The economic and social blood of any city relies on the ability of its residents to be mobile, and to have easy access to work, education, and amusement. The sprawling nature of Metro Manila, combined with an extremely chaotic and inadequate public transportation system renders this easy access non-existent, as travelling, and especially commuting, is time-consuming, uncomfortable, and expensive.
The MRT and LRT rail systems, what should be the most modern and efficient components of travel in Metro Manila, are severely lacking. We are all too familiar with their problems: massive overcrowding (to the point where you are literally spooning the person next to you from line-up to exit), unsafe cars, stampede-like conditions. When an MRT car fell from the rails last year it seemed to be the inevitable catastrophe waiting to happen. Yet, the next day, myself included, millions again lined up to take the train. Perhaps we view having an extra four hours a day to spend with one’s friends and family instead of stuck in traffic as worth risking one’s life.
Thus, it is no surprise when the DOTC first floated an over 60% increase in MRT/LRT fared in 2013, it was met with severe opposition. It was seen as an attack on the citizens of Metro Manila, especially the working poor. The government backed down, only to make the announcement that it would implement the fare hike over Christmas break, when Congress was not in session and people wanted to think about enjoying the holidays with their families and optimism for 2015, not additional burdens. The fare hike is unjust and unjustified, for the following reasons:
1. No improvements in service
In a statement, DOTC Sec. Abaya said that commuters could expect service improvements in 2015. These improvements have already been scheduled and budgeted for. However, this fare hike has nothing to do with service improvements. It will go entirely to pay debt to MRTC, the concessionaire that (mis)manages the MRT/LRT system.
I, and I venture to say, most riders would willingly comply with a fare increase if it meant better service, and especially safety. I would even happily comply with a fare hike if it meant MRT/LRT employees could have regular (non-contractual) work with benefits. However, not a single centavo of the fare hike will go to either of those. Rather, it will go to government payments to a corporate entity. A concessionaire, by the way, that has completely failed to maintain and modernize the train lines.
2. Benefits from mass transit do not come from farebox recovery. Benefits come in the form of positive externalities.
Public transportation, especially in dense cities, is a public utility, not a for-profit business. Contrary to government statements, it is not just those who ride that get the benefits, ergo, user-pay is not the correct framework. With few exemptions, no public transport system in the world makes money from ridership. Governments subsidize mass transit because those governments understand that the value of the positive externalities that result from accessible mass transit – a more efficient workforce, less pollution, less traffic, less congested cities, more economic activity – far outweigh the direct subsidies. More accessible mass transit, an important part of which is affordability, results in more commercial activity, which results in the generation of wealth. Put this in the context of Manila, the economic powerhouse for the entire country, and it is impossible to say the benefits of the MRT/LRT extend only to those who ride.
3. The fare hike disproportionally hurts the poor.
Any flat-rate increase in the cost of a basic service is by its nature regressive because those with smaller incomes pay a larger percentage of their incomes for the increase. Combine this with the profile of MRT/LRT ridership. According to the Mega Manila Public Transport Study (2007), 72.4% of MRT/LRT riders make less than P15,000 per month, 52.8% make less than P10,000 per month, and 29.7% make less than P8,000 per month. It is clear that low-wage earners are those most affected by the fare increase.
To further illustrate, let us consider a minimum-wage earner in NCR making P429 per day (though we all know there is an abundance of people paid below minimum wage). An extra P10 per ride, or P20 per day, means almost 5% of their income would go to the increase alone, and so a total of approximately 10% of the worker’s income would go to MRT/LRT rides. The worker now loses an additional one day’s wage every month to the fare hike.
Contrast the additional amount the government is asking commuters to pay compared to what motorists and franchise owners pay. Financing for cars is at an historic low, hence the great influx of private vehicles on the road leading to more traffic. Unsafe, unmaintained, and environmentally-unfriendly taxis and busses abound as the LTFRB works in complicity with franchise owners to eschew regulations and consumer protections for the right price. In other countries and cities, a larger VAT is levied on new motor vehicles, with larger VATs on multiple vehicles per household, and street parking fees are high and regularly collected. These are means of limiting the number of private motor vehicles and introducing a form of progressive taxation that could subsidize public transport and other services (motor vehicles, especially new and multiple new vehicles per household, are considered a luxury good likely to be purchased by households with higher incomes). While I understand that given the shoddy nature of mass transportation in Manila, making it prohibitively costly to own a car would hurt the middle class much more than the rich, the truth remains that there is a de facto policy of incentivizing car ownership versus the use and development of mass transit.
This does not even begin to compare how much the national and local governments spend on the development and maintenance of roads instead of making public transportation more efficient and comfortable.
4. There are plenty of other potential revenue sources that could pay for the government’s debt to MRTC.
As articulated by numerous progressive groups and even not-so-progressive personalities, there are plenty of other revenue sources that the government could tap to pay for its debt to the MRTC. According to Partido Manggagawa, Travel subsidies for high-ranking government officials have increased in recent years – in the 2012 budget they were worth P8.7 billion, over four times more than the P2 billion a year this fare hike proposes to raise. The electricity industry, one of the most lucrative industries in the country (Meralco is a constant top-performer in the stock exchange) received over P5 billion in subsidies last year. It is worth noting that far from a multitude of small energy producers that the spot market envisioned, the electricity industry in the Philippines in run by a few large conglomerates. Local branches of multinational corporations are given tax holidays and preferential import schemes. Hundreds of government officials get reimbursed for meetings and meals in restaurants that they themselves own. These are all examples of when the government used our tax dollars (or potential tax dollars) to give preferential treatment to the already rich.
Ayala, SM and Robinson’s make billions of pesos from the MRT/LRT because train stations run directly to their malls. Hong Kong’s and Singapore’s MTR and MRT systems are the most profitable in the world because they both own commercial establishments connected to train stations, as well as receive a cut of the commercial profits from malls into which the systems feed. Here in the Philippines, retailers get the same benefits from our mass transit system – just consider what a boost to foot traffic the MRT provides to Trinoma, SM North, Centris, Gateway, Megamall, Glorietta, and others – but these retailers do not pay concessions to the system.
This does not even begin to touch on all the government waste and frivolous expenditures that occur. How much did those televisions in the MRT that have not worked since they were acquired almost half a year ago cost? (And even if they did work, what would be the point? It’s not like you can change lines if your train is late.) How much for the metal detectors that are never turned on? Expanding to other agencies, how much for Metro Manila “beautification,” i.e. those potted plants along EDSA that have to be changed every month because they die of smog? Let us not even venture into corruption and inefficiencies in tax collection.
There is no doubt that the Aquino government has had more redistributive programs and been more sincere in its fight against corruption than administrations past. However, the very nature of tolerating subsidies for the rich while removing subsidies for the poor is a form of regressive taxation – socialism for the rich while maintaining predatory rent-seeking capitalism for the poor.
5. This is not about Manila vs. the provinces.
I find it an act of, at the best naïve misunderstanding, at the worst a bad-faith attempt to foment intra-class animosity through taking advantage of Filipino regionalism, that the government is trying to say that it is unfair for provincial taxpayers to subsidize the MRT/LRT and that reducing the subsidy would lead to better services in the provinces. This is not a zero-sum game where the choices are limited to raising commuter fares in Metro Manila or foregoing development projects in the regions. As already mentioned, there are plenty of underutilized (in terms of actual benefits to people in need) funds that could be used to prevent the fare hike without sacrificing provincial development.
Furthermore, Metro Manila is the economic powerhouse of the country. Peso for peso, Metro Manila subsidizes development in the rest of the country much more than taxes collected outside of Manila subsidize the Metro’s transit. In other words, net of the MRT/LRT subsidy, Filipinos in the provinces still get more in redistributed taxes. When the economy in Metro Manila is not efficient and effective and workers have decreased purchasing power to participate in the domestic economy, the entire country suffers. We all know that the Philippine economy loses P2 billion per day due to Metro Manila traffic. That is, the entire economy, not just the Metro’s economy, loses out due to traffic patterns in the Metro. The same principle applies to the MRT/LRT.
6. The sneaky way the fare hike was implemented shows bad faith
The fare hike was first proposed in the middle of last year and was met with outrage. The government postponed, opposition momentum relaxed, and then suddenly it is rushed through decision, announcement, and implementation during the Christmas holidays. This is a time when Congress is not in session, many Metro Manileños have gone home to the province, and people would rather generally be enjoying time with their family and friends than considering injurious government policies and how to combat them. It is simply too wild to believe that the government did not choose this timetable for the announcement and implementation for this exact reason: they wanted to sneak it past us.
7. Don’t victimize the people for government’s past wrongs
There is no question that the Aquino government inherited a contract that was extremely disadvantageous to the Filipino people. According to the contract for MRT/LRT operation, the government guaranteed at least 15% return on investment to the MRTC for operations from 2000-2025. With such a guaranteed return, again, one unheard of in the world of public transportation, why would the MRTC bother to invest in better services? An economics 101 student could tell you this is a textbook moral hazard. Now the DOTC is trying to make up for long-needed upgrades and maintenance. Whoever negotiated that contract over a decade ago should be held responsible.
But that does not justify passing the sins of foregoing administrations onto ordinary citizens. The government must take responsibility and find a solution that protects low-wage earners. However, shame does not just belong to the government, it also belongs to the MRTC. I would like to know who sits on their board, who is calling their shots, and who exactly is so unamenable to throwing working people a damn bone for the daily safety gamble that is the MRT/LRT.