Thu, 10 Mar 2005

Fuel price hike: Is it truly going to help the poor?

Azas Tigor Nainggolan Jakarta

On March 1 the government raised the prices of most fuel products despite many protests from the community. The present price hike, the government said, was necessary to cut the subsidies, which have become too costly, and do no benefit the poor or the little people, who actually deserve them. If the prices of fuel remain as they are, the subsidies that should actually go to the poor will only benefit people able to afford motor vehicles.

Now that the government has raised the prices of fuel, the subsidies that should actually go to these fuel prices are not channeled as compensation for programs to empower the poor.

All the government's considerations behind this price hike decision sound reasonable and highly populist. But, why has President Susilo Bambang Yudhoyono hinted that it is likely that this policy will make him unpopular, a situation that he has said he is ready for? Why, also, has the plan to raise fuel prices led to social restlessness and rejection?

Based on their own experiences, the public will say that the government's promise to redirect the subsidies to the little people is, "bullshit and that the poor will never benefit nor will their interests be protected."

Pledges of assistance for the poorest people will only be an attempt to dupe the public so that they will not react against the government's price hike policy.

This public's rejection and distrust are not made up, but they are real. The government has made promises only to calm the public. Our experiences show that every time the prices of fuel are raised, the prices of other commodities will rise too and the cost of living will be higher, as well. The result is that life will become more and more difficult for the poor.

The government has repeatedly said that a portion of the subsidies that otherwise would go to the prices of fuel would now be channeled to the poor in the form of subsidies for education, health and public transportation. What frequently happens is that even before the prices of fuel are raised, public transportation companies increase their fares. Their demand that transportation fares should be increased clearly hurts the little people because they use public transportation.

Besides, this demand also runs counter to the commitment to reduce fuel subsidies to help the poor. Public transportation companies say that unless transportation fares are hiked, the companies will go bankrupt once the government raises the prices of fuel. Actually the fuel price increase will only increase costs for most transportation businesses by 7 percent.

In actuality, the largest portion of the operational costs for the transportation business is for illegal fees to unscrupulous government officials. A company, for example, must pay extra money when obtaining a business transportation license.

Then there are additional operational expenses on the road. A public transportation company must pay double the cost for the road worthiness tests every six months and pay more because the prices of spare parts continually increase. A public minivan driver, for example, must spend at least Rp 30,000 in illegal fees at bus terminals or on the road.

Most such public transportation drivers can only take home between Rp 40,000 and Rp 50,000 a day. Certainly, these illegal fees will also increase along with the fuel price hike because the cost of living for the officials that collect them will go up too, so they just pass on the burden to the drivers.

Likewise, when we talk about abuse in the distribution of the low-income assistance funds to offset price hikes, we will find a lot of irregularities committed by government officials from the top to the bottom levels. Take Jakarta, for example: It has been frequently reported, directly by the residents, or in the mass media, that there are irregularities in the distribution of cheap rice.

The fact is that not a single corrupt official has been incarcerated while these irregularities continue unchecked. According to the regulation, a poor family can receive 10 kilograms (kg) of rice for Rp 1,000 per kg, but in reality they receive only 5 kg and have to pay Rp 1,500 per kg. It is said that poor people will be exempted from educational and medical treatment costs, but in reality there is no such thing.

Children from poor families cannot go to school as they cannot afford the school fees. Poor families cannot get proper medical treatment because they don't have enough money, especially now that the Jakarta provincial administration has privatized many hospitals. Obviously, this privatization will make it harder for the poor people to benefit from the fund that otherwise would be used to subsidize fuel prices.

Given all these irregularities in the distribution of the fund that should otherwise be used to subsidize fuel prices, there is reason enough to justify the rejection of the fuel price hike. The public not only refuses the fuel price hike, but would like to reject the promises that the government makes when raising fuel prices.

Care for the poor or siding with them should not be limited only to rhetoric to justify a difficult decision like raising the prices of fuel in order to maintain the popularity of the president. The administration of Susilo Bambang Yudhoyono must have their own creativity to make breakthroughs in channeling funds to the poor families.

They can, for example, exempt public transportation from license plate fees, the route license fees, or, reduce the import duties on spare parts for public transportation vehicles. The government should no longer repeat past practices of distributing or spreading assistance funds as, in the end, a large portion will be siphoned off.

Of no less importance is that the government must show greater courage to take action against government agencies involved in irregularities when distributing these funds. The government must also have the courage to take action against agencies at lower levels that make policies that contradict the commitment to help the poor.

The government must not only talk, but must also take action, for example, against Jakarta Governor Sutiyoso, who is planning to privatize many hospitals in Jakarta. Obviously, this privatization policy will make it difficult for the poor to obtain health services at a low cost.

The writer is chairman of Jakarta Residents Forum (FAKTA).





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