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The Regional Environmental Reconstruction Programme for South Eastern EuropeREReP Record |
| Tickets, please EU regulation could rein in discounts for public
transport by making municipal On the eve of Hungary’s parliamentary elections in 1998, things looked grim for incumbent Premier Gyula Horn. His Social-Liberal coalition had instituted a harsh austerity programme and opposition parties were riding high on the public furore it provoked. Horn’s campaign desperately needed some first aid to patch up his bruised Socialist credentials. So just before the vote he made an announcement: Pensioners over 70 years of age could ride free on trains and public transportation. The move was a time-honoured gambit of European politics, where state control over public transport makes it a handy electoral tool. In Hungary’s case the 1998 decree failed to rescue the Horn government, but it saddled Budapest’s public transport company, as well as the country’s national rail system, MAV, with a financial burden that still exists today. This kind of political fiddling is likely to become less common under a regulation agreed to in September by the European Parliament and European Commission. According to the new stricture, cities whose public transport is run by independent companies will no longer be able to award fare discounts by unilateral decree. The regulation will require working relations between city administrations and their transport operators to be spelled out in detailed contracts, with agreed-upon funding for social discount compensation going from the city to the operator. The regulation could have a particularly dramatic effect in new member states of the EU (as well as in candidate and aspiring member countries), where public transport administration is less evolved than in Western Europe. In candidate state Croatia, for example, just three municipalities have formal contracts with their public transport operators; the rest operate at the whim of politicians, and with all the financial insecurity that this situation entails. Capital ideas Operators at the Zagreb meeting agreed that unfunded social discounts can be a serious problem. In virtually all cities, passengers with discounted passes make up a large share of ridership. In the city of Warsaw, for example, there are social discounts for 29 categories of people. Along with the usual categories (e.g. pensioners, students, physically handicapped) are: victims of Nazi and Soviet persecution, blood donors, Second World War veterans—and persons who can certify that they were born in public transport vehicles! Due partly to this wide range of discounts, public transport in Warsaw is 66 percent dependent on public subsidies, the highest rate in Europe. In the Bulgarian capital of Sofia, discount transport passes are given to more than 200,000 users. Metodi Avramov, head of the economic department at Sofia Public Transport Company Ltd., said his city is grappling with the financial burdens of discounts that were decreed by the city council 10 years ago. The problem with such breaks is not that they exist; the difficulty is when the city gives discounts without budgeting for it, according to the department head. “A city can’t have a social policy of discounted public transport fares without paying for it,” Avramov added, “because in the end, the burden will fall on the operator.” Contracts and competition Such contracts would have to be awarded through public tendering—the better to encourage competition. Although cities with single, so-called ‘in-house’ providers will at first be allowed to award their contracts to existing vendors without a tender, they will have to make public all the terms of the agreement. After a period of time, competing vendors who have had an opportunity to inspect the contracts will be allowed to bid for the work. The regulation was intended to encourage greater efficiency
and competition, according to Peter Faross of the European Commission’s
Directorate General for Energy and Transport. At the time the regulation
was first proposed, in 2000, public transport operators in Europe, on
the whole, were actually overcompensated for their services, Faross aid.
Transport companies would fight fiercely for service agreements, and when
they lost they would inevitably sue and demand that the city show the
basis on which the winner got the contract. However, the representative of one municipality has doubts about whether the regulation will work. Stanislaw Jedlinski represents Warsaw’s Public Transport Authority, which works with a single, independent operator of the type that will be allowed to keep its exclusive working contract under the new regulation. Jedlinski believes this arrangement will hinder improvements to local public transport. “The European Commission says the essence of the
new regulation is that the relationships between authorities and operators
are governed by contract, but this has been the case in Poland for years,”
Jedlinski said. “Rather, it seems a step back. You may have a contract
with In point of fact, the contract hasn’t changed much in Zagreb, according to Branimir Valasek, an advisor at ZET. Even before ZET and Zagreb City Hall sealed their relationship in writing, the city had provided adequate support for public transport, he said. However, a worry came prior to recent elections, when political opponents of the incumbent administration accused City Hall of spending too much on public transport. The sitting city council won the election, but the close race was enough to convince Valasek of the merits of a long-term contract—one that provides some shelter against the vicissitudes of politics. Get it in writing
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