Zero-growth car policy will result in tens of thousands of households without a car

Traffic on the Pan Island Expressway (PIE) near the Toa Payoh exit.

From next February, motorists will have to contend with zero-growth allowance in the vehicle quota system. The move to lower the allowable annual growth rate from 0.25 percent currently to zero reversed what former Transport Minister Lui Tuck Yew had previously pronounced.

Mr Lui had indicated that a small, controlled growth was necessary to meet the car-owning aspirations of Singaporeans. Well, that was before the “car-lite” slogan became a mantra among policymakers.

What does zero growth mean? At first glance, it does not look like much. After all, the current growth rate is already 0.25 percent (down from as high as 3 percent during the first half of the 27-year-old vehicle quota system).

But it is actually a big deal. And not just from the ideological perspective which Mr Lui alluded to. Zero growth will in fact shrink the car population more than it has already been shrinking.

Even at 0.25 percent, the car population has been contracting. From the peak of 607,292 cars in 2013, the population has fallen by 10.4 percent or 63,301 to 543,991 (as at September this year) – the lowest since 2008.

Why the shrinkage? Simply because there is a three-month lag between the time a car is deregistered and its certificate of entitlement (COE) is recycled back into the system.

In the past, the growth rates were large enough to mask this lag. But at 0.25 per cent, it is no longer able to do this. The clawback of some 17,600 oversupplied COEs five years ago contributed to the shrinkage, but it does not account for the population contraction of 63,301 cars.

Zero growth will accelerate car “depopulation” – a term Transport Minister Khaw Boon Wan used in Parliament in March this year.

How big an impact is a population contraction of 63,301? Well, in a simplified way, it means some 63,000 households which had cars before no longer have them today (assuming one car per household). That’s about 5 percent of households.

With zero growth, my own conservative estimate is that more than 100,000 families who had a car in 2013 will no longer have one by 2023. And if one household has four people, we are talking about more than 400,000 people losing access to private transportation.

That will no doubt fuel the Government’s ambition to have more people take public transport. At a conservative 2.5 trips a person, the 400,000 “car-less” people will contribute to more than one million additional trips on buses and trains a day.

Hopefully, the public transport infrastructure can cope with the influx.

But what will it mean for those with car-owning aspirations? Alas, they will have to come to terms with the fact that no more than 30 percent of households will have a car in the near future – down from about 40 per cent today.

With Singapore’s resident population continuing to grow, the near-term car ownership figure could be nearer 25 percent, and in the long term, 20 percent.

So, those who want to own a car by say, 2030, will have to be the top 20 percent earners. That will be the new reality, if policymakers continue their “car-lite” push.

The Government, of course, says this is necessary, given that land is scarce in Singapore, and roads already take up 12 percent of surface space today.

Without a doubt, Singapore cannot be a city for cars. But can it be viable with such a hard anti-car policy? Will this policy lead to a brain drain as young and upwardly mobile people look elsewhere to start a family? Will foreign investors be put off by say, $200,000 for a COE (almost a certainty if only a small fraction of the population can own cars).

The Government is of the view that people need not own a car to have access to a car. It seems to think the explosive growth in private-hire car services and the looming emergence of autonomous cars will see to this.

When Mr Khaw used the “depopulation” term in March, he indicated as much. “There will be less need to own cars,” he proclaimed. “It is about a lifestyle change, a mindset shift, and improving the quality of life for all.”

He also said: “New technology, disruptive business models and commuters’ demand for higher levels of service are transforming the way we move about. History is truly in the making. Where these will lead us, we cannot be sure. But it sure is exciting.”

Clearly, change is upon us. But whether it will be “exciting” or “terrifying” remains to be seen.