THE INSIDE MAN

Cheap fares for the poor

Cheap fares for the poor image

Text: Tito F. Hermoso / Photos: MRT-3 | posted May 04, 2015 15:42

Subsidizing transport

They'll always be with us

The Poor. Everyone talks about them. Politicians, NGOs, the Left, consumer groups, civil rights groups, religious groups – all claim to speak for them and claim to only have their best interests at heart. Take the case of price rises, any price rises. Power. Mobile and internet fees. Fuel. Tolls. Water utilities. Transport fares. Whenever the laws of economics and mathematics demand a price rise, protests against it are as sure as any knee jerk. Then comes the demand for a raise in salaries and tax exemptions.

Instant replay

Its almost become predictable national theatre; the threats of those who claim to represent the poor, confrontation, name-calling and rash judgement on national media, posturing and assorted accusations of villainy and greed. And so it has been for the train fares, a rise that is even below what is needed to economically keep the trains safe for daily public ridership.

Which poor?

But are the poor really hurt by these fare increases? Common sense and truth be told, to be poor is to presume no steady income and if there is any income, it is absolutely inadequate. Common sense is proven by the daily life of the genuinely poor; they don't have the money to afford daily commute fare. Hence, they take their chances and push their luck for some impromptu income in the immediate vicinity where they live, usually informal settler's colonies in the heart of the city. So it wouldn't matter to them if train fares are 15 or 30 or 50 Pesos per ride. They don't even earn a fraction of it to afford it. So it stands to reason that cheap train fares do not help the poor as the poor don't even come close to affording, much less needing daily train rides to work. All the more can they not afford the highway robbery fares of unregulated tricycles and pedicabs.

The real beneficiaries

So who takes the train? The same socio-economic class that can't afford private transport and are highly dependent on public transportation. Moreover, they are dependent on safe, convenient, comfortable and reliable transport on a daily basis, simply because they have a job to go to, daily. This is the working class and the studying class, and though not extremely poor, they are still scraping the bottom of the barrel, barely able to live a decent existence. Still, they are the backbone of the economy as they are the tax-withheld income earning class.

Still deserving

So they are not the poorest of the poor but any fare increase is a big dent in their daily budget. Next question: Do they deserve a subsidy? Why not, as all ruling classes would want to give every hard working stiff a chance and a leg up to a better life. So who will pay for this subsidy? It cannot be the private sector, whose funding is also from the same working and income tax withheld classes. If the private sector did such a subsidy, it should be ready for its collapse, resulting in job losses and income termination. Government? They can print money, sure, but it still has to find a way to source the funds that backs up the printed money.

Who subsidizes who?

It has been said that subsidized cheap train fares for Metro Manila means that the most of the portion of the subsidy comes from the national coffers. Which means taxes paid by all the citizens of the Republic, across all 7,000 islands. But the Metro trains only serve the slightly above poor citizens of the Metro. Think: taxes from 100 million or so countrymen are paying for a big portion of the daily train fare that transports 1 to 1.5million regular Metro riders a day. Easily, 90 million plus citizens do not benefit from this train fare subsidy for Metro riders.

Piecemeal vs. holistic

Hence the conundrum: how much is government willing to lean to in the trade-off of subsidized cheap train fares vs. safe, convenient and reliable mass transit. Never mind if non-users foot most of the bill. Whether the pundits and the public trust the government or not, the numbers show that train fares that are too cheap sacrifices safety, convenience and reliability of mass transit. Fares should be set to afford day to day operation. But this is to treat the problem piecemeal.

Subsidy choice

To justify a subsidy for the poor, one must look beyond train fares and consider the fare price vs. service quality of all modes of transport – tricycle, pedicab, taxi, UV express, bus, PUJ. This way, the commuter, rich or poor, has a complete range of choices which should be priced, for the kind, speed and comfort one needs or desires.

Regulate, then subsidize?

Government has to make a choice to either regulate all forms of public transport or not at all. As it is, tricycles and pedicabs are free to charge an arm and a leg depending on their mood, the weather and the time of night. And to think only a half-man or orangutan can fit in their stainless steel capsule-cab. The same capsule cab that they pack with a 4-pax family and charge per person. By this account, the super-sized Jeepneys are relatively cheap. But like the tricycles, they are not provided for with proper terminals so they become a cause of congestion themselves. Matters are made worse by their operators' desire to pack them in so that the 40-pax mongrel Jeepneys have become as unwieldy as a mini-bus. Buses? If you can risk their random cut-throat flying style. Sure they are regulated; just watch them have a hard time demanding a fare increase. But the problem lies in that their drivers are not regulated and in some cases, the passenger capacities are just too cramped for the size of the bus.

Regulate first, subsidize next

The ideal that the DoTC should pursue is this: that all kinds of for hire public transportation are priced for the suitable service they proffer to the buyer. Quickie short trip in the village? E-trike. Going a couple of blocks away? E-Jeepney. City to city or 'burbs to CBD? BRT [Bus Rapid transit] and MTR [Mass Transit Railway]. Have an important date and have to look clean and impressive? Taxi. And of course, these modes of transport should pay for themselves without subsidy. But to the jobless, homeless, rock bottom poor, all this means nothing. So every time you hear a politician, street-activist, bleeding heart liberal etc. claim to be speaking for the poor, look further and deeper; they may not really know which poor they are speaking for. Never mind if they really don't know what makes life for the poor, poor. Train fares? By all means subsidize them. Whether or not they are taking away from or sharing the burden with the scrapping-the-bottom-poor to give to the not so poor. It begins by making an inventory of all forms of public transport and build a price-to- commuter-benefit matrix. For everyone, and not just the poor's sake, regulate all forms of public transport before you subsidize. Not just trains and jeepneys, tricycles and pedicabs too.

Regulate the regulator

Lastly, there should be responsible monitoring government departments who will check on the abuses of government agencies that regulate the contracted private sector transport provider. We've seen it before as some officials of TRB, MWSS, LTO, DoTC and others, refuse to abide by contracts and even court decisions when fare/toll/charges have to rise. If such officials hold sway, you can kiss good bye any meaningful participation and efficient operation of public utilities by the private sector investors. Like all deals, win-win-win [government, private contractor, commuting public] is the best and only scenario.