Subsidies

Of course, commuters oppose the MRT/LRT fare hikes imposed last Sunday. That is populist instinct.

It is not so much that the fare adjustments are unjust. It is more that they are untimely. Commuters are now charged more for use of a system that saw so much degradation the past four years. Commuters are now asked to pay more for a scandalously devalued service.

The light rail system we have was not designed to be pleasing to commuters in the first place. The concrete monstrosities we call “stations” are dark, unpainted boxes. The stairs leading to them are cramped. To transfer from one line to another, commuters must walk through cramped crevices, reduced to rats navigating an inhospitable maze.

There are no places to sit while waiting for trains. When the trains do come, there is no place to sit in them as well, with passengers packed like sardines. It is never a certainty the journey will be completed: the MRT suffered its first breakdown in the new year.

When the lines are long, there is never enough space for the queues to form. People stand on the street, exposed to the elements. The areas around the stations are always dirty. The exterior is always as dark as the interior, colored by grime.

Aesthetics was the first casualty when the light rail system was built. Commuter convenience seemed never to have been a consideration from the start. The mass transport seems intended to treat the masses rudely.

Taking the trains is never a pleasant experience. People endure the trial by ordeal day in and day out only because every other option is worse. The rail system is a monument to how badly our government has treated its people.

It is always a hard decision for me whether to take the trains or take my car. When I take the trains, I end up mangled. When I take the car, I sit in traffic and endure constables out to mulct.

I would be happy to take the trains all the time if the system was kinder to those who patronize it. Now it is not only unkind, it is also costly. Now I feel that whether I ride the trains or drive down eternally cursed Edsa, I will be robbed anyway.

It is never easy to compute how much subsidies mass transport services deserve to get. The P45 per ride per passenger seems high, even as the service is despicable.

The DOTC under Roxas and then Abaya never saw the urgency of adding to the rolling stock or upgrading the system to benefit commuters. This is why paying higher fares feels painful.

Besides, we are not presented with a plan to use additional revenues to improve services. To this day, all Abaya wants to do is to buy out the GFIs who hold the MRT bonds rather than use whatever money his agency might have to upgrade the system, improving not only passenger comfort but, more basic, passenger safety.

Over in Indonesia, the freshly elected government of Joko Widodo opens the year boldly withdrawing hefty subsidies for gasoline. The amount realized from withdrawing those subsidies, the Indonesian government announced, will be used entirely to improve infra.

Since the withdrawn subsidies will resurface in better infra, few Indonesians have complained. Besides, the withdrawal of subsidies happens at a time when fuel prices are collapsing. On the day the subsidies are withdrawn, Indonesians will still be paying less for fuel.  

This is such a great lesson on the importance of timing in making policy corrections.

Subsidizing fuel is such a wrong thing to do. The subsidies are badly targeted and always result in the rich getting a larger share of the subsidies because they consume more fuel. We know very well how that works, having once indirectly subsidized fuel costs under a regulated oil industry through the Oil Price Stabilization Fund.

The massive amounts spent subsidizing fuel during the period of industry regulation aggravated our debt problems. Subsidized fuel also sent the wrong market signal to consumers, encouraging imprudent consumption of the commodity.

Deregulating the oil industry was one of the best policy reforms our government did, although that required a politically costly battle with populist groups protesting the move. It took time for the populists to understand that the regulated oil industry benefitted the giant oil companies because they were guaranteed returns without having to be efficient in an environment of competition.

Deregulating the oil industry was a political battle worth waging. I am not sure the same can be said about reducing subsidies for commuter rail services.

In the case of the commuter rail service, withdrawal of subsidies will not result in improving the utility. The rail service will continue to rot in the absence of a comprehensive plan to rehabilitate it. In the hands of government, especially this government, indications are the rail service will continue deteriorating.

It might have been better if government took the dramatic step, after all the deterioration has happened, to completely privatize the commuter rail system. This should have opened the door to massive investments in rebuilding the service, producing a commuter rail system more responsive to its customers.

Government would have earned much more from the sale, overshadowing the marginal amounts it saves from merely reducing subsidies. The fares to be charged will be a commercial question and not the political one it now threatens to become. 

It is unimaginable, however, for this current administration to have chosen a dramatic step in solving this city’s transportation woes. Such would have called for an imaginative policy charge this administration had shown very little capacity for.