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

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).