Impact of Higher ERP Rates on Traffic Volumes

Mr Leon Perera asked the Minister for Transport (a) what is the rationale for increasing ERP charges in May and June; (b) what is the impact of these higher ERP charges in terms of traffic congestion; (c) what is the effect of the higher ERP charges on the Consumer Price Index (CPI); and (d) whether any further increases to ERP charges this year can be halted in view of high petrol prices and general inflation.

The Electronic Road Pricing (ERP) system is a congestion management tool, to reduce time and productivity losses from traffic congestion by encouraging motorists to plan their routes and travel times. The Land Transport Authority (LTA) regularly reviews ERP rates based on observed traffic speeds on ERP-priced roads. ERP rates are increased when traffic speeds fall below optimal levels, and decreased when they are above optimal levels.

The adjustments of ERP rates in May were part of this regular exercise. At the same time, LTA also announced the temporary reduction in ERP rates for the June school holidays and their restoration at the end of the holidays. This is done as part of LTA’s twice-yearly school holiday reviews in June and December when rates are temporarily reduced, given that congestion typically eases in some timeslots and locations during the school holidays.

ERP was suspended across all gantries and time slots in March 2020 during the circuit breaker. From July 2020, LTA has gradually introduced ERP charges, which currently apply at a total of 35 timeslots across nine locations. For comparison, prior to the COVID-19 pandemic, ERP was chargeable at 173 timeslots across 29 locations. With all workers now allowed to return to the workplace as per pre-COVID-19 norms, more traffic congestion is to be expected. LTA will thus continue to monitor traffic speeds and adjust ERP rates accordingly to target traffic congestion.

Halting ERP increases will lead to heavy congestion and inadvertently increase costs. As an example, logistics drivers will have to spend more time on the road, which raises not only their fuel costs but also shipping and delivery costs, and consumers may ultimately bear such costs indirectly. Separately, to cushion the impact of higher prices, the Government had rolled out a comprehensive package of measures in Budget 2022; brought forward the disbursements for several schemes in April 2022; and most recently, the Government had announced a $1.5 billion support package to provide immediate and targeted relief, especially to lower-income and vulnerable groups. The package includes a one-off relief of $150 for eligible taxi and private hire car drivers, and up to $300 under the NTUC Freelancers and Self-Employed Unit Relief.