the scheme where the quota is being given every three months, I am afraid there could be certain cartel groups that may want to try to profiteer from the scheme by cornering some blocks of quotas and then sell them off at a higher price. May I ask the Minister whether he will take special care to monitor such situations in the earlier period, and especially if he could consider whether the quarterly bidding period can be reduced to a monthly quota as soon as possible, even on a different category basis instead of doing all at the same time. In this way, the chances of cartels trying to profiteer from the quota scheme would be minimised. The second question is that though the validity of the quota is for six months, there are people who have booked for cars that may take more than six months to be delivered. This is not due to any fault of their own, and they find that their certificate has lapsed before their cars are delivered. Could such special cases be considered for extension? The other issue I would like to ask the Minister is this. I just came back from Hong Kong and I am very impressed by the city planning in Hong Kong, whereby they have inter-connecting linkways, passages, between buildings and shopping centres, which minimise the number of pedestrian traffic on the ground level, thereby not adding to the congestion on the roads. Could we not have the same arrangement whereby pedestrians are taken away from the roads and they either go above ground or below ground in Singapore? The last point is that I am quite attracted to the idea of a weekend car. Perhaps in this case the Minister can consider having special distinguishing features for weekend cars. This is not to say that they are going to be painted with tricolours or rainbow colours, but at least they have special number plates or colour plates whereby if they are used on non-weekend periods they may be subject to fine by the Traffic Police. Otherwise, they can be used on weekends, or we may even consider that these cars can normally be used in other parts of Singapore except for going into the CBD during weekdays. There are many people who are not working, like housewives and various categories of people who need a car to fetch their children to school or to do marketing but they do not need to drive a car to work. Such category of people can then be given a special label or special registration number whereby they can use their cars at certain periods.

Sir, I would first like to ask the Minister a very basic question. His Ministry has opted to tackle the road congestion problem by curbing car ownership. Has his Ministry in fact studied all remedies in relation to car usage and to keep down car ownership? Has his Ministry made a thorough study to opt for this system at the moment? Sir, the quota system, of course, is liable to mistakes. The Government could make a mistake on the estimation of the quota. Is his Ministry willing to make it cumulative in this quota system? Assuming that this year you have a lower quota, can this excess be carried over to the next year? I wonder whether the Minister will say that, in fact, there is already an inherent inequity in regard to items (4) and (5). You have got six categories in item (5) and we see that in each category you only have got the capacity. I think it is a well known fact that some cars are cheaper than other cars. Of course, those who bid, say, for $10,000 and opt to buy an European car which is more expensive, he will proportionately pay less, as compared to the cheaper Japanese or Korean models. That is in fact already an inequity there, because proportion-wise, the expensive car will pay a lower percentage of the quota premium. Also in regard to item (5), I can see that there is an inequity there.

Mr Chiam, can I direct you to ask your questions?

I am asking the Minister whether there is any inequity.

Yes. Please be concise with your questions.

Yes. Will the Minister say that in fact there is an inbuilt inequity in the 20% open category in relation to the small cars and to the motorcycles, as Encik Yatiman Yusof says that they will be squeezed out. Will the Minister be willing to reduce these two open categories in regard to small cars and the motorcycles, say, to 10% or less? Sir, can the Minister say what is the effect of the quota system on Government revenue? Will additional income from revalidation exercises offset losses of revenue from the falls in ARF? In regard to old cars, it is a pity that they are going to put a surcharge on them because I will be affected. The Minister has given data that half of the cars more than 10 years old failed in their fitness test. But can he give us the data whether or not the number of cars that break down on the roads are in fact old cars? The fact that people keep old cars and they take good care of their old cars, it is very unlikely that old cars will break down. Perhaps the Minister could give us some data on the breakdown of cars and whether they are old cars. Sir, in regard to infrastructure, it is good to know that the Government will continue to build roads, overhead passes, underground tunnels and so forth. But for the time being, is the Minister willing to give assistance to shuttle service between MRT stations and private and public estates? I think this area of transportation will have to be looked into by the Minister, since he has announced that he is willing to exempt scheduled buses from the quota premiums.

Sir, Dr Beng and Mr Leong asked whether the certificate will be transferable. These are details which I have not touched upon this morning. We are very conscious of the possibility of cartels being formed, particularly when the scheme is new and people are not familiar with how it operates. ROV is looking at this matter and will give the details of implementation of this scheme a little later. But I want to assure the House that the scheme will be devised in a manner that will not permit a cartel to be formed, nor would we allow people to use the quota system as a means for speculation. It means it will be a little inconvenient for some people. Later on, when people are more familiar with the scheme, and as the system evolves, we will be a little more relaxed. But we start off being a little more restrictive. The important thing is to safeguard the interests of the people. Dr Beng asked whether it is possible to dismantle the quota system after the ERP is available. Let us proceed one step at a time. Let us look at the ERP and how effective the ERP will be and how early we can distribute the traffic, particularly during peak hours. The more we are able to distribute the traffic over time and space, the more we can allow the number of vehicles to increase. The quota system is not fair because it is upfront. Sir, the purchase of vehicles is also something that buyers pay upfront. I would expect that in due course finance houses will work out their own scheme where some financing will take place. I want to point out that Mr Chiam, in the last debate, did specifically say that he was very much against the idea of financing and that it should be loaded upfront to make it more difficult for people to own cars. So we have different points of views. The taxi drivers will well taken care of by the taxi operators, in particular by NTUC Comfort. They have schemes where taxi drivers pay over a period of years to minimize cash flow fluctuations. Mr Leong also suggested that we move quickly to operating the tender system on a monthly basis. We want to do it as soon as possible. But let us give some time for people to get used to the system. I want to point out that when we move to a monthly tender system, the number of vehicles available for each tender will effectively be diminished by two-thirds. So the quotas become smaller and when the numbers are too small, particularly when we have so many different categories, the probability of fluctuation, will be higher. So let us give a bit of time for people to understand and to operate the system. Validity period of six months, I have gone into the pros and cons. We can look at it as we go along and see whether there is a real need for it to be extended or not. The proposal for better linkways along the roads to make it more convenient for pedestrian to move from place to place, I believe the Minister for National Development has already announced an extensive programme to beautify Singapore, to make covered walkways and linkways from various key points of interests, commercial centres, etc. I am sure the Ministry of National Development will be doing more and more of such programmes in due course. I thank the Member also for his suggestion that weekend vehicles should be given different plates so that they can be easily distinguished from the rest, otherwise it would be open to abuse. It is a good suggestion. Mr Chiam has asked whether we have looked at all remedies. Sir, Mr Chiam spent five months on the question of land transport. He knows the possible remedies. We have looked at all possible remedies. We have looked at them in great detail. There are no more convenient, useful, practical, effective measures that we can apply. We have exploited the Area Licensing Scheme to its fullest. We have managed to protect the central business district from severe congestions in the mornings and in the evenings. But that is really the limit, because to go further, we would have to introduce a full-day ALS.

Increase your car parking fees.

Increase car parking charges, yes. We will look into it. But I think we will also need to bear in mind that if we increase car park charges, we increase the temptation for those who would park their vehicles illegally. Then they will create more congestion. So there is a balance. But it is something that we can look into. We can have an increase in petrol duty. But you know the problem of abuse , the easy way of bypassing that particular measure.

Increase it only in the CBD areas.

Increase the car park charges in CBD areas? We will bear that in mind, and maybe at the next exercise make an adjustment. The kilometre tax? These are some of the different suggestions that have been made and have been looked into. Mr Chiam asked whether a quota, if not fully used in one quarter, will be carried over. Yes, it will be carried over into the next quarter. Is there an inherent inequity in the six different categories because cheaper vehicles in each category will pay more percentage-wise? When we move towards a fixed dollar tender system, then obviously we are talking about dollars. We are no longer talking about percentages. If you pursue that argument then you will say that it is also unfair to charge a big car and a small car the same parking rates.

They take up the same space.

Exactly, they take up the same space. Similarly, they occupy the same road space and therefore they should pay the same price, regardless of what the value of the vehicle is. Otherwise, you will say old cars will have to pay less because an old car has less value and so on. 20% open category - is it unfair to the motorcycles and the small cars? Again, the same argument comes forth. For motorcycles, we have already made a special case for them where the premium that they are required to pay will be kept at one-third. Small cars, as Mr Chiam rightly pointed out, occupy the same road space. For the time being, let us keep it as it is and let the system work itself through. Will the additional income from the quota system offset the reduced collection as a result of fewer vehicles registered with ARF?

Reduction of ARF.

With the reduction in ARF. Sir, the reduction of ARF is a subject that will be taken up a little later. It is not possible at this stage to decide whether the reduction will be offset or otherwise. Do we have any data on the breakdown of vehicles on the roads and whether they are caused by old cars? Sir, the answer is no. We do not have the data, because people do not report breakdowns of vehicles to the Government. When your car breaks down you do not report it. Therefore there is no way in which the Government can have that data. But, yes, it is commonsensical to believe that old vehicles, on the average, must be less road worthy than new vehicles. Let me give some figures on the failure rates of major systems among vehicles 10 years and older. Structural problems, for old vehicles - 15% of them failed. Wheel system, in other words, something wrong with the wheel, 27% of them failed. Propulsion system, 13% of them failed. Braking system, 19%. In other words, one car out of five old vehicles has got faulty braking systems. Steering system, 14%; body, 22% and other faults, 15%. They add up. It is true. It is only commonsensical that older vehicles are less fit than newer vehicles. The next question is whether we will have more shuttle services. The bus companies have already initiated and are operating shuttle services. So far, they have got five services operating. This is an area where I would encourage management committees of condominiums or private housing estates or residents associations to get in touch with the bus companies. If they can carry out surveys which indicate a need for such services to be operated , then the bus companies can look into the demand. The bus companies have also indicated that they are looking into the possibility of running mini-buses to such estates.

Sir, I would like to ask the Minister two related questions. (1) Should the Minister consider freezing the ARF and the PARF rate currently so that the bid for the licensing and the quota system can be conducted without undue expectations and uncertainty and with greater transparency, and also bearing in mind that such changes in the ARF and the PARF rate now will affect the personal networth. (2) Related to this, will the Minister consider implementing the quota system and the licence bid system without dismantling the ARF and PARF system, bearing in mind that both the quota system and the PARF scheme can co-exist without contradiction and without bias, revenue and cost effects?

Mr Speaker, Sir, the Minister has enunciated very laudable principles. He says he does not intend to use transport policy as an excuse to collect more revenue. And he wants to be fair to all. That is the most important consideration, he says. As I have said, they are very laudable principles and aims but, unfortunately, the measures that he has suggested do not seem to be consonant with these two principles.

Dr Lee, will you ask your question?

Yes, I am going to ask him the question. This is the preface.

Dr Lee, may I direct you to ask your questions. It is not possible to make speeches.

Yes, I understand. He has enunciated a new system of quotas. He has also mentioned something about PARF. Therefore, I ask, why not extend the PARF from 10 to 15 years? After all, cars are built to last longer than 10 years. He says he wants to be fair. Therefore, he should be fair, especially to those people who cannot afford to change cars so easily. If he wants to be fair, then there should be no surcharge whatsoever. Of course, that is linked to the quota itself. Therefore he should extend the grace period to 15 years as well. As I have said, that will help those who are not so well off and also help small businesses, and especially the spare parts dealers. Moreover, it will also cut down loss of foreign exchange.

Dr Lee, can I direct you to ask your question?

Sir, the Minister has also said that he does not know how much the quota premium is.

Dr Lee, if you do not proceed to ask your question, I have to direct you to resume your seat.

To be fair, why not fix the sum for the quota premium, instead of allowing people to bid for it? Because if you bid for it, you will bid it on the basis of price. Last time, during the debate, I suggested a quota on the bases of need, but no answer was given to that suggestion, whatsoever. Even today he has not mentioned it at all. Therefore, if ---

Dr Lee, do you have any more questions?

Yes, Sir, I am coming to it now. Therefore, if it is going to be a matter of tendering, let the tenders be put in. But in order to be fair to all, why not ballot the tenders? Everybody will realise then that he has an even chance. Otherwise, only those who are better off will have the advantage. That won't be fair at all, Sir.

I want to ask two simple questions. Can the Minister allow the payment of the licence fee to be spread out over a 10-year period, instead of a one-time payment? The other question is about vintage cars. I sympathise with Mr Chiam because I do own a 22-year old car and, like him, I also have to pay. But I can assure the Minister that these cars that we own are not that bad and we are prepared to give him a ride.

In answer to my question just now, the Minister said that there is no control over the number of new taxis introduced on the road. But I believe there is still a quota. The taxi operators have to apply and each of them is given a limit, a quota, on how many new taxis that they can introduce. But of course, as the Minister said, the quota is large, so that the taxi operators can actually introduce new taxis as and when they wish. My question really is whether there would be a complete de-control. And hence my second question, which the Minister did not answer, is: can an individual or group of individuals come together and then form a company, and bid for the entitlement to own taxis? I will give an example of the yellow-top taxi drivers. Presently, the yellow-top taxi drivers are not allowed to transfer the vehicle ownership to their children. So can their children go and bid for a licence to own a taxi?

I would like to ask the Minister three questions, Sir. The Minister has talked about a lot of deterrents and disincentives. Would the Minister consider some road tax rebates for people who use the roads less? From the takings that he has got from the tenders, would he give rebates to the existing car owners? Secondly, in the event there is cartel, what intervention does the Government have to ensure that there is no cartel formation in the tendering system? Thirdly, since there is a significant drop in the number of motorcycles registered, I am suggesting whether the one-third premium on open entitlement could be reduced significantly, in the light that many motorcyclist are low income earners.

Sir, Mr Chay suggested that we freeze the ARF and PARF and operate the two systems independently. The two systems ie, the quota system and the ARF/PARF scheme will be operated independently. But freezing the ARF means that we will not be able to reduce the ARF, which is what I believe the Select Committee has recommended. I understand the interaction. In fact, it is the interaction between the ARF and the quota system that makes the ARF problem complex and, therefore, requires additional time for us to look at it carefully. Dr Lee suggested extending PARF to 15 years. Sir, he has obviously not listened to the figures that I have quoted earlier on, to show that vehicles over 10 years do have very serious problems and therefore we should discourage rather than encourage their rapid growth. To give PARF for 15 years means that we encourage more and more old vehicles on our roads. And when a vehicle breaks down, other road users pay for it by way of increased wastage of time. All road users will have to spend another half an hour, 40 minute, 50 minutes, stuck behind that vehicle particularly if it broke down during peak hours and at a critical junction. So a cost has to be borne by people who have got nothing to do with the owner of the old vehicle. While it is obviously advantageous to the owner to keep an old vehicle, it is disadvantageous to all the others. The same argument applies also to giving a grace period for 15 years. Yes, we can be a lot more generous to existing owners, but it will be at the expense of prospective owners of vehicles. Whether we should have a fixed sum for the entitlement, and have a ballot? The Government has been operating a similar system all these years with the road tax and the ARF. The Government determines the ARF and the road tax and all the other levies that need to be made, and leaves it open to people to buy vehicles. It has been pointed out by the Select Committee that the quota system is more effective, more predictable than the old system. Dr Lee comes back to the question of need. We discussed that the last time. Need is very subjective. Everybody needs a vehicle if it is within his means to own one. We are aware of it. But as Mr Chiam pointed out, it is not possible to have everybody owning a car or a vehicle. So who is to assess whose need is greater? Let the individuals decide. Individuals have the choice to decide whether they prefer to spend their money on a vehicle or they prefer to take a bus and spend their money in some other way. Dr Tan Cheng Bock suggested that we allow instalment payments over a period of 10 years. Sir, let us leave it to the private sector to sort it out. The private sector has already got the mechanism of spreading out the price of a car, ARF, and all the other costs through financing. Let us leave it to them. Vintage cars? Sir, I can give a copy of the failure rates of old cars to the Member for his careful study. He may or may not be keeping his car in good shape. We are not able to ascertain. But as a general principle, It is quite obvious, (I am sure he will also agree) that the older a vehicle is, the more likely it is to have defects, which may not surface today, but will cause a breakdown some day and cause a congestion. Sir, Mr Goh Chee Wee came back to say that it is not true that Government does not control the number of taxis allowable. ROV requires a taxi operator to indicate to the ROV the number of licences that it wishes to have. And we have been extremely liberal, as he himself pointed out. Many of the taxi operators are given licences to operate more taxis than they are currently operating. We have chosen to allow them to decide. But for purposes of monitoring the overall situation, we keep tab of the numbers. Should we allow individuals to own taxis? This is a very old subject, Sir. The yellow-top taxis represent a legacy from the past where individuals who own taxis eventually become proxies for others who want to manipulate the system. We have been trying over the last decade and a half, to move away from that position. We will allow bona fide companies with the expertise in operating vehicle fleets, with the expertise to do good proper maintenance of vehicles, to operate taxis. Indeed, we have done so recently by allowing a bus company to operate taxis. We will free the market. But at the same time, the Government has the duty to the public and to taxi commuters. We want to make sure that every taxi is kept in good operating condition. And the best way of ensuring it is to have the taxis operated by companies. Then they can work out their own schemes, as indeed the NTUC Comfort has done, where NTUC operates a fleet of taxis but the taxis are in the names of the taxi drivers themselves. We want to have a good fleet of well maintained taxis for the benefit of taxi commuters. Dr Vasoo suggested giving rebates to those who use roads less. Sir, that is the equivalent of a kilometre tax. I have indicated earlier on that it is not practical because any mechanic worth his salt can alter the odometer without much difficulty. It is to abuse. But I understand the idea and I appreciate his suggestion. The idea is similar to the concept of weekend vehicles, where vehicles that do not use the roads as extensively, particularly during the weekday peak hours, can be given special rates of taxation. We are happy to consider that. Cartels? We will prevent it in the first place, rather than allow it to happen and then try to eradicate it. Motorcycles should be less than one-third, I think Mr Yatiman also made that appeal. We will operate the system, see how it works out, and if necessary, make some adjustments.

Mr Speaker, Sir, when the Minister links the taxi quota premium to that of the quota premium for the 1.0 litre to 1.6 litre private car category and calls it a concession, I presume he thinks that the quota premium for this category of private cars would be lower than that of the 2.0 litre category. In the event that this does not happen to be true, then would he consider allowing the taxi operators to pay the lower of the two quota premiums?

Sir, can I seek one clarification from the Minister? I want to know whether an individual bidder is allowed to bid for only one or more than one licence and whether he or she is allowed to bid for only one category or more than one category at a time.

Mr Speaker, Sir, thank you for letting me join in this question and answer session. I would like to ask the Minister to review this question of PARF and ARF in relation to the quota system. Presently, as it stands, the quota system is a definite scheme. We know that it will control the number of cars because of the definite control numbers we set. So the point is that since this is to replace the price mechanism, contrary to what Mr Chay has suggested, I will say that we must work out a scheme whereby we can as quickly as possible phase out the ARF and PARF. Initially, to be fair to the new owners, could not this licence fee be offset against the ARF? At the same time, those cars which are bought on this basis will not have the full entitlement in future in the case of scrap value or for PARF consideration. In other words, if there is a $5,000 licence, the new car owner will not pay anything more. This $5,000 is offset against ARF and this licence will affect the future value of his car. What we are trying to do is to progressively transfer the investment value on the PARF into the quota system. Then that will also not affect the present owners who will only be affected when their cars reach the 10-year old mark. In other words, by May, I am sure a scheme can perhaps be looked into whereby we do not retain both systems at the same time. We cannot have the cake and eat it. The price mechanism was to control the car population. We have the quota. Now, we say let us run both in parallel. I am suggesting that one should replace the other more gradually. I believe that by May, the Minister can present something positive in that area.

Sir, will the Minister be persuaded by me that he should not consider the recommendation of the Select Committee on the incorporation between the ARF/PARF and the licence bid system as divine? He should tread with caution on juggling between the ARF/PARF scheme and the licence bid rate.

Sir, Mr Lew Syn Pau asked whether we could give the taxi drivers yet another concession, namely, a choice between the preminums for 1.0 and 1.6 litre or greater than 2 litres, whichever is lower. Let us allow the system to operate before we jump the gun. I can understand his very special concern for the taxi drivers. I share that concern also, but we have tried to be fair. If he wants to be more definite and argue one way or the other, I am quite happy to consider his proposal, whether he wants to group taxis in the same category as luxury cars or whether he prefers it to be with the medium-sized cars which, I think, is a more reasonable and more sensible approach. Mr Goh Choon Kang asked whether individuals will be allowed to tender and whether they will be limited. I have again not gone into the details of administrative measures. Yes, we will allow individuals to tender. And, in the first instance, to ensure that there is no abuse, we will restrict the number that individuals can tender for. But once the system is satisfactory, we should be quite relaxed about the limits. I would ask him to be a little more patient and allow ROV to work out the details and announce them in due course. Mr Chng Hee Kok and Mr Chay Wai Chuen have totally opposing views. But I think the question by Mr Chng did clearly indicate that the subject is a complex one. Because at the moment there is a range of ARF and PARF paid by the different categories of vehicles. In due course when I make the announcement, I would go into all the details and from the explanation, it would be quite obvious to Members why it is indeed complicated. No, we will not ignore the Select Committee's recommendation. We will look at it carefully. But I understand Mr Chay's point, which is we will operate the two independently. We will take into account the recommendations of the Select Committee because I believe they have got a good point, which is to find a mechanism, to find a way in which we can offset some of the additional cost that comes about as a result of the quota system. It is a valid point. But the ARF/PARF scheme is fairly complex because of its diversity in application to the different categories of vehicles. So give us a bit of time and we will untangle it a little. 4.21 pm

"to amend the Mass Rapid Transit Corporation Act (Chapter 172 of the 1988 Revised Edition)", presented by the Minister for Communications and Information (Dr Yeo Ning Hong); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

"to amend the Road Traffic Act (Chapter 276 of the 1985 Revised Edition)", presented by the Minister of State for Communications and Information (Mr Mah Bow Tan); read the First time; to be read a Second time on the next available sitting of Parliament, and to be printed.

Mr Speaker, Sir, I beg to move, That Parliament do now adjourn to Friday, 2nd March, 1990. Mr Speaker, Sir, on 2nd March, the Minister for Finance will deliver his Budget Statement. As it is customary for him to deliver his Statement in the late afternoon, may I ask that the sitting on 2nd March commence at 3.00 pm? Resolved, That Parliament do now adjourn to Friday, 2nd March, 1990.

I direct that the Sitting on 2nd March will commence at 3.00 pm. Adjourned accordingly at Twenty-Three Minutes past Four o'clock pm to Friday, 2nd March 1990 at 3.00 pm. table - QUOTAS FOR THE DIFFERENT CATEGORIES FOR THE 1ST 4 QUARTERS (Cols. 1279 - 1280)