Toll

Opinion

By: Alex Magno

(The Philippine Star)

Updated January 6, 2011 12:00 AM

Links: http://www.philstar.com/Article.aspx?articleId=645713&publicationSubCategoryId=64





There is something wrong in this sequence.

Immediately after they were given the go-ahead to raise toll rates last month, companies operating the expressways announced they will implement the increase in stages. They, obviously, have an interest in cushioning the impact of the price adjustments on the consumer: it reduces the possibility of violent consumer protests.

As the workweek began, the Palace announced they will ask the companies operating the expressways to implement the increase in stages. Wasn’t that exactly what the companies already announced? Was anybody working in the Palace through the holidays?

Sometime late this week, we do not know exactly when, the administration is supposed to convene its economic managers to discuss ways by which the impact of the toll rate adjustments might be mitigated. Such a meeting ought to have been convened months before, anticipating the hefty toll adjustments that will be made.

It is not as if the toll rate adjustments caught us by surprise.

In its first few days, the Aquino administration announced that the contracts with the investors will be respected. Those contracts assure investors in our infra development cost recovery and profitability. If those contracts are not respected, future investments in our economy will be doomed.

A couple of months ago, a conference was held where potential investors in our infra projects were assured a hospitable policy environment. Our economic managers, in fact, promised something that might be difficult to deliver: government guarantees against any losses incurred because of juridical or political uncertainties.

We knew the toll rate adjustments would happen. In fact, they should have happened a long time ago. Investors were losing massively with every day of delay in the implementation of the rate adjustments. Too, every day of delay meant less time for cost recovery within the concession period — therefore steeper price adjustments to ensure recovery.

The only thing that held back the rate adjustments was a consumer suit filed before the Supreme Court in a frantic attempt to stop the rate adjustments. The Court ruled in favor of government and threw out the petitions.

When President Aquino whined about being singled out by the Supreme Court, he forgot about this important ruling. The ruling opens the way for the administration’s program of “public-private partnerships” to proceed.

The expressway toll rate adjustment is a litmus test for assuring investors a more market-friendly environment in the country. If the administration buckled under populist pressure in this case, its credibility in the eyes of investors will collapse. We might as well give up any hope of attracting private investments to help close our yawning infrastructure gap for the next six years.

True, the toll rate adjustment will inflict pain on consumers. We have long been used to paying ridiculously low rates courtesy of immense government subsidies for everything from electricity to fuel to trains to expressways. Those immense subsidies threw us into indebtedness.

Subsidies are an inefficient use of scarce public finances. They benefit some at the expense of others. They favor richer consumers and disfavor the poor. They benefit those who use a utility at the expense of those who don’t.

Subsidies for roads and rail, fuel and power are generally unjust. If we subsidize fuel, for instance, we favor those who own gas-guzzlers and disfavor bikers. If we subsidize expressways and commuter rail, we favor those in the metropolitan area at the expense of those in the Visayas and Mindanao.

Because subsidies are generally unjust, they deepen regional disparities, preserve rural poverty and retard our development by discouraging market-driven investments in things we urgently need, such as good roads, efficient rail and reliable power supplies.

If we want First World expressways, we should be prepared to pay for their real costs. Justice is better served if the direct users pay for these costs and the non-users of the utility spared the expense. There is an ethical consideration here, not just an economic calculation.

The new toll rates took effect, as long expected, on the first day of the year. The “economic managers” meeting is scheduled about a week after. This is not just a problem of timing but also of audience. This might not even be the right meeting to convene.

A month ago, the President should have convened, not the economic managers, but the line agencies charged with transport fare, traffic management and other related concerns. Government should have been ready with a coordinated response, adjusting fare rates and dealing with traffic overflow caused by vehicles avoiding the expressways.

When the new toll rates took effect, for instance, buses using the expressways took it upon themselves to adjust their fares independent of the government regulatory agencies. For the transport operators, it was a matter of necessity. What they did was illegal, but government action was late.

Little, if any, was done to upgrade, ahead of the toll rate adjustments, the old roads used by small traders who bring agricultural produce to the metropolitan area. If all agricultural produce pass through the expressways, a commensurate increase in food prices becomes unavoidable.

We need more rail services to lower the logistics costs of bringing food to the city. There is no government program for this.

Soon we will have to deal with a fare increase in all the commuter rail lines in the city. Hopefully, we see less of the utter unpreparedness on the part of government characterizing the toll rate adjustments.

We are moving into a new price regime in all our logistical systems as we prepare for their modernization. The Palace should be more proactive in preparing for their many repercussions.