Fri | Jul 23, 2021

Editorial | Taxis deserve fare hike, but …

Published:Wednesday | June 16, 2021 | 12:12 AM

No one, not least this newspaper, would claim that the buses and taxis that traverse Jamaica’s roads, especially in the Kingston Metropolitan Transport Region (KMTR), are examples of decency and discipline. They race and jostle, break laws and put at risk the lives of their passengers and other commuters. Then they insult us by denying the conduct, claiming it to be the behaviour only of unlicensed operators.

These failures notwithstanding, it is hard to deny that these transport operators deserve a fare hike. They provide a service for which the price has formally remained fixed for eight years. Whether that hike is the 80 per cent they have asked for, is to be determined by the sector’s regulator, the Transport Authority (TA), after its economic analysis of the claim. Although the decision is likely to be influenced by two other factors: the Government’s perception of the ability of consumers to pay and its assessment of any likely fallout from its decision.

Indeed, it is these considerations that recently caused the transport minister, Robert Montague, exercising his usual populist rhetorical gymnastics, to seemingly reject out of hand the possibility of fare hikes, even as he conceded that transport “operators and investors are struggling to keep afloat”. He has now formally accepted that the status quo is unsustainable and advised commuters to brace for the inevitable.

In arriving at a fair rate for the transport operators, the Government, beyond the immediacy of politics, must take into account a number of critical considerations, including how it can make any hike it agrees to a lever for behavioural change in the sector. But before that, it has to determine the importance, or lack thereof, it affords to the private transport sector as a critical player in the national economy. Further, it has to consider how it treats the state-owned Jamaica Urban Transit Company (JUTC), which operates in the KMTR.

CONTEXT TO ANALYSIS

There is a context to this analysis. First, over 70 per cent of Jamaican households do not own vehicles. They mostly depend on public transportation. In other words, the vast majority of commuters use buses and taxis to travel to their jobs and to other destinations. Like most other countries of the world, public transport is critical to the pursuit of economic activity.

In the KMTR, where roughly half of Jamaicans live, the JUTC, by most estimates, moves substantially less than half of the commuters who rely on public transport. The flipside, therefore, is that the majority of commuters travel by private commercial transportation – mostly those rumbustious route taxis and jostling minibuses. Indeed, were it not for its dependence on the deep pockets of taxpayers, the JUTC – established more than two decades ago with the aim of returning quality and order to the capital’s transport system – would have collapsed long ago.

For example, in the current financial year, which will end in March 2022, taxpayers will pump around J$11 billion into the JUTC – J$5.34 billion in direct subsidies and another J$5.6 billion to cover the deficit it will record at the end of the year. With an accumulated deficit of approximately J$30 billion and shareholders’ equity of nearly minus J$5 billion, the company is technically bankrupt. It operates because it sports the imprimatur of Jamaica’s taxpayers.

This is partially background for Mr Montague and the Government, across administrations, to consider, whether private transport operators, given the freeze of their fares, have been forced, de facto, to subsidise commuters. Perchance the answer is the affirmative, Mr Montague will have to contend with how this clearly political, rather than economic, decision contributed to the dysfunction and ramshackle in the private transportation against which all of us, including the minister, rail. He may even have to abide the argument that the JUTC, too, despite its huge subsidies, is a badly managed, loss-making enterprise with, at best, indifferent or mediocre service.

TOUGH ACTION

Mr Montague will also have to confront how his own policies may have exacerbated the crisis of indiscipline in the private transportation sector. With its low entry bar, the transportation sector is often the first port of call for jobless Jamaicans who own, or have access to, motorcars.

Add to this Mr Montague’s ‘liberalisation’ of the route taxi and carries licence, which contributed to the surfeit of licensed operators, who jostle among themselves and with the unlicensed ones. His apparent expectation that the market would correct itself has not happened. And his regulatory/enforcement regime has been weak.

Now that Mr Montague has agreed that a fare increase makes sense, we can hope that he can parlay this decision into a constructive debate on the role and structure of the public transportation system, including how to achieve the best service standards. This may require Mr Montague eschewing populist rhetoric for really tough action, which may require a hard look on how it deploys its transportation subsidiary and whether that money can be spent...and if yes, with whom.