The Race to Raise Toll

The Race to Raise Toll image

Text: Tito F. Hermoso / Photos: | posted June 29, 2010 12:58

Why raising toll, raises hell

Of toll fees, grandstanding politicos and monkeys

The old adage "If you pay peanuts, you get monkeys" has always been Gospel truth in anything economics. Just like budget airlines. "Eeeoouw!", say frequent flyers of full-service airlines. Never mind if more flyers fly budget. The same apply to roads. The "free" ones are hopelessly congested and far more unsafe, compared to private company run toll roads. Still, the price-buying majority would rather hack it out on the free road, rather than pay a toll fee for faster and safer travel. Yet, as the country grows, its road network must follow.

Why more roads?

But why do we always need new roads? The short answer is that we have a fast growing population that needs a faster growing economy in order to survive. So the government must provide these roads. But with so small a tax intake being a poor country, how can the government increase the supply of roads, especially when supply is always outstripped by growing demand? This is frequently referred to as the infrastructure gap. And the solution is to invite the private sector to build the road and give them a franchise to charge a toll fee for a period of time so they can recover their investment and maintain the road.

One more time

For example : you can't have a thriving Bicol region, if you don't fix the roads. You can't fix the roads, if you don't have money. If you don't have money, find someone who has and is willing to fix it. But you have to let them regain their investment. But you have to stop your voters from destroying the roads by instituting zoning laws.

Bypassing the bypass

Zoning laws? Its like this: notice how the DPWH has to keep building by pass roads and in some cases expressways around existing highways? This is a vicious cycle, because every time a new road is built to relieve the now-congested previous main road, squatters or locals build on the edge of the new road and start treating the road as a free extension of their private property. This naturally constricts traffic flow, as more and more imitators, stake their claim on the sides of the new road. Elected local government officials are reluctant to scold their town mates as they are always trying to secure votes for local reelection in the next 3 years. Long term planning and zoning take a back seat, making this short-termism endemic. Hence zero or no importance or expertise is given to sophisticated planning and zoning since the days of the Commonwealth. Because of this failure, what used to be limited access highway to bypass the crowded poblacions, which grew on the side of the highway, are doomed to repeat history, i. e., the new highway gets crowded necessitating the building of yet another new highway, ad nauseam.

Think national

Infrastructure is a good that benefits each and every single Filipino, not just the locals of towns that any national road provides access to. At the most, and to the cost of expanding the fiscal deficit, the DPWH is tasked with acquiring rights of way to build new by-pass roads around existing highways. If it can, it will let the private sector build the road in exchange for the right to charge a toll fee.

There's more to it

It doesn't end there. Most cities and towns self regulate the local means of public transport - jeepneys to a certain degree and tricycles to an even greater degree. And the way the municipalities and town councils regulate local public transport is myopically local, with little regard to the well being of through traffic on the national road. Off street terminals are non-existent and fares are not regulated. Congestion is taken for granted, and scant concern is given to non-local traffic passing through.

Grow up or slow down

Towns should realize that their growth and prosperity depend on interacting with other towns, provinces, in short, interacting with the rest of the nation. If the traffic in your town flows at a snail's pace, then so will its economic future. Their attitude should transcend hometown mentality. The attitude of what is good for the Poblacion only, should change to what is good for the nation is also good for the poblacion. It is vital that through passage is never hampered.

Hometown mentality

Unfortunately, our countrymen have an ingrained parochial psyche. Funeral corteges, barrio fiestas, baptisms, tricycle parking lots take precedence over the national right of unhampered passage, the raison d' etre of national roads. Squatters, a gold mine for votes on election day, are tolerated on railway, road, water and power utilities right of way. More proof of this selfish short-sightedness.

The good son

There is hope as a recent visit to Ilocos Norte demonstrated. There the respect for the road right of way is sacrosanct. Which is why the main roads are not horribly congested and that new by pass roads are not being built because Ilocanos did their zoning right, delaying the time when expressways and by pass roads become a must for town's or national highway traffic's survival.

Knee jerk NO to any increase

Its inevitable: price swings is a law of economics. We've gotten used to price swings in utilities already - fuel, power, water - but why are toll fees such a violently opposed issue? Five years ago, a 650% toll rate increase hit the NLEx's northern traveller. But it was a brand new world class road. To quiet the wagging tongues, President GMA released money to widen the MacArthur highway to provide a free alternative. Which led to more truck strength concrete being made into free parking spaces on the shoulder and disjointed drainage canals. Meantime, the more sober minded realized that the time and fuel cost savings enjoyed while paying toll on the NLEx more than made up to the cost and time penalty of driving the traffic choked MacArthur Highway. Similar protests usually greet every increase in Skyway toll rates, to which the wiser commuter points out that there is the alternative to the Skyway, and that is the Jeepney traffic locked East and West Service roads.

Citizens, to the barricades

Mob rule, masquerading as Civic action, will always have the usual suspects: grandstanding politicians hustling for more votes come reelection time, forecasts based on gut feel, hyperbole, unsubstantiated claims - the usual arsenal of rabble rousers. For the South Luzon Tollways long delayed toll fee increase, as in anywhere else that benefits from toll expressways, reason, notwithstanding justice and fairness is drowned by the wail of an angry mob. Predictions on the demise of the southern economy, made by the same vote chasing politicians, based on gut feel, are swallowed hook, line and dentures.

The alternative

So the messianic naysayers will not only create a groundswell of anger, they will also spend good money on lawyers and the Judiciary's time to stop the toll rate increases. They probably never heard of Economist John Maynard Keynes nor his warning : "there is no free lunch". Raise the toll, then bus companies will simply raise their fares, even if the smoother traffic flow on the SLTollway have already realized savings in time and fuel, fattening their bottom line. Stop the toll increase, then the same profitable bus companies can't justify raising fares. BIR's VAT tax take will suffer a haircut, but what about the poor suckers who made a world class road out of two bumpy ribbons of dissolving 30 year old asphalt?

Numbers don't lie, but so do roads

Sure, raising the toll from 7 pesos to 22 pesos from say Alabang to Southwoods is around 330%, but look at how the SLT looks and performs now compared to 2006? Compare : Seven Pesos but your life is in mortal danger. Or Twenty Two pesos but you get through faster and in one comforting piece? In fact, the tolls should have been increased long before 2006 so as to have prevented the road reaching its sorry state. Its an undeniable truth that roads never stay the same - they can only improve with investment of money or disintegrate if no money is spent to care for them.

Finger pointing again

Who destroyed the SLEx faster than the wear and tear of 250,000 vehicles a day? Overloaded trucks and reckless bus drivers - those who were the dominant and abusive road users during the bad old days of the narrow and decrepit SLEx. These trucks and buses were not only destroying the road, a vital national asset, but also wreaking havoc on their fellow countryman, the daily bus and car commuter.

Where's the new road?

Even if the only new right of way acquisition is the 8km stretch from Calamba to STAR, the SLTollway is a completely new expressway, having excavated, widened and built over the old SLEx from crumbling Alabang Viaduct to sinking bumpy Calamba. This new SLTollway, while under construction, has been used by travelers at a huge discount for over four years. The collections during those 4 years all went to the PNCC, a company at the end of its corporate life and in need of funds to be able to give it proper closure. This delayed any payback whatsoever to the investor that was creating the new SLTollway. MTD, a Malaysian company self financed the building of a new expressway without Philippine government loan or guarantee. All those questions as to MTD's legitimacy are questions that should be directed to PNCC and the Legislature's refusal to extend the PNCC's corporate life for fear of funding ancient but legitimate and huge financial claims on it.

Wither the Bicol Economy?

As to the forecast, based on the omnipotent "gut feel", that the Bicol Region economy will dive because of the 250% toll rate increase, well, its at best rhetorical and at worse, non-sequitur. The Bicol Region economy grew because the national government tried as hard as it could to keep traffic flowing along the Maharlika highway, despite the constricted through-flow of traffic caused by failure of zoning by local governments. The sorry state of the SLEx in 2006 to 2008, already took its toll on the economy not just in the Bicol region, but also Calabarzon and the powerhouse economies of Alabang-Makati economic corridor. If MTD did not use its own funds to build a new highway, we may not have an SLEx to speak of today. Now that the SLTollway has greatly improved, it has caught up with capacity to spare for future growth, even as our local infrastructure demands are met at least one and half decades late. And its a momentum that has to sustained. If we slid back into stasis, into the mediocrity of inertia, economic growth will falter, the way the damaged old Alabang Viaduct choked truck traffic from coming into the Metro.

There's still the future

MTD's South Luzon Tollway segment called Toll Road 4 from Calamba to Lucena is already faced with scores of expensive river bridges to be built and high priced productive farm land that needs to be expropriated. The alternative is a farther longer route that will require less bridges but will be more scenic as it keeps away from thickly populated areas. The foreseeable problem for this longer but nicer route is what will the environmentalists, radical parish priests and the NPA say? Despite the harassment MTD is getting from some sectors in society and government, it is prepared to take the expressway to Lucena. Now, won't that be good for the Bicol Region economy?

Happy ending or back to square one?

If ever there is one, it should be a reprise of the NLEx experience, which is duplicated in the SCTEx and the SFEx, formerly the Tipo-Subic Expressway. There, toll rates have been accepted and at one time, even went down. World Class policing and maintenance is taken for granted. Government is happy that this works as the franchise the expressway operators pay to it helps decrease its fiscal deficit. This happy on going story is proof that privately funded toll roads are a way the country can catch up with inadequate government funding to build and maintain roads it needs to catch up with demand. But to make this work as a business, any investor in road building must be allowed sufficient time and toll fees to recover their investment and operations costs.

If the lawyer employing naysayers succeed in blocking any toll rate increase, the burden of making up for the lost payback to the new toll road operators will fall on the national government, who will have to make up the deficit from the correct toll charges. Hence another increase in the huge government fiscal deficit. Which brings us back as to why our country lags in infrastructure investment in the first place.