Philippines: Why we ought to derail MRT/LRT fare increase
Share this on

Philippines: Why we ought to derail MRT/LRT fare increase

Manila_MRT3-349x262

LRT/MRT fare hikes loom in Manila. Photo from Wikimedia.

The proposed increases in commuter fares for the MRT and LRT mass transit lines are not being discussed as widely as their expected impact on workers and professionals working and living in Manila and its suburbs.

The citizens of Manila seem to have been lulled into calmly accepting the questionable fare hike. But thanks to activist organizations such as Bayan, we could get alternative and critical views on the MRT/LRT fare hikes.

If in most parts of the world, governments shield their citizens from price and rate hikes as much as possible because of the economic crisis gripping most economies, the Philippines, under the government of Benigno Aquino III, is presiding over wholesale upward “adjustments” in prices and rates, all at the beck and call of corporations and banks and without regard to the plight of public, especially those who have limited means and who could only dream of buying a Porsche.

Bayan’s secretary-general Renato Reyes Jr. outlined five reasons why the public should derail the fare hikes:

  1. There is no need for a fare hike. The present fares can already cover the cost of operation and maintenance of the LRT and MRT. The additional fares government wants to implement are only meant to increase the direct burden of commuters in paying the creditors. The DOTC said that the rule of thumb for big infrastructure projects like the LRT/MRT is that debt accounts for 85 percent of the cost. This is the obligation of the National Government and not the commuters, who as taxpayers are already servicing such debts. The MRT debts, in particular, have been also proven to be onerous. It is thus a double injustice for the commuters to pay more to service these debts when the just thing to do for government is to seek remedies including the possible renegotiation of the terms with creditors.
  2. The fare hike is anti-poor. According to the Mega Manila Public Transport Study of 2007, almost 68 percent of regular LRT/MRT commuters earn just less than P 10,000 a month. Such income is just within the range of the minimum wage rates in Metro Manila. Forty-five percent of the commuters earn below the minimum wage. The new fares will cost a minimum wage earner who is a regular LRT/MRT user as much as 16 percent of his income. Put in the context of increasing fares in alternative modes of transportation, prices of food and other basic goods, etc. – not to mention the chronic job scarcity – the LRT/MRT fare hike is unconscionable.
  3. Public infrastructure is not business. Government should not consider as losses the subsidies it provides to LRT/MRT users. Instead, these must be deemed as public investment that will provide the economy and its human resources new or additional capacity. The viability of public infrastructures is measured not in narrow financial terms but in terms of net social and economic gains. Besides, the losses stem not from commuters paying less than the operation and maintenance costs of the LRT/MRT. The losses are the results of burdensome contractual and loan obligations that previous governments inked with the private sector.
  4. There are other ways to ease fiscal pressure. We recognize that there is an urgent need to address the fiscal woes of government. But this should not be at the expense of the already hard-pressed masses. Instead, government must negotiate with creditors to find ways on how to lessen the debt burden. Government must seriously look into the many projects funded by onerous debts and were bloated by corruption. Further, creative ways to improve the non-rail revenues of the LRT/MRT, which at present is only less than 3 percent of the total, should be pursued and maximized.
  5. Fare hike is first step to privatization. Government admits that the long-term plan for LRT/MRT is privatization. Thus, the fare hike can also be seen as a scheme to entice potential investors and showcase the profitability of the rail system. But we already have around three decades of experience under privatization that includes water and power utilities. Since last year, we have seen how insecure we remain in our energy and water needs despite the manifold increases in user fees under privatization. The fiscal crisis, which privatization was supposed to help address, has not only lingered but even worsened. The same predicament is true in many countries around the world where corporations have taken over public utilities and infrastructures

Fellow activist Arnold Padilla also wrote a separate piece demolishing pro-fare hike arguments centered on the financial viability of the MRT/LRT and the payment of debts related to them.

[W]hy is the issue of debt important? Isn’t it reasonable for the commuters to shoulder the cost of building the infrastructure which was funded by foreign debt?

In the case of the MRT, the original proponents were private corporations that formed a consortium – the Metro Rail Transit Corp. (MRTC). I have already pointed out how these investors made a killing on the MRT due to their interlocking interests with the foreign and local banks that financed the project. They also borrowed in near commercial rates, which a DOTC official I spoke to said could have been avoided if the government was the proponent since it can avail of soft loans. Payments for these onerous debts are being shouldered by the commuters and taxpayers.

The issue of debt also disproves the claim of the Aquino administration that there is a need for a fare hike because government is losing money. Such claim misleads the people into believing that MRT/LRT commuters pay below the actual cost of operating and maintaining the rail systems. As I showed earlier, they are paying even more than the cost of operation and maintenance. Government is losing money due to onerous contractual and debt obligations.

Furthermore, it is not unusual for state agencies managing public infrastructure like the Light Rail Transit Authority (LRTA), which operates LRT 1 and 2, to be in the red because their performance is measured not in narrow financial terms but through the net social and economic benefits they bring. The new capability that results from public infrastructure such as improved mobility of the economy’s workforce, for instance, far outweighs what government deems as its “losses”. These losses are actually not losses in the business sense but public investment that go into achieving economic efficiency and improving the overall living condition of the people.

By placing additional burden on commuters to settle the debts of the MRT/LRT, government is abandoning its obligation to provide the infrastructure needs of the people and the economy. The Aquino administration tries to conceal this dereliction of duty by peddling the twisted logic that it is unfair for Mindanao taxpayers to subsidize the MRT/LRT users in Metro Manila.

Whether the public, including the professionals and intellectuals, would launch into a first quarter storm of protests against the questionable price and fare hikes starting with a reexamination of how and why the Aquino government has been increasingly anti-consumer, we do not know and we could only hope for the best.

In the meantime, I hope you, dear readers, will contribute by raising pointed questions and never give up the cause of providing economic relief especially to those who have limited means in life.