A Levels Essay

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Answer ALL questions.

Question 1

Car population and pollution

Extract 1: Road pricing makes good economic sense. But voters hate it

Britain’s sclerotic roads learned that the recent global financial catastrophe had slightly improved their lives: traffic volume has fallen by about 3% since the start of the recession. But the Confederation of British Industry (CBI), warned drivers that it would not last: traffic has risen remorselessly and a return to growth seems inevitable as the economy recovers. Congestion does more than irritate drivers. It makes employees and deliveries late, it snarls up modern “just-in-time” supply chains and it clogs up labour markets by making commuting difficult. The cost of all this is almost impossible to measure. But a big review of transport put the cost between £7 billion and £8 billion a year.

To fix the problem, the CBI offers a couple of ideas. First, it wants to see more flexible working, with employees staying at home or staggering their hours, spreading the traffic load over more hours in the day. Second, it wants to see more money spent on building new roads and widening existing ones. Third, it wants to encourage better use of existing roads. All these will help, but at best they merely chip at the edges of the problem. The CBI’s big idea is to match supply with demand using a system of nationwide road tolling. To economists the case for road charging is simple. The problem is not a lack of capacity, but a failure to allocate it properly. A system of charges would be fairer than the current means of paying for roads from a mixture of fuel duties and general tax revenue. For the politicians, though, road charging is lethal. The public’s first suspicion is that pricing would be just another tax, an interpretation that would seem plausible with today’s eye-watering budget deficits.

Source: The Economist, 15 March 2010
[pic]
Source: Land Transport Authority, Singapore

Extract 2: Panic over likely quota cut sends COE prices north

Premium for commercial vehicles hits 10-year high. Making a dash before a foreseeable and sizeable cut in quota size next month, bidders sent certificate of entitlement (COE) premiums higher across the board again yesterday.

Motor traders said the anticipation of a reduction in COE supply from next month was the main cause of yesterday's price spikes. The number of bids submitted rose by only 6.5 per cent to 4,753, a sign that sales in hand had not risen by much since two weeks ago. Motor traders said the premium increase in COE for cars up to 1,600cc remained modest because bidders in this segment typically have thinner margins. Rising demand from businesses on the back of an improving economy drove the commercial vehicle premium to its highest level in a decade.

Source: The Straits Times, 11 March 2010

Extract 3: COE, ERP and the question in between

It is not often that Singaporeans hear of differences in opinion within the highest ranks of Government, but there was a hint last week. Senior Minister Goh Chok Tong was at a dialogue with Marine Parade residents when he revealed an interesting divide over transport policy. He said Minister Mentor Lee Kuan Yew was in favour of making car ownership very expensive so that fewer people would own cars hence, leading to less congestion on the roads. Prime Minister Lee Hsien Loong, on the other hand, wanted more people to be able to own cars and to control congestion by applying more stringent usage measures like Electronic Road Pricing (ERP).

‘The PM believes it’s fairer if you can spread car ownership. Philosophically, the PM is right. In a practical sense, the MM is right,’ he said. ‘But then the problem is, the middle class can’t own cars, only the rich can. So the PM is right philosophically, and I think it’s the fairer approach. But then, more road congestion, and so ERP.’

It has always been a tricky balance, getting the...
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