Speech by Minister for Transport S Iswaran at the Ministry of Transport Committee of Supply Debate 2023 on Building a Resilient, Sustainable and Inclusive Transport System

Introduction

1.     Mr Chairman, I would like to thank all Members who persevered till 8pm last night to speak on the budget of the Ministry of Transport.

2.     In responding to Members’ questions and suggestions, my colleagues, Amy Khor, Chee Hong Tat, Baey Yam Keng, and I will elaborate on how my Ministry is working to build a resilient, sustainable and inclusive transport sector.

3.     My response will focus on three broad themes: Recovery; Growth and Sustainability; and our Social Compact.

Recovery 

4.     Our air and land transport sectors have recovered strongly from the debilitating impact of the pandemic.

5.     Let me start with aviation, about which Mr Saktiandi Supaat and Ms Ng Ling Ling have enquired.  At its lowest point in 2020, Changi’s passenger traffic was less than 0.5% of pre-COVID levels.  Today, Changi’s passenger traffic volumes, flights and city links stand at about 80% of pre-COVID levels.  To Mr Gan Thiam Poh’s query, flights at Seletar have fully recovered since January this year.  Based on the current trajectory, Changi should return to pre-pandemic levels by 2024, possibly earlier.  One determinant, as Ms Ng Ling Ling noted, would be how quickly air connectivity with China is restored.  Weekly services to China have more than doubled since January, from 38 to nearly 100.  That is about a quarter of the number we had in 2019, with Chinese and Singapore carriers expected to resume even more services in the coming months.  

6.     Ms Poh Li San asked about our aviation hub’s challenges amidst the recovery.  Let me highlight three. First, our aviation stakeholders must continue to ramp up their workforce to sustain the recovery. Today, the sector’s workforce is at about 90% of pre-COVID levels; and we expect a full recovery by this year.  Beyond recruitment, we must ensure that the new hires gain the requisite experience to meet the demands of the job, and also to ensure their safety, welfare and morale, as Ms Ng Ling Ling has highlighted. Second, though Singapore is now in DORSCON Green, we must remain alert to new threats from the virus and other similar threats.  We are therefore closely monitoring the situation with the Ministry of Health, and must be prepared to respond quickly should the public health risk assessment change.  This is the new normal for aviation. Third, the recovery of air travel will have to contend with uncertainties in the global economy, and rising energy and manpower costs.  Against this backdrop, Ms Poh had asked if there was room for airport charges to be raised.  Last September, the Civil Aviation Authority of Singapore (CAAS) and the Changi Airport Group (CAG) announced increases to the airport charges for passengers and airlines.  We will review these charges periodically so that CAAS and CAG can continue to invest in capacity building and essential infrastructure, while ensuring Changi remains competitive.

7.     Turning to land transport, our public transport ridership reached 90% of pre-COVID levels in January this year.  However, this recovery has been uneven.  Public transport journeys to the Downtown Core in the morning peak are at about 70%, whereas journeys to other areas like Queenstown are at 90%, and Woodlands and Tuas are already back to pre-COVID levels. We are tracking these travel patterns, which have yet to stabilise because of various adjustments to work practices.  

8.     Our maritime hub was resilient and performed well through the pandemic.  In 2022, we achieved our second highest container throughput of 37.3 million twenty-foot equivalent units (TEUs), and remained the world’s largest transhipment hub.  More recently, due to global economic headwinds, international container trade and container freight rates have softened from the exceptionally high levels of 2021, but the mid-to-long term outlook remains positive.

Growth & Sustainability

9.     Overall, our air, sea and land transport sectors are back on track.  Capitalising on the recovery, as well as learning from the pandemic, we are now gearing up for growth.  We have three priorities – capacity, capability, and sustainability.  

Capacity

10.    First, a core focus of my Ministry is to invest in our transport infrastructure capacity to meet future needs.  Our major projects are progressing well.

11.    In January, we held ground-breaking ceremonies to commence work on the Jurong Region Line and the Cross Island Line. We are on course to expand our rail network by a further 100km over the next decade, with eight in ten homes within a ten-minute walk of train stations.  To Mr Gan’s query, these lines will have several points of intersections with our existing rail network, thereby enhancing the resilience of the system, and convenience for commuters. 

12.    Our land connectivity with Malaysia will improve with the JB-Singapore Rapid Transit System Link, which is expected to be completed by the end of 2026.  As for Mr Gan’s question on a possible HSR link, I would like to reiterate what we have said before that Singapore remains open to discussing any new proposal from Malaysia, starting from a clean slate.  

13.    Mr Melvin Yong and Mr Dennis Tan sought an update on T5.  At last year’s National Day Rally, Prime Minister Lee announced that we have restarted the T5 project.  We are working with  consultants to incorporate lessons from the pandemic, and update the design to be more modular, resilient and energy-efficient. We plan for T5 to be operational in the mid-2030s.  Land preparation and drainage works at Changi East have been completed, and construction is expected to commence by 2025.  The third runway will also be ready towards the later part of this decade. 

14.    As shared by DPM Wong in his Budget Round-Up Speech, it is important that we set aside some resources whenever we have the means for projects with large and lumpy expenditure.  In this regard, the Government will inject a further $2 billion into the Changi Airport Development Fund. Meanwhile, the Changi Airport Group and airport stakeholders have worked out operational plans to manage the anticipated growth in flights and passengers at Changi in the run-up to T5.

15.    Ms Janet Ang asked about the development of Tuas Port, which will be completed in four phases by the 2040s, with an annual handling capacity of 65 million TEUs. Reclamation for Phase 1 has been completed, and Phase 2 is at about 60%.  When the berths in both phases are fully operational, Tuas Port’s annual handling capacity will be more than 40 million TEUs.

Capabilities

16.    Second, to strengthen our capabilities, we will invest in our workforce, redesign jobs and deepen skillsets. Our upcoming rail lines will create about 800 good jobs and we will use the Rail Manpower Development Incentive to equip our workers for these jobs.  More than 2,900 have already been trained in skills such as data analytics and condition-based monitoring since 2020.  This year, we are committing a further $12 million to this effort. Attracting talent to the aviation and maritime sectors is a key thrust as highlighted by Mr Melvin Yong and Ms Janet Ang. We are collaborating with our partners to do so through student outreach and work-study programmes, mid-career conversions, and skills upgrading for workers.  We will also provide career guidance and employability support through touchpoints such as the OneAviation Careers Hub portal.  SMS Chee will elaborate on our plans for the maritime sector.

Sustainability

17.    Thirdly, Mr Chairman, sustainability is central to the growth of our transport sectors.  Hence, we have partnered the industry to develop sustainability pathways across all three domains.

Electrification as the key lever to reduce domestic emissions

18.      Last year, I highlighted our plans to drive electrification in the land transport sector.  We made good progress in 2022 with electric vehicles (EVs), accounting for 11.8% of new car registrations last year , up from 3.8% in 2021 - a more than threefold increase.  Of all EVs registered in 2022, 20% were from Category A, 50% from Category B, and 30% from Category C.  

19.      I think we can attribute this to several factors.

20.      First, we have established clear regulatory milestones.  We have announced that diesel cars and taxis cannot be registered for use from 2025, nor Internal Combustion Engine (ICE) cars and taxis from 2030.  

21.    Second, we have financial incentives to encourage the adoption of EVs.  Ms Sylvia Lim asked why EVs incur an Additional Flat Component.  As then-Minister for Finance explained in Budget 2020, fuel excise duties are significant contributors to government revenue, yielding around $1 billion annually.  The Additional Flat Component for EVs, of $700 a year, was introduced to partly account for this loss in fuel excise duties.  By way of comparison, a typical ICE car user will pay about $1,000 a year of fuel excise duties assuming they use a 92 or 95-octane petrol.  

22.    Separately, the total cost of ownership for EVs has been reduced through Government initiatives such as the EV Early Adoption Incentive, and the reduction in road tax for mass-market EVs, our adjustments in power rating.  We will continue to review road tax as part of the overall vehicular tax structure, taking into account the transition to electric as well as  other cleaner energy vehicles, and technological developments, while staying true to our objectives of controlling private vehicle ownership and usage. 

23.    Thirdly, we have brought forward the islandwide deployment of EV chargers to address range anxiety.  1 in 3 HDB carparks will have EV charging points by the end of this year.  We have also supported the installation of EV chargers in private developments through legislative amendments and the EV Common Charger Grant.  SMS Khor will give more details. 

24.    Our efforts to green the public transport sector are also gathering pace.  Mr Gan and Mr Ang Wei Neng asked about the electrification of our public buses.  This month, the Land Transport Authority, will launch a tender for about 400 electric buses, to replace diesel buses reaching end of life from December 2024.  New bus depots will be completed in tandem to support e-bus operations.  This will help achieve the goal of electrifying half our bus fleet by 2030, and a 100% cleaner-energy bus fleet by 2040. Several Members asked about the cost impact of switching to e-buses.  We are in the early stages of electrifying our bus fleet.  But based on the experience of the e-bus fleet trial, the higher upfront costs are expected to be offset by lower operating costs in the long run. I should also add that, as announced at the launch of GreenGov.SG in July 2021, from this year, all new cars procured by the public sector will be electric, or alternatives with zero tailpipe emissions. 

25.    Electrification will also be a key lever to reduce domestic emissions in our air and sea transport sectors. Let me first outline our ambition for Changi Airport.  Currently, close to 20% of around 2,500 airside vehicles at Changi Airport are electric.  We want all vehicles on the airside to run on cleaner energy by 2040.  This would include electrification or the use of biofuels.  To drive this transition, we will embark on three initiatives. First, all new airside light vehicles, such as cars, vans and minibuses, must be electric from 2025, as they already have viable electric alternatives, which can progressively replace existing diesel models.  We will also require certain new heavy vehicles like forklifts and tractors, for which viable electric models are available, to be electric from 2025.  

26.    Second, we will enhance the charging infrastructure on the airside.  To date, CAG has installed about 100 EV charging stations and this will increase to more than 300 over the next few years, in tandem with the needs of its airport partners as they electrify their airside fleet. Third, we will commence trials on the use of renewable diesel, especially for specialised airport ground handling vehicles where there are no electric models.  These trials will inform our evaluation of renewable diesel as a complement to electrification to achieve the goal of cleaner airside vehicles by 2040.

27.    Moving to the maritime sector, the harbour craft sector will be required to achieve net-zero emissions by 2050.  This will apply to about 1,600 harbour craft currently licensed by MPA.  To achieve this transition, from 2030, all new harbour craft operating in our port waters must be fully electric, be capable of using B100 biofuels, or be compatible with net-zero fuels such as hydrogen. MPA will partner industry, financial institutions, harbour craft operators and manufacturers to help lower the cost of adoption and mobilise support for early adopters.  MPA will launch an Expression of Interest in the second quarter of this year, to call for proposals for the design and development, demand aggregation and green financing for new electric harbour craft.  

28.    The pleasure craft sector and domestic tugboats will also be required to achieve net-zero emissions by 2050.  MPA is studying the timelines for the transition given their different power requirements, and will provide an update next year.  SMS Chee will share more about our initiatives to support the transition for the maritime sector.

Reducing emissions from international transport

29.    Ms Poh Li San asked about international partnerships to catalyse our sustainability initiatives.  As a major international aviation and maritime hub, we actively support the efforts of the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO) to reduce emissions from international transport.  We are also working with like-minded country partners to create sustainable international aviation and maritime eco-systems, through “green lanes” for flights powered by Sustainable Aviation Fuels (SAF), as well as green and digital shipping corridors.

30.    Ms Ng Ling Ling asked how we will encourage the aviation hub to step up its sustainability efforts.  The Government will establish a $50 million Aviation Sustainability Programme to support feasibility trials and research studies , and bring stakeholders together to create innovative solutions for a more sustainable air hub.  CAAS will be releasing more details, and I would encourage companies to make full use of the funding.  More broadly, CAAS is studying the recommendations of the International Advisory Panel on Sustainable Air Hub, and will publish the Sustainable Air Hub Blueprint in the second half of this year.

Our Social Compact

31.    Mr Chairman, I would now like to focus on the way forward to meet our evolving urban mobility needs, as well as the undergirding social compact.  

Motorcycle COEs

32.    Let me first address the questions from Mr Pritam Singh and Mr Saktiandi Supaat about motorcycle COEs.  Our COE system aims to efficiently allocate our limited vehicle quota.  Prices inevitably increase when demand is high relative to supply. 

33.    The cost of Category D, or Cat D, COEs and its impact on motorcycle users is an issue that has been raised by Members from all sides of the House.  Besides Mr Saktiandi and the Leader of the Opposition, Ms Mariam Jaafar asked a PQ earlier this week.  Mr Murali Pillai and Mr Abdul Samad did so at the end of last year, and many other members have also raised this point. We fully understand the concern, especially those who rely on their motorcycles for their livelihood.    

34.    This is why motorcycle owners receive preferential treatment under the current vehicle ownership regime.  The Additional Registration Fee, Road Tax, and Electronic Road Pricing (ERP) charges for motorcycles are all lower compared to other vehicle types. In March last year we took additional measures to curb any speculative bidding by dealers for motorcycle COEs.  We halved the temporary COE, or TCOE, validity period from 6 to 3 months, and increased the bid deposit from $200 to $800.  More broadly, to reduce volatility in the COE cycle for all categories, we smoothened the supply by basing the quota on the rolling average of the de-registrations from the preceding four quarters instead of just one quarter. 

35.    Following the changes in March last year, the TCOE utilisation rates have remained high close to 100% in the ensuing months which reflects strong underlying demand.  It is noteworthy that in the last two months, about 450 TCOEs, secured when Cat D prices were close to or above $13,000, have been forfeited along with the deposits.  However, the market subsequently corrected itself, with prices easing and utilisation rates going up again.  This indicates that the system is functioning as intended with corrections where the market cannot support the levels of prices.  The forfeited 450 TCOEs will be reinjected into the May to July quarter’s Cat D supply.  This would constitute an additional 15% above the projected supply from de-registrations.  I trust that motorcycle buyers and dealers will take this into account when making their decisions to bid or buy.  We will monitor the market closely and will make further moves if warranted – including a further reduction in the TCOE validity period, or a further increase in the bid deposit, as Mr Saktiandi and Mr Singh have suggested. Mr Singh also suggested reviewing motorcycle financing – specifically, in-house financing.  Such financing agreements are not new.  They are a part of industry practice providing a service for prospective buyers. The Hire Purchase Act provides for regulations governing such agreements.  Our agencies will take action if there is evidence of practices that contravene these regulations.  

Forward Singapore

36.    Mr Ang and Mr Lim Biow Chuan asked about the Forward Singapore engagements that we launched in 2022.  We brought together Singaporeans from all walks of life to discuss our aspirations for future urban mobility, the trade-offs, and what our renewed social compact should be. I was heartened that many participants recognised and appreciated the improvements to our public transport system over the last decade, making it more accessible, reliable, and inclusive.

37.    Ms Poh Li San asked about the cost of running public transport.  Over the last decade, operating costs for public transport increased by about 7% per year on average.  This was not matched by revenue growth. As members would be aware, fares have gone by about 1% a year on average over the last decade. Hence, government subsidises public transport operating costs by more than $2 billion annually, and that is about slightly more than a dollar per journey. 

38.    While we aspire to have a high-quality, world-class public transport system, we must also ensure financial sustainability – and this is the shared responsibility of government, operators, and commuters. Where we land on the balance between quality, affordability, and financial sustainability, is driven by what we value as a society.  We believe that commuters and taxpayers must share the financial burden equitably, because ultimately, we don’t want a financially unsustainable system with a large fiscal burden for future generations of Singaporeans to bear.

39.    The Public Transport Council is reviewing the fare adjustment formula and mechanism, guided by the need for a balance across these three factors.  To Mr Lim Biow Chuan’s query on the progress of this review, the council will announce its recommendations by the second quarter of this year.

40.    Another strong sentiment that emerged from our engagements was that inclusiveness should be at the heart of our social compact. We agree fully. First, we can be more inclusive in our road design.  Hitherto, much of the focus in road planning has been to meet the needs of vehicular flows.  However, our local streets are also an integral part of our daily lives, and the pedestrian network in our communities.  We use them to visit neighbourhood centres, markets, polyclinics, and schools.  It is where we might meet into our neighbours and friends.  

41.    There was a strong feeling amongst the dialogue participants that we should make our streets more conducive for such everyday pedestrian use, especially with an ageing population. LTA will therefore pilot an initiative to design such streets with local communities.  They will be called ‘Friendly Streets’, which I think aptly captures the spirit and intent of this effort.  SMS Khor will elaborate on this.

42.    Second, where at-grade road crossings are not possible, we will incorporate lifts in all new pedestrian overhead bridges built by government agencies, where suitable and cost-effective.  In tandem, we are pressing on with our works to retrofit lifts at existing pedestrian overhead bridges.  SMS Khor will share more on our plans.  

43.    And third, in addition to pedestrians, we will also place greater emphasis on the needs of those who use active modes of transport, such as cycling.  They can expect more intra-town paths that will aid first and last-mile connectivity to the major transportation nodes and key amenities.  For longer commutes, we are exploring cycling trunk routes to connect cyclists to more places.  SPS Baey Yam Keng will give more details.

44.    Fourth, we will also look at ways to expand the range of choices in the transport system to meet needs that may currently be underserved. And in this regard, I am happy to share with members that the Government accepts the Active Mobility Advisory Panel’s recommendations on the rules and guidelines for cargo bicycles, tricycles and recumbents.  SPS Baey will elaborate further.

Conclusion

45.    Mr Chairman, three years ago, we were confronted by a crisis, unprecedented and unimaginable for this generation.  Today, steeled by the experience of the pandemic and having emerged stronger, we are building for the future with optimism and confidence, to drive the next bound of growth across our air, sea and land transport sectors.  Even as the challenges and resource constraints become more complex, I would like to conclude by assuring Members that the Ministry of Transport and our stakeholders and partners remain resolutely committed in our endeavour to build a resilient, sustainable and inclusive transport system for all Singaporeans.  

46.    Thank you.