Why did Israel Ministry of Transport's public transport subsidy grow by NIS 2 billion in the past year? Members of the Knesset Finance Committee tried to get an answer to this question yesterday, but to no avail. Minister of Transport Bezalel Smotrich attended the session specifically and promised "to answer any question," but gave no information about this huge sum.
Smotrich addressed only a specific request approved yesterday by the committee of NIS 250 million for pay rises for bus drivers and NIS 70 million for training new drivers. "We are short of 3,000 bus drivers, and we have no choice other than to give them better terms," Smotrich explained.
Smotrich went on to say that bus operating costs had risen, but did not say by how much. MK Orit Farkash-Hacohen (Blue and White Party) tried to ask Ministry of Finance personnel about the increase, but received no clear answer. The other MKs did not even try to find out. "Public transportation is good, and we are for it," MK Avi Nissenkorn (Blue and White Party) and Michael (Miki) Levy (Blue and White Party) said, for example.
The only protest came from MK Orly Levy-Abekasis, who said, "I want to register a complaint that the ministries are not foreseeing their real spending. If the Minister of Transport says that his ministry's costs are NIS 2 billion more than expected, that amounts to 13% of the ministry's budget. Something is wrong here. If the other ministries do the same thing, the deficit will reach NIS 50 billion." Levy-Abekasis believes that this has become a routine practice. "They learned from the Ministry of Defense," she added. "The ministry does not prepare its budget properly, because it believes that no one will say no to adding routes and no one will say no to payments to drivers, but they say no to enlarging the National List of Reimbursed Drugs. When the Ministry of Transport behaves this way, we have to cut other ministries' budgets. The Finance Committee should know what is being paid for, and at whose expense."
No leap in the number of public transportation users
The subsidies for public transportation consist of grants paid by the state to Israel Railways, the light rail, bus companies Egged and Dan, and private operators according to the extent of their operations. The budget also includes discounts for groups such as students and senior citizens.
The subsidies have grown by NIS 500 million a year in recent years. After the approved budget reached NIS 7 billion in 2018, the state planned to allocate NIS 7.4 billion in 2019. Last September, however, the budget was exhausted, and will grow to NIS 9 billion by the end of the year.
What accounts for this phenomenal increase? Smotrich claimed yesterday that the reason was a positive one - increased use of public transportation. The problem is that the number of public transportation users did not increase by over 10% in 2019, and there has been no breakthrough in deployment of new routes.
Next Monday, the Ministry of Finance will be asked to approve a NIS 550 million supplement for public transportation, consisting of NIS 350 million for various added costs in operating buses (insurance, costs, fuel, and minimum wage), NIS 151 million for buying buses for the Egged cooperative under the new subsidy agreement between Egged and state in November 2018, and NIS 40 million for a "flexible service" pilot in the greater Tel Aviv area. This is an experimental program designed to offer "personalized service ordered in advance as part of the effort to encourage a switch from private vehicles to public transportation."
50% of the budget supplement is still unexplained
All of these items and supplements account for 50% of the Ministry of Transport's budget overrun. What about the rest? The Ministry of Transport did not respond to questions about it from "Globes," which leaves the public to speculate about the cause. For example, one explanation for the gap is people traveling without paying - what the Ministry of Transport calls fraud. Transportation sector sources say that this phenomenon increased this year when the option of paying drivers when entering buses was eliminated, and people were allowed to get on buses through any of the doors (something that started five years ago).
"The Ministry of Transport claims that there is a very high rate of fraud, i.e. people sneaking on buses," says Yossi Saidov, co-organizer of the 15 Minutes organization for promoting public transportation, "but first of all we have to keep in mind that the economic benefit of a switch to public transportation is far greater than the damage caused by the thieves. Secondly, when you look at all of the data according to districts, you discover that there are extreme differences between them."
Saidov adds that the Ministry of Transport estimates the proportion of unpaid passengers in the Haifa district, for example, at no more than 2-3%, compared with 20% in the Beer Sheva district. "There aren't more thieves in Beer Sheva; the passengers aren't really at fault," Saidov stresses. "There are no machines for buying tickets at stations in Beer Sheva. People get on a bus and have no way of paying." Saidov and 15 Minutes CEO Shimrit Nothman assert that there are many problems in validating tickets on the rear parts of buses in many places, and that the problem is also a lack of awareness.
Saidov believes that the reason for the jump in the subsidy this year is attributable to changes in traveling habits on public transportation. "For example, I used to get to the city center on a single ride. Today, I change routes and use the light rail. That's three rides instead of one, and it explains the Ministry of Transport's figures showing a jump in the number of rides, while the number of passengers hasn't grown that much," he says.
No way to cut the budget, so it is passed
The increase in the subsidy to public transportation operators is only part of a total NIS 3.5 billion budget that the Ministry of Finance wants to give the Ministry of Transport in order to finish the 2019 fiscal year. This is a 16% increase in the Ministry of Transport's NIS 22 billion approved budget. The Finance Committee approved a NIS 1.1 billion supplement for transportation yesterday, including NIS 900 million for road development that supports housing and development of a cyber center in Ayalon Highways Company.
At its upcoming session on Monday, the Finance Committee will be asked to approve NIS 700 million more in supplements for road development, including the Arava road (Road 90), expansion of Road 65 from the Golani Junction to Dovrat, upgrading sections of Road 77 and Road 6, enlarging the coastal highway to three lanes in the section between Givat Olga and Havatzelet HaSharon, and upgrading the Yanay and Olga Interchanges.
The Ministry of Finance will also ask for approval of a NIS 300 million transfer for transportation projects on urban roads, mostly for work in the area of Jerusalem, Ramle, and Road 60 from Gush Etzion to Jerusalem. NIS 120 million of this is supposed to come from the Ministry of Transport National Road Safety Authority's program, but most of it will be taken from the budgets of other ministries.
The Ministry of Finance's hands are tied in this matter. The government has no option for cutting the budget or increasing revenue by raising taxes, which is forcing the Ministry of Finance to scrape the bottom of the barrel and scrutinize every possible item in a search for money. The situation will only get worse next year until the 2020 state budget is approved.
The vote on a NIS 1.4 billion transfer was postponed yesterday because of opposition by Levy-Abekasis, who said that she was "furious," after a Ministry of Finance representative told her that the money to be transferred would come from money not used by other government ministries. "There are distorted priorities here," Levy-Abekasis told the representative. "You create insuperable hurdles for the Ministry of Labor, Social Affairs and Social Services. There are children standing outside with a court order and nowhere to go, and you say that you have a surplus that you will transfer for future planning of the light rail from Ra'anana to Tel Aviv. If there are NIS 63 million in the Ministry of Labor, Social Affairs and Social Services' budget that have not been used, I say that someone should take responsibility for it and go to jail. Planning the future light rail between Ra'anana and Tel Aviv is a luxury. It's not the icing on the cake; it's the cherry on top of the icing. We should be talking about black bread. Nothing should be voted on before we get answers."
The Ministry of Transport said, "Two requests for an NIS 850 million increase in the subsidy budget were sent to the Finance Committee. The 2019 state budget approved in March 2018 was based on 2017 figures. The subsidy budgets grew substantially in 2018 and early 2019 in comparison with the basic budget provided.
"Following a shortage of drivers created by the increase in service in recent years, it was decided to raise the drivers' wages by 10% and to help train 2,500 new drivers. Changes took place in input indices that have increased the operating costs for public transportation, and substantial service was added in 2018-2019.
"As part of the work on the Red Line of the light rail, changes were also made in traffic arrangements that cost tens of millions of shekels."
Published by Globes, Israel business news - en.globes.co.il - on October 31, 2019
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