Informe Nº: 07/01/2018

95% OF SUBSIDIES TO TRANSPORT ARE DESTINED TO BUENOS AIRES

The National Ministry of Transport announced the increases for buses, trains and subways tickets in the metropolitan area scheduled for 2018. In the case of buses, the basic fare will gradually go from AR$ 6 to AR$ 10 in June. For trains it will go from AR$ 4 to AR$ 6.75 and in some lines the increase will be from AR$ 2 to AR$ 3.25. The subway ticket will go from AR$ 7 to AR$ 12.50.

An innovation that is being introduced in the tariff design is the articulation of the three types of transport in the same payment instrument (the SUBE card). This will allow a person who uses buses, trains and subways within 2 hours of the first mode of transportation to have 50% discount on the second trip and 75% on subsequent trips up to 5 trips. This is a scheme widely used in advanced countries and the purpose is to encourage the use of the public transport over private vehicles.

The measures, in addition to improving the quality of the services, help reduce economic subsidies and, thus, contribute to the fiscal balance. In any case, it does not solve a central institutional issue that is that of competencies. According to November 2017 ASAP data, subsidies to transport financed by the national government reached AR$ 70 billion of which:

  • Some AR$ 37 billion went to bus tickets, mainly from the metropolitan region.
  • Another AR$ 29 billion went to trains in the metropolitan region.
  • This means that 95% of the national subsidies go to the metropolitan region.

These data show the enormous magnitude of national resources used in benefit of the metropolitan area and serves as an explanation for the fact that tariffs in Buenos Aires are substantially lower than in the rest of the country, even considering the announced increases. This is an irritating discrimination against the more than 2,000 urban centers that Argentina has. That is why, although the announcements go in the correct direction, it should be noted that those who must make these decisions, finance them, execute them, monitor them and perfect them are the local authorities and not the national government.

The distortion is a legacy of the pending transfer of public services to the Autonomous City of Buenos Aires (CABA) after its creation in 1996. Like in the rest of the country, where public services are the responsibility of sub-national governments, Buenos Aires City has to coordinate with the Province of Buenos Aires the financing, regulation and management of the transport network in the metropolitan region. Just as an example, Buenos Aires City and the Province of Buenos Aires could form a consortium such as the Washington’s “Metro” where the District of Columbia and the states of Virginia and Maryland make up a consortium called the “Washington Metropolitan Transportation Authority” to plan, finance, develop and operate the transportation network of the United States capital. This is what prevents the president of the United States from having to deal with urban transport issues in Washington.

Finishing with the transfer of all the public services of the metropolitan region to Buenos Aires City and the province of Buenos Aires is an institutional reform of high transcendence. On the one hand, it frees the National Ministry of Transport from duties as “major”. It is not a minor issue when the development of the country urgently needs highways on national routes, modern waterways, more efficient ports, the revitalization of rail freight transport and the development of a dense network of low-cost flights that connect different destinations in the country without having to pass by Buenos Aires. On the other hand, it diminishes the risks and temptations for future governments to make demagoguery for the benefit of the metropolitan region using funds and national officials, as happened in the previous administration.

The Fiscal Consensus corrected the discrimination suffered by the Province of Buenos Aires as a consequence of the non-updating of the cap in the Fondo del Conurbano. But for this not to result in an injustice against the rest of the country it is essential that the Province of Buenos Aires and Buenos Aires City take the responsibility for their public services.

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