Public transportation and development
Claude Clarke, Guest Columnist
The controversy over the recent Jamaica Urban Transit Company (JUTC) fare increases is yet another example of the degree to which the present International Monetary Fund (IMF)-influenced economic environment has narrowed the focus of economic thought in the country. Government's near-exclusive attention to meeting its fiscal targets has led it to neglect other areas of economic management that are vital to overcoming our chronic economic malaise and creating the conditions for sustainable economic growth.
In determining how public transportation in the country's largest metropolitan area should be financed, the Government seems to be peering through the constricted lens of the IMF's fiscal demands and is seeking to draw as much as possible of the funds needed for its operations from the users of the service and as little as possible from its budget. The Opposition, for its part, has opportunistically donned the garb of defenders of the poor and is seeking to exploit the negative public reaction to the fare increases.
Given the importance of public transportation to the efficient functioning of the economy and society, there is more than an impression of myopia in the manner in which both political entities have approached the issue.
In the early 1990s as chairman of JAMPRO, I presented Government with a proposal by an investor to establish an industrial park on the 105 acres of land on which the Bellevue Hospital sat. As would be expected, the project would capitalise on the mercantile advantages of the Kingston Harbour. However, its principal economic value was its proximity to a demographically diversified community, supported by good physical social services and commercial infrastructure that would enhance the convenience and minimise the cost of transportation for its employees.
The critical impact of public transportation on commercial and industrial enterprises and, more broadly, on an economy is not always readily appreciated. A recent study conducted by London-based international consulting firm, Credo, found that among 35 cities representing three broad categories: well established, densely populated, and emerging cities, the cost of public transportation is between nine and 28 per cent of gross domestic product (GDP) per capita. The lowest costs were found in the highly productive and socially stable cities of Copenhagen and Singapore. Both are distinguished by highly developed and sophisticated public-transportation systems. The highest costs were seen in cities like Lagos and Mumbai whose public-transport systems are underdeveloped and inadequate.
Public-transportation system's importance
According to Mckinsey Global Institute, 80 per cent of the world's wealth is produced in cities. Given this fact and the findings of the Credo study, the Jamaican Government cannot avoid accepting that a part of its development strategy must be to ensure that the public-transportation system of its largest urban centre is made efficient, dependable, and affordable to the public.
The conurbation of Kingston, Spanish Town and Portmore accounts for more than 40 per cent of Jamaica's total population. The economic competitiveness and output of this important urban population centre will, therefore, have to be significantly lifted if there is to be meaningful growth in the national economy. If we are guided by the design of successful modern economies, the cost and efficiency of public transportation in these areas must be addressed as a matter of priority.
The real cost of public transportation to an economy is much more than the fares paid by commuters and Government's subsidy. The most important cost is the extent to which it harms human productivity, and by extension, undermines the value of all other assets with which people interact, including capital.
Jamaica desperately needs economic development. Government should, therefore, be focused on the economic advantages to be gained from an efficient public-transportation system. And, while the costs to the Budget and commuters are important, these issues should be mitigated by correcting the manifest inadequacies and dysfunction of the system, not by neglecting its development.
To be sure, the cost of providing the service must be consistent with the country's economic means. But there is no reason that we should accept costs created by inapt management. If Government accepts the central part that must be played by public transport in economic development, it must ensure that the method of delivering the service does not create superfluous costs.
It is, therefore, disappointing that neither the Government nor the Opposition has addressed the obvious contradiction that Government, with its undistinguished record of mismanaging commercial enterprises and landing mountains of debt on the heads of taxpayers, continues to own and operate a commercial enterprise such as the JUTC, which is so vital to the efficient performance of the national economy.
The Government should gain from the experience of countries that have achieved the highest levels of economic performance. Public transportation in Singapore, a country consistently rated among the five most competitive in the world, is privately owned. Government plays the role of providing sound infrastructure to enable the private sector to own and operate the rolling stock and deliver a first-class service to commuters at an affordable cost.
But the box into which Jamaica's economic thinking has been placed by the IMF-directed government economic programme has confined discussion of our public transportation to whether Government should charge commuters or the public purse more for an admittedly inadequate service.
In the modern competitive world economic environment, the view that the principal purpose of a public-transportation system is to provide a benefit to the public is obsolete. The value of public transportation embodies far more. It is at the heart of a country's ability to produce efficiently and competitively.
The Credo finding; that the simple act of taking people safely, quickly and comfortably to their destinations in cities, could by itself add one per cent per annum to global GDP, reinforces this fact. The Jamaican government and opposition party must therefore approach public transportation as the vital economic subject that it is.
The first step in a responsible approach to public transportation policy should be to determine the optimal level of service that will facilitate the efficient movement of the people involved in the economic and social life of the country, and what would be its cost, if operated efficiently.
This exercise would no doubt lead to the recognition that, for efficiency to be assured, ownership and operation should be in the hands of competent, experienced and properly financed private interests. If a government subsidy is needed to make commuter costs affordable, the government must provide it. Singapore is able to maintain its optimal and highly effective public-transportation system with such an arrangement.
The Opposition, instead of pursuing easy political gain, should confront Government with questions about its plans to raise the quality of the city's transportation service while reducing its cost. And it should challenge the Government to assume the proportion of the cost necessary to deliver on its mandate to manage the economy toward development.
Simply by moving people more efficiently within our cities, the benefit to the national economy could be exponential.
Claude Clarke is a businessman and former minister of industry. Email feedback to email@example.com.