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Are motorists subsidised?

By SGCM_editorial on 17 May 2014 in Discussions

Attached Image Juxtapose a recent proposal to keep public transport fares affordable for lower-income groups with the perennial complaint about high car prices (higher for some now), and you have a veritable class divide.
Our bus and train fares are among the lowest in the developed world, based purely on distance covered. But when it comes to service quality standards such as network comprehensiveness, waiting time and reliability, the comparison becomes murkier. Alright, let’s not mince words: The standards available to public transport commuters here are not up to mark.
On the other hand, motorists journey in “Business Class” here. There are roads to every nook and corner of the island, the tarmac is well maintained (except for the occasional sinkhole) and well-lit, traffic is relatively free-flowing, there is ample parking, and drivers are often able to drive faster than stipulated by regulation.
Attached Image You may say motorists travel “Business Class” because they pay “Business Class” fares – mainly in the form of high car prices. Well, let me be provocative here, and assert that Singapore car owners aren’t paying full fare. That is, their travel is being subsidised. Firstly, let’s look at infrastructure, and compare the two costliest and most current new projects – the Marina Coastal Expressway (MCE) and the MRT Downtown Line (DTL). The 5km, 10-lane MCE costs $4.72 billion, or $944 million per kilometre, to build. When it opens later this year, it will take up to 10,000 vehicles per hour each direction. Assuming there are two people in each car (it’s often one), and assuming bi-directional volumes are the same (they often aren’t), you will get 40,000 “rides” per hour.
On its part, the 42km DTL costs $20.7 billion, or $493 million per kilometre to build. When fully operational by 2017, it will cater to 500,000 passenger rides per day – or close to 42,000 rides per hour (based on 12-hour train operations).
So you see, the MCE not only costs almost twice as much as the DTL per kilometre, it also carries fewer people. And as part of an underground, undersea link between the Kallang-Paya Lebar and Ayer Rajah expressways, it is unlikely to be used by public buses – which means it is almost exclusively the territory of private transport users.
A 2005 study funded by the European Commission, titled “Hidden Subsidies for Urban Car Transportation – Public Funds for Private Transport”, found that government expenditure for private transport almost always outstrips car-related revenue. It found that said expenditure is mostly associated with road building and maintenance – not only of the roads themselves, but the green spaces alongside them, too.
Attached Image In Singapore, the annual cost of road maintenance is about $100 million, or about $100 per vehicle. This is relatively low – until you factor in the cost of real estate (something Singaporeans can all relate to pretty well). Roads take up 12 per cent of our land, which works out to about 86 sq km, or 926 million sq ft. Based on, say, $3,600 psf (recent freehold commercial plot transactions), the road space will cost $3.33 trillion, or $3.3 million per road user here.
Of course, this illustration is a tad facetious, because we cannot do without roads altogether. But if you were to imagine a rail network in place of a road network, the cost equation would be completely different.
Rail lines can be largely underground, and high-density developments can be built above them. There will be no pollution and no accidents, either.
Which brings me to the next cost element that motorists do not bear fully: environmental cost and the cost of accidents. In 2006, the United Nations estimated that road fatalities and injuries cost countries US$518 billion (S$641 billion) a year, accounting for one to two per cent of the gross national product. Singapore’s GNP is about $342 billion. One per cent of that works out to $3.42 billion, or $3,420 per road user per year.
Attached Image Environmental cost is harder to quantify in dollar terms, but the impact is just as tangible. A recent study by the Massachusetts Institute of Technology found that traffic emissions led to 5,000 premature deaths a year in the UK. Based on the average carbon emission of cars here and the average annual mileage clocked, each driver in Singapore produces about 3.7 tonnes of CO2 a year. So each year, the average car emits twice its own weight in carbon.
Let’s get back to monetary cost comparisons. A family of two adults and two schoolgoing children relying solely on public transport is estimated to spend $250 a month on it. But since a journey by car is about twice as speedy as that by public transport, we have to factor in the value of money. The value of money varies widely from one person to the next, so let’s make it simple and apply a conservative multiplier of two to the monthly expenditure. That makes $500.
Now, $500 is close to the monthly running cost of a COE Category A car, excluding the cost of purchase. The sunk cost of purchase will translate to around $1,000 a month, which the non-car owner gets to save for holidays or retirement. But this $1,000 more per month allows the same family to enjoy “Business Class” travel – access to a far higher level of mobility (e.g. Changi Point for breakfast, a walk by the beach afterwards, lunch and shopping in Orchard Road, and a quiet dinner at a friend’s place), and a measure of status. Not to mention the joy of driving.
And going by gut feel, $1,000 a month does not cover all the externalities mentioned earlier, nor the pleasure of driving on roads that cost nearly $1 billion per kilometre in Singapore.

This article was written by Christopher Tan, consulting editor for Torque.

subsidised, motoring, torque

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  • 1
Vinceng May 17 2014 01:22 AM
So what is the writer's agenda and message he's trying to put across?
Ezfaun May 17 2014 05:39 AM

It may seem that motorists are being subsidized in terms of general transportation from one point to another. If you factor in the cheaper erp fares that average drivers pay compared to MRT fees, they do seem to be subsidised compared to commuters on public transport. However, other than the fares drivers pay for travel, they also have to pay for other high cost necessities such as road tax, COE, parking fees and fuel, on top of the cost for the car itself. All summed up, the cost of travelling in a car costs dozens or more recently, hundreds of thousands of dollars.


All of a sudden, drivers don't look to be as subsidized now, do they?

Kangadrool May 17 2014 08:53 AM

If you want to argue, everything is also "subsidized", even if air travel on business class, be it market subsidies or not market subsidies. Just an excuse to invent more taxes to milk you.

Voodooman May 17 2014 09:01 AM
Every road in Singapore is MCE? What an idiotic comparison? What about the $70b in COE revenue collected every 10 years (800k vehicles at average premium of $70k a piece), it could build 12 MCE every 10 year or 1 MCE a year but I don't see LTA building 1 MCE a year, more like 1 every 5-10 years and we haven't even talked about other vehicle and usage charges. Whatever spending on roads, even expensive one like MCE (which is supposed to free up precious real estate for development), I am pretty sure it will pay for itself via COE, ERP, road tax, petrol tax... How can we be subsidized? It is a bloody cash cow for the government. If the article is about efficiency between public and private transport, then we don't need Christopher to write such a long article to tell us.
Furrynadz May 17 2014 09:02 AM

how much PAP pay him to write this?

Watwheels May 17 2014 10:19 AM

Like I have said before his views are pretty much biased. There's totally no mention of the car tax structure, the COE thing and ERP. Tell me what country other dan Singapore has such a high taxation structure for owning a car?

He also did not mention that public transport also has emissions. Overloading the buses gives out more smog and CO2 if you had not notice. And how many times were the bus companies fined? And how much were they fined? We all know that our electrcity comes from burning barrels of oil. Do you know how many barrels of oil are burnt to run the MRT trains? How much emission was produced in the process? If the trains are overloaded how much more electricity is needed to move the trains during peak hour?

Who can also play this kind of numbers game. I just have to say it to my advantage to get to my agenda. But one thing about Singapore is that people around you and me are not fools. They see where you are coming from and they can see right through you and your words.


Fastfive1 May 17 2014 11:29 AM

WTF! Chris Tan again. f**k off lah. All his articles are full of crap. How does one become an editor with such poorly written articles. It amazes me how anyone could possibly want to hire him.

Vhtfhwlego May 17 2014 01:33 PM
Using real estate prices to pin point cost per km but forgotten 1 fact that without roads, real estate worth nothing. Like running a warehouse fully pack, rack after rack but without aisle to load/off load cargo, do you think the warehouse can run & be profitable?
Vhtfhwlego May 17 2014 01:35 PM
Thank goodness that I never read torque because of such lousy article. I think torque will lose a lot of readership after this. Boycott torque in order to boycott Chris!
Friendstar May 17 2014 01:49 PM
I have never liked his articles. This takes the cake
Beehive3783 May 17 2014 03:30 PM

Cock talking article. Pui.

Ozkaki May 17 2014 04:07 PM

Read with an open mind. this is just another way of looking at it, though it did not the other side. perhaps he will have a part 2

Xeonic May 17 2014 10:47 PM

I don't usually comment or voice out about any article as I do enjoy the occasional articles from MCF.


But this article smack full of PAP propaganda and full of government BS. 


Roads are a key infrastructure in any country, are you sure that as consumer, motorists, we are the sole users of the roads in SG? Have you considered that in the first place, the roads are designed and built so that public transportation and commercial transportation can move from one end to another? 


Our car prices are already the world most expensive and its only going to go even higher.


In term of taxation, we are already paying close to 400% to 500% when you add all the different components that we are paying when we buy a car.


I just don't see how the word 'subsided' can be used when we are paying through our noses just buying the car. 


And let not get started on the rest of the taxation on running the car.

Turret May 18 2014 11:50 AM

If you ever takes MRT in morning to CBD for free, that is call "subsidies" for sure.


It seems that the writer has defined the term "subsidies" so loosely that I am not sure he knows what he is writing afterall or what he is trying to put the message across from his articles.

Renegade777 May 18 2014 01:28 PM

So simple yet dunno. If tell people we are paying a hundred or hundreds of thousand for a car and that is being subsdised, people sure laugh at us.

Ezfaun May 18 2014 03:02 PM

PS, author. Driving a basic piece of metal on 4 wheels should never cost an arm and a leg. But they do including the surgical and medical fees associated with said appendages in this part of the world. Instead of the government subsidizing us, it's quite obviously the other way around.

Beehive3783 May 18 2014 03:13 PM

Is that his photo in the article?

Fastfive1 May 18 2014 07:03 PM

Is that his photo in the article?


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