'If you wait till everybody owns a car, everybody will vote against road-pricing policy'
Walter Theseira, of the Singapore University of Social Science, says if congestion charges are adequate, driving a car will be a choice rather than a necessity.
On September 27, Bengaluru residents were caught in a traffic gridlock described as “unprecedented” by the city authorities. However, traffic snarls in Karnataka’s capital are nothing new, and worried about the impact of a mobility crisis on the growth potential of India’s tech hub, the state planning department, and the Federation of Indian Chambers of Commerce and Industry recently recommended a congestion tax for non-exempt (private) vehicles entering the city. Delhi, another Indian city that desperately needs to resuscitate its choked streets, proposed to look at the feasibility of congestion pricing five years ago, but has dithered since.
Road pricing requires finding political will, public support, and a lot of backend preparations and investments. Shivani Singh spoke with Walter Theseira, associate professor of economics at the Singapore University of Social Science, who has researched the city-state’s vehicle quota auctions — a car ownership control scheme — to understand the dynamics and complexities of the congestion charge, and what motivated the island country to enforce it as far back as 1975. Edited excerpts:
48 years ago, Singapore was the first in the world to enforce a congestion charge. What were the compulsions that made it restrict car use so early on?
In the 1970s, Singapore went through rapid economic growth. People got rich and started buying cars, and traffic congestion increased in the downtown area. So, the motivation for starting the area licencing scheme (drivers had to display a pre-purchased licence on windshield) was that you pay a fee to use roads downtown or in the central business district. In fact, when the scheme was first introduced, the traffic dropped by more than what was expected or desired. Perhaps the fees were a bit higher than they should have been. But because traffic was reduced significantly, the authorities decided just to stay with the scheme.
Why did Singapore still feel the need to control car ownership and introduce the Certificate of Entitlement (CoE) scheme in 1990?
If you keep the fees at a certain level, it doesn’t hurt people as much because their incomes increase over time. So, despite road pricing, people could afford to buy cars and drive more.
Throughout the 1970s and the 1980s, the government was trying to keep the car numbers under control by charging people a very high tax on car registration. But it soon realised this was not good enough. When the economy does really well, people just buy cars even if the government taxes these cars heavily.
The idea behind the earlier car management policy was that the number of cars should not exceed the growth of the road network. The only way to have perfect control over that was to limit the maximum number of car licences. That was the beginning of the vehicle quota policy fixed by the government. (Based on this quota limit, certificates of entitlement, or the licence to own a car, are auctioned off to people.)
Singapore being an island state can’t go beyond its physical limits to build more roads. Was this a big consideration in introducing demand-side management policies?
Going back to independence (in 1965), and even shortly before that, when the master planning was being done, a UN commission was invited to advise Singapore on these matters. There was recognition that it would not be feasible for Singapore to be developed along the lines where everybody felt that they could own a private motor vehicle. The mainstay of commuting and transport, because of the lack of space for roads and so on, would be public transport.
Being an island state, the minus is that we don’t have space for building roads indefinitely. The plus is that we have very good control over the vehicles that come in to use our roads and car parks. This is actually a major problem for cities across the world because they control only the area within their limits, and not the areas around. So they have great difficulty stopping people who live outside their jurisdiction from buying cars and then driving them in. But in Singapore, we have perfect control over this.
Are rules and regulations easy to enforce in Singapore because of its governance structure and the political system that gives the government a lot of controlling power?
It’s true that there is not a lot of organised political opposition, not the same way, let’s say, India or European countries would have. But it doesn’t mean that the government is able to ignore political concerns when they enact policies. Every single policy change in transport has been accompanied by the government’s efforts to bring it in a politically acceptable way. When the area licensing scheme was introduced, it was necessary for the government to put a lot of money into special bus services. The government promised to lower purchase-related taxes on vehicles, so as to moderate the impact of the COE policy on vehicle purchases, and to assure the public that the intent of the policy was not to raise revenue. The context is that before the COE policy, the government had been using high purchase taxes to attempt to moderate car growth, but this was difficult to fine-tune. Even today, given that cars are very expensive in Singapore due to the quota being more or less frozen, the government is heavily subsidising public transport.
Also, Singaporeans are actually quite happy to vote against the government based on their happiness with the car policy. One of the major political complaints that people have is about the high cost of cars. That being said, Singaporeans also have experience travelling to other cities where there is no car control policy and they can see that it’s not a bad trade-off to have expensive cars but fairly low traffic congestion compared to say Kuala Lumpur or Jakarta, where they have cheap cars but motorists spend huge amounts of time in traffic every day.
From sticker-based area licencing to electronic road pricing, Singapore’s congestion charge enforcement has seen upgrades. So what is next?
The next technology, which is being tried out and contracts have already been issued, is satellite-based charging (of congestion fee). This is already widely used in many countries, mostly in Europe, for long-distance tolling and heavy goods vehicles. However, in our trials for the satellite-based system (in an urban environment), we discovered that GPS signals are not accurately received in an urban environment because of reflections or attenuations from tall buildings. We are now supplementing this system with ground stations to ensure that the signal is accurately received.
The advantage of this system is that it allows much more flexibility in setting up new congestion charging zones. Today, when you set up one, you have to put physical infrastructure on the road. That is time-consuming. But with a satellite-based system, especially if you are establishing a charging zone outside the downtown area, you could just turn it on instantly because you don’t have to worry about signal issues. It also opens up the possibility of charging all vehicles based on the distance they travel over a given period.
This could be an alternative to the fuel tax or the annual road tax because these taxes collect less from more efficient vehicles and nothing from electric vehicles so a distance-based charge may be necessary for many countries as the vehicle fleet electrifies. Satellite-based road pricing can be one way of facilitating this type of distance-based tax.
Levying congestion tax requires advanced technology, expensive infrastructure and enforcement. So far, only cities in the developed countries have introduced it. Do you think cities in the developing world are equipped to experiment with congestion pricing?
The good thing is that many of the technologies used now are fairly mature. In fact, they are being installed routinely as part of general traffic management systems in many cities worldwide. The best example of this is the automatic number plate recognition system. This would have been a fairly expensive technology 20 or 30 years ago, but today, due to advances in computer vision, many of the standard traffic camera systems, which are installed everywhere, including in many developing countries, would be capable of automatically resolving this. So (road pricing) doesn’t actually create additional costs.
The real problem, however, is enforcement. You can certainly have a system that shows that a car has passed through the barrier or the road. But if (its driver) doesn’t want to pay, can you make them pay? Enforcement for traffic issues tends to be bad in many countries… but this is something that will have to be dealt with when it comes to it. In many places, authorities don’t allow people to renew their car registration unless they have paid the outstanding fines. So it (congestion pricing) is no different than enforcing parking fines.
London and Stockholm have enforced congestion tax, while New York City is proposing to start it by next year. How do their models compare with the one in Singapore?
Often the case for many of these congestion charges such as in London, is that you pay (flat charge) for entering the (congestion) zone or driving on a certain road during a particular time of pay. In Singapore, the charges differ depending on the time as well as the place. The policy is to have traffic inside the congestion charging area flowing at the maximum rate possible... There is a speed target -- about 20 to 30 km per hour in CBD, and about 50 to 60 km an hour on the expressway. The logic is that when you've got heavy traffic, this target ensures that the maximum number of vehicles per hour can pass through the node. We calibrate -- if traffic speeds fall below the target, we raise the price. Conversely, if traffic is going faster than the target, we lower the price.
Congestion prices change basically every quarter by a small amount depending on local traffic congestion and the conditions around the charging areas.
It's much more dynamic than London. They've only changed the price two or three times since they started (congestion pricing).
Recently, Bengaluru received a recommendation to enforce congestion pricing. In the past, Delhi thought about it but soon dropped the idea. Do you think Indian cities are ready to enforce congestion pricing?
Because of economic growth, people are getting rich enough to start thinking about buying cars. But at the same time, India is not yet at the stage where everybody owns a car, which would be the situation European cities have. So this is a good time to think about these (road pricing) policies because if you wait until the point where everybody owns a car, everybody will vote against your policy (of imposing congestion tax.)
India is at the stage where many of its stakeholders are not directly hurt because they can’t yet afford the car and they would benefit from a good congestion charging policy that instead improves the road conditions for non-car owners. So if they’re taking a bus, (revenue generated from the) charge will be used to improve access for buses and other public transport.
But it also means that if you implement the congestion charging policy, it has to come with tangible benefits for those who don’t own cars. If they feel that public transport isn’t getting any better, they would want to earn more and buy a car.
Should improvements in public transport come before congestion tax?
You can’t just have a demand (management) policy without also looking at supply. The cities that have implemented congestion charges have recognised that they would have to overcome a lot of unhappiness and discontent. And the most effective way of doing that is to get the people who don’t own cars on your side. But if you want to have them on your side, you need to show that the policy will help improve public transport for them. But then, you also need to put the money there.
Instead of a complex congestion charge, can Indian cities use variable parking fees to reduce car use?
Parking is actually too cheap in many places and motorists often are not being asked to pay parking charges that are commensurate with the value of the land that their cars take up. There may be political constraints that prevent (authorities) from charging the appropriate amounts. Even if you don’t have congestion prices, you should rationalise the parking charges. Not just increase the parking fees but also consider whether you want to take back parking spaces and use them for pedestrian paths. It’s not an alternative to congestion charging but should be done in addition to or maybe before the congestion tax (is enforced).
An argument against congestion pricing is that it favours the rich who can afford to pay a higher charge to get into a congestion zone, because being in the car is a matter of comfort they won’t give up, no matter how costly it gets. But the middle and lower-income people get priced out.
It’s a valid concern. In Singapore, it is mostly the higher-income people who buy cars and drive them because of CoE, congestion charges, and other costs. From the broader societal perspective, the lower and middle-income folks are the ones who will probably have difficulty affording even a modest car. But to have a good quality of life in the city, they are the ones who will need good public transport (which is affordable). If we get the rich to pay congestion charges and other costs of driving a car, we can use that money to subsidise and improve public transport that would cater for everybody else.
If your congestion charges are adequate and public transport improves efficiently, people will see driving a car as a choice rather than a necessity. But if public transport is really bad, then people will look to earn enough money to buy a car. But ideally, if public transport is good enough, they will accept that the rich choose to buy a car, they’re paying high taxes, so that’s fine.
But a lot depends on the local context. In some cities, you only have congestion charges in the Central district, and it’s still relatively affordable for people to buy and use a car outside the congestion zone. But if congestion charges are levied everywhere in the city, the middle class is likely to feel that they have to pay high taxes to get (even) a basic quality of life.