Get real
Philippine Daily Inquirer, 10 January 2015


The following information may help to shed more light on the raging controversy over the LRT and MRT fare increases. These are the cold, hard facts:

Until the recent increase, the LRT fares had remained the same for 11 years, while the MRT fares had remained unchanged for 13 years—both at P15. None of those protesting the hike have bothered to mention this salient fact; maybe it is in the briefs they filed with the Supreme Court, but I doubt this very much. Another important fact is that bus fares, which, at P12, were identical to LRT fares in 2002, are now (2015) at P32, according to Malacañang. I have seen other data that show them to be at P27. These bus fares are controlled by the LTFRB (Land Transportation Franchise and Regulatory Board), and interestingly, a reader e-mailed me recently and asked me to look at the basis for these rates, because he could make neither heads nor tails out of them. Maybe the LTFRB should be a little more transparent.

But I digress. The increasing price differential between rail transit and bus transit is obviously (at least to elementary economics students) the reason behind the flocking of passengers to the LRT and MRT. This can be explained using the usual demand-supply graphs, but anyone can figure out that between two alternative ways of getting somewhere, one costing half the other, guess where you would go? Oh, I forgot to mention: The lower-costing one gets you there faster.

No wonder then that the rail transit systems carry more passengers than they should. And following the logic, that means more wear and tear on the trains, the carriages, the air-conditioning systems, the stations. They conk out faster, in other words, and have to be replaced more often.

What then should be done to correct this state of affairs? A fare increase is indicated, don’t you think?

Additionally, we have an aggravating condition in the form of the losses to the government arising from the fare situation, to the tune of about P12 billion yearly (this was what it was for 2012). The total losses of government over that 11- or 13-year period must be on the order of P90 billion to P100 billion (the exact amount can be calculated). In other words, the government has been subsidizing the rail transit passengers by that amount.

The amount that the government subsidizes, per passenger, per ride, is, according to the government spokespersons—no, correct that: The President himself, in his 2013 State of the Nation Address, said (and no one corrected him at the time) that the subsidy was P25 per passenger per ride for the LRT and P45 per passenger per ride for the MRT.

Well, I tested those figures against the LRT and MRT financial statements for 2012, assuming that ridership was at full capacity for every day of the year, and the subsidy figures I got were P24 for the LRT and P37 for the MRT. Pretty close.

So the question is: Why should Metro Manilans and their transport expenses be subsidized, at the expense of the rest of the Filipino people? What is so special about us, that we expect the government to shell out P12 billion a year for the rail transit passengers?

Here’s where the hearts and flowers begin. The rail transit passengers are poor, and increasing fares by so much will drive them into greater poverty. There are also arguments I read, from the critics of the fare increase, that transport is a cost of production, and therefore should be paid by the businesses. Good grief!

But let us discuss the poverty of Metro Manilans. Based on the 2012 Family Income and Expenditures Survey (FIES), the family poverty incidence for the whole Philippines (the percentage of Filipino families who live below the poverty threshold amount of P18,355 per capita a year, or roughly P91,775 for a family of five) is 19.7 percent.

The poverty threshold for Metro Manilans was P20,344 (or P101,720 for a family of five; for a family of 5.6, which is the average size of a poor family, it is P114,767). And the family poverty incidence for the National Capital Region was all of 2.6 percent. That is not a typographical error.

The population in Metro Manila in 2012 was about 12.2 million. Assuming five per family, that means we have 2.4 million families, and the number of poor families was therefore 2.6 percent of 2.4 million, or 63,000 families.

How can 63,000 poor families generate daily ridership of at least 540,000 passengers a day for the MRT, and 560,000 passengers a day for the LRT1 (I don’t know what it is for LRT2)? Please.

In other words, the majority of the riders in the rail transit system are not poor. Keeping fares down subsidizes the nonpoor more than it helps the poor. If we want to subsidize the poor, charging everybody low fares is not the answer. And remember that the subsidy is being paid by Filipinos everywhere, who are probably poorer than their Metro Manila brethren. Also, remember that the fare increases will only reduce the total subsidy by P2 billion, or only one-sixth of it, according to estimates. So the Metro Manilans are still the favored offspring.

P-Noy, in his 2013 Sona, said, “Wala tayong balak magpamana ng problema sa susunod sa atin.” He is not going to export the problem to his successor. And he is not going to favor Metro Manilans at the expense of the rest of the Filipinos. Bully for him. I wish he would do it more often. In this, he is acting like a statesman, in contrast to the other politicians who, conscious of the Metro Manila vote, are standing on their heads trying to justify an unjustifiable situation.

Pope Francis said: “Serve the poor, do not use the poor.” Amen.