The Social Alliance has delivered its promise of free public transport for pensioners, the disabled and, shortly, students; it is a universal benefit that is not means-tested. The proposed basis of operation is that each bus will accrue a daily payment of Rs 250 plus Rs 1,100 in respect of each category of beneficiaries. The public must applaud the prompt execution of this electoral promise. In fact, this policy provides a tax-exempt windfall equivalent to their transport costs to its beneficiaries. However, the government has failed to use it for engineering social change.

What is wrong with the ‘free’ transport policy? It is an unconditional subsidy of Rs 1,350 per bus for bus operators and it does not address the congestion problem. It takes into account neither the density of beneficiaries along the different routes nor the number of beneficiaries in any given household.

Mauritius is exemplary in managing to avoid bureaucratic administration: TV licences are included in electricity bills; the Civil Office recoups its charges via postal stamps, etc. Neither of these two levies requires the overhead of separate administration or accounting. Yet, the proposed implementation of free transport is set to create a bureaucracy for its administration; bus operators will have yet another body, no doubt located in the capital, to deal with.

The administrative cost of this scheme is likely to rise well above the costs of disbursing qualified bus operators. Given that some students are not identifiable by such means as a school uniform, some form of new bus pass will be required to establish their entitlement for free transport. For those who don’t qualify, will the present 25% and 50% concessions apply?

Mauritius has villages without any public buses; private minibus operators do not qualify for payment. Therefore, the otherwise eligible beneficiaries do not benefit from this initiative, because of where they live or because they use a more direct means of public/communal transport. This policy discriminates against those who choose to use private transport or live within walking distance of their destinations such as town centres, hospitals, schools, etc.

The bus network, including vehicles, bus-stops and terminals, is not equipped for the disabled. How does a wheelchair-bound person - pensioner or student - board a bus? Direct and indirect taxation fund this policy. Those who are not eligible or cannot benefit will feel antagonised at the prospect of subsidising those who are.

<B>The likely consequences</B>

A vast number of households will have higher disposable income. This will lead to increases in consumer demand and will add to inflationary pressures within the domestic economy, and adversely affect the balance of payments. Families with students consider the cost of school transport as earmarked for education; the windfall may lead to increased expenditure on private tuition, a curse of the ‘free’ education system.

For students, the distance between home and school is no longer a constraint as transport costs are nil. Longer journeys, combined with the fact that the subsidy applies per bus, will cause more congestion. Directly or indirectly, every one, including businesses, pays an ongoing penalty for congestion. Some costs, namely future maintenance of the road network, will be borne by the yet unborn generations of the future.

The number of buses on the roads is set to increase. Usually, more buses imply more competition and therefore downward pressure on fares; however, with a guaranteed subsidy per bus, such gains from competition are unlikely to materialise. If the current subsidies increase in line with projected inflation at 5%, all other things being equal, the cost per bus will be 1350*1.05^5 or Rs1,723 in 2010. It is an open-ended commitment.

This piecemeal policy fails to integrate with a more sustainable national transport policy. It is the sort of concession that single-issue lobby groups such as pensioners’ associations and students’ unions dream of coaxing out of governments worldwide.

Why is eligibility for the subsidy not conditional on the age, condition, and passenger amenities a bus provides? Public transport etiquette in Mauritius, a tourist destination, is a disgrace and an ordeal for passengers. How did buses like EV324 and CM212 acquire their roadworthiness certificates? Seats for the disabled are never marked; there is no provision for the storage of bulky shopping bags or for access by wheelchair-bound passengers. Bus tickets are unreadable thereby making any analysis of passenger movements impossible. Invariably, the buses are filthy, uncomfortable, slow, and the ambient noise from their engines and vibrating framework is intolerable. Had the subsidy related to the quality of transport, would not operators be more inclined to invest in modern vehicles and modernise or decommission older, less environmentally-friendly stock? The subsidy changes the economics of operation such that new operators who are ready to comply may enter the market.

<B>Subsidies on buses, not on passengers</B>

Why is the subsidy not conditional on the reorganisation of bus routes? At present, few buses do not stop at every bus stop along their respective routes. For students, it makes sense to provide dedicated non-stop services between designated collection points such as bus terminals, colleges and other locations such as community centres and village halls. Non-stop and ‘as the crow flies’ routes produce a faster service: fewer buses will be required to carry the same number of passengers.

Why does the subsidy relate to the bus rather than the number of its non-paying passengers? A passenger-based subsidy would not imply a big administration overhead; several simpler mechanisms exist whereby the administration is self-servicing.

One approach is to adapt the existing parking fee arrangement. Pensioners and disabled people can collect their book of tickets from the pensions’ office and tender their ticket for the journey to the bus conductor. Students collect their book of tickets from their school, which is responsible for producing them: these can be included as tear-offs in the school diary. Unlike tickets for pensioners and disabled, those for students are valid only between their pre-defined points of origin and arrival. The bus operators collate the tickets and render their account for amounts due. The transport office has the minimal overhead of auditing the amounts due and settling them: actual usage drives the monetary cost of the subsidy.

A more robust approach is to integrate the subsidy with the existing personal taxation system: this compensates parents in line with the number of students they support and the government retains scope for fine-tuning this policy in the future. Parents claim the subsidy via their personal tax assessment: a tax-free allowance based on a scale appropriate to the students’ journeys applies, and documentation from the school certifying each student’s travel requirements determines eligibility for the allowance. For the other category of beneficiaries, transport is free on production of the appropriate identification.

A subsidy that is unrelated to a uniform metric and not focused on specific objectives is not only unsustainable but also open to abuse. The transport subsidy needs to relate to actual usage, integrate with the wider transport policy, avoid cross-subsidisation among the social groups and leave the government empowered to fine-tune it in the future.

<B>Ajay ASKOOLUM</B>