ERP helps business, says LTA

(SINGAPORE) ERP rates must go up because the current congestion, if left unchecked, will have a negative impact on the economy, says the Land Transport Authority.

From July 7, 2008, electronic road pricing rates will rise sharply and five new ERP gantries will be erected along the Singapore River line to reduce transit traffic using the city area for outbound trips in the evening. This is similar to the concept behind the Orchard Cordon, which discourages vehicles from making use of Orchard Road to get to other areas.

But the hikes and gantries have met with protests from motorists, some of whom have questioned whether the moves are necessary, given that traffic congestion does not appear to be as bad as the LTA says it is.

'ERP changes are necessary to manage congestion effectively,' Mr Yam explains . 'Faster travel times lead to overall lower transport costs and ultimately help businesses to remain competitive. Congestion also adversely impacts family life as people spend more time on the roads.'

When asked about the effectiveness of the higher ERP rates, given that Singaporeans seem to eventually accept them after some initial complaints, he says that the actual ERP price levels depend on the choices drivers make and how they weigh the charges to be paid against the other options, such as travelling during non-ERP times or switching to public transport.

'As traffic demand patterns change, ERP rates will also have to respond accordingly because the situation is dynamic,' says Mr Yam.

'If the demand for limited road space goes up over time, it is likely that ERP charges will have to go up as well. This does not mean that ERP is not effective, only that periodic reviews are needed as the situation does not remain static.'

He adds that since the system was implemented in 1998, ERP has been effective in encouraging motorists to consider alternatives. As a result, traffic speeds on priced roads have been maintained within their optimal speed range through regular reviews and rate adjustments.

'However, the edge has come off in recent years and that is why we have had to make some enhancements to the system at this time,' he says. 'Having done this, we are confident that the system will be effective again.'

As for those diehard motorists who are unlikely to give up their cars whatever the increase in ERP rates, Mr Yam says that the LTA's aim is not to get everyone to stop driving 'as we would then be under-utilising the roads'.

'Rather, the intent is to influence enough car users not to use the roads during congested periods,' he says. 'In doing so, we will be able to optimise the use of the roads. We only need a small decrease of cars on the roads to bring about smooth-flowing roads.'

In the case of the five new gantries, LTA is targeting a 17-18 per cent reduction in car trips into the CBD.

The LTA reiterates that the system is not a revenue-raising exercise. The government has been progressively shifting from vehicle ownership taxes to usage charges, with road tax to be cut by 15 per cent from July 1, 2008.

This will cost the government $110 million annually and follows the 10 per cent cut in ARF or the additional registration fee in March 2008 - at a cost of $200 million. So total cost is $310 million.

At the same time, ERP revenue will increase by $70 million a year (total annual ERP revenue is about $100 million).

'ERP places the decision of whether to drive, travel at a different time, use a different route or take public transport, in the hands of motorists,' says Mr Yam. 'Without ERP to keep our roads smooth-flowing, there is no choice as everyone using the road will be caught in gridlock.'

This article was first published in The Business Times on June 23, 2008.