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Yesterday, the government pushed through with its plan to increase the fares in LRT lines 1, 2 and MRT line 3 by as much as 50%, 66% and 87%, respectively. The fare hike was done treacherously while everyone’s attention was on the yuletide season and all agencies that commuters could possibly go to for relief (the Courts) were closed for vacation.

Yesterday, several groups and individuals, myself included, filed with the Supreme Court a petition to stop the fare hike.

Here are six lies and fallacies that the Aquino government is trying to foist about the LRT/MRT fare hike:

1. The fare hike is needed to rehabilitate and upgrade the LRT and MRT train systems.

This is a lie. In fact, the 2015 budget recently signed by Pres. Aquino already includes a P7.4-billion allocation for the rehabilitation of the MRT, and another P4.65 billion for its subsidy. Aside from this, a 2014 supplemental budget was approved last month containing a P1.2-billion allocation for MRT rehabilitation and capacity extension, and P727.6 million for the rehabilitation of LRT lines 1 and 2.

In other words, the LRT and MRT have already secured enough funds from government for 2014 and 2015 to pursue its planned rehabilitation and upgrading plans. The sad thing is, the fare hike will now being used to justify a P2.1 billion reduction in subsidies for the train lines.

2. The fare hike will benefit commuters.

This is a lie. Proceeds from the fare hike will be used to pay the private creditors of the train lines and fatten the pockets of its private concessionaires including the MRT 3’s Sobrepeña group and LRT 1’s Metro Pacific-Ayala consortium.

In fact, DOTC Secretary Joseph Abaya admitted that the estimated P1 billion additional income from the MRT fare hike will go to an escrow account for the payment of the government’s monthly dues to the MRT Corporation. This is due to the onerous contract entered into by the Ramos government where the Sobrepeña-led company was granted, among many sweeteners, a guaranteed 15% annual rate of return for 25 years.

As to the LRT 1, which was recently taken over by the Light Rail Manila Consortium of the Metro Pacific, Ayala and Macquarie groups, the increased revenue is needed to improve its financial standing which would allow the private concessionaire to raise funds for their LRT-1 extension project. The fare hike is actually part of the guarantees given by the Aquino government to the consortium under the P65 billion LRT-1 privatization contract.

3. The fare hike will re-channel limited public funds for education and health as well as development projects in the Visayas and Mindanao.

This is a fallacy. Due to the estimated P2.1 billion fare hike revenues, the same amount of subsidies earlier granted by Congress to the LRT and MRT will most likely be declared as “savings” and thus re-aligned, DAP-style, to anything under the sun. Knowing how such savings were used from 2010-2014, we know that patronage politics will be the prime consideration in the use of these funds especially since 2015 is an election year. This is nothing but sugarcoating. There is no guarantee that this will go to classrooms, hospitals or the like.

4. The DOTC Secretary, the LRT Board and the MRT 3 Office followed due process and are authorized to raise fares.

This is a lie. The train lines being a public utility or service, its rates should be approved by an appropriate quasi-judicial body like the LTFRB for bus, jeeps and taxis, the Marina for shipping lines, the CAB for airlines, MWSS-RO for water rates, ERC for power rates, etc. However, in the case of the LRT and MRT, no such body has yet been mandated to deliberate and approve changes in their rates.

Having no proper notice and hearing of the fare hikes, the actions of the DOTC secretary, the LRT board and the MRT-3 office were illegal, arbitrary and did not follow due process. Commuters and the public at large were denied their right to scrutinize and question the basis of the new rates. There was even no procedure for the filing of an opposition. Documents on the basis of the fare hike repeatedly requested by the Bagong Alyansang Makabayan and other concerned groups were all denied by the said agencies.

5. The new fares are just and reasonable.

This is a lie. Government insists on the principle that “users must pay.” But the reality is users ARE already paying adequately for the operation and maintenance of our trains. For this year, the LRT 1 and 2’s farebox ratio averaged 1.12, meaning revenues from fares covered 1.12 times the train systems’ maintenance and operating expenses. For the MRT 3 the latest farebox ratio was 1.17 in 2012. Such ratios are even better than train systems in the industrialized countries where farebox ratio ranges from 0.12 to 0.71 (US), 0.39 to 0.78 (Canada), 0.41 to 0.90 (Spain), 0.30 (Paris), 0.17 (Berlin), 0.91 (London). In these countries, governments subsidize even the maintenance and operating costs of the trains.

A great majority of train riders are workers, employees and students who can hardly make ends meet. Keeping fares low is the least that the government can do to help these present and future productive sectors of the country.

However, given the meager subsidies that goes to this very important means of mass transportation, what our government has been subsidizing is just the financial obligations of the train lines, mainly debt servicing and payments to private concessionaires, including that onerous 15% guaranteed return on investment granted to the MRTC. Such subsidy should be considered part of government’s duty to provide a cheap and efficient mass transport system for the public and should not be passed on to the commuters.

6. Subsidizing the LRT and MRT is an injustice to taxpayers in the Visayas and Mindanao.

This is a fallacy. If this were true, then spending public funds for roads, bridges and yes, trains in Cebu, Davao or anywhere else in the Visayas or Mindanao should also be considered an injustice to Metro Manilans. Crazy.

Subsidizing trains or any mass transport system, especially in clogged Metro Manila which contributes at least 60% to the entire economy, certainly makes sense. In fact, the logical conclusion that should be drawn from this argument is that instead of cutting back subsidies for the trains in Metro Manila, government should also build trains in the Visayas and Mindanao to spur development in those areas.#

14 thoughts on “6 lies and fallacies on the LRT/MRT fare hike

  1. Great article! Thank you for “revealing” the lies of Malacanang and DOTC, for what I call DUBIOUS reasons for MRT fare hike. I feel ashamed that I voted for Benigno Aquino who turned out to be a real DULLARD for a president. And Abaya? Gosh, no amount of hype over his curriculum vitae can change that fact that he is a waste of space for not accomplishing genuine public service.

  2. Pingback: [From the web] 6 lies and fallacies on the LRT/MRT fare hike -teddycasino.wordpress.com | Human Rights Online Philippines

  3. informative… fact based…

    except… uh… where is all this information coming from?
    is it a matter of public record? if so… maybe you could indicate your sources so your article doesn’t end up looking like just so much …

    you know. hot air? why does everyone post all these “FACTS” and expect us all to just swallow it? on BOTH sides if this issue?
    This is no different from the stuff on the DOTC website saying this and that about why the fare hike is justified — then reciting all sorts of “facts” without any references?

    except they did post the actual amount of the fare increase. not a meaningless percentage. the actual fare change:

    http://www.dotc.gov.ph/index.php/2014-09-02-05-01-41/2014-09-03-06-43-32/85-lrt-mrt-fares-to-be-increased-on-jan-4

  4. For as long as the supplier of services are limited to only one entity – whether government or public private partnership or a crony – the prices will remain high – and go higher.

    It is the law of supply and demand – few suppliers in the face of huge demand will lead to high prices – whether it is MRT, water, electricity, phones, internet, schools, or hospitals.

    The only way to reduce the price pressure is to increase the number of suppliers – and that means opening the economy to allow non-Filipinos to provide services.

    There is no other way.

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