By Jung Min-ho
Major city governments across Korea paid more than 40 billion won ($37 million) too much in subsidies to bus operators in 2013, the nation’s audit institution said on Tuesday.
According to the Board of Audit and Inspection (BAI), city governments of Seoul, Busan, Incheon, Daegu and Gwangju gave their bus operators 100 billion won in subsidies in 2013. This was 40.5 billion won more than the companies were supposed to receive.
The inspection result exposed a loophole in the local governments’ quasi-public bus operation system, under which the governments financially support bus operators to keep them afloat in exchange for managing the bus routes.
The system, which the Seoul Metropolitan Government (SMG) adopted first in 2004, guarantees the companies a profit paid with taxpayers’ money. The aim is to provide bus services to residents in isolated areas on routes the companies might otherwise close because they are unprofitable.
“We found that the local governments subsidized the bus operators based on their own standards, not the one set by the Ministry of Land, Infrastructure and Transport, although they are recommended to follow the ministry rules unless there is a special reason not to,” a BAI official said.
For example, the SMG gave local bus operators 25 billion won to cover vehicle insurance fees, while the companies actually needed only 19 billion won.
The BAI said the cities’ mayors should follow the ministry standard or make their own standards more reasonable to prevent further waste of taxpayers’ money.
“We will look into the issues raised by the BAI,” said Shin Jong-woo, an SMG official in charge of bus policies. “We will soon announce a new standard.”
The BAI official said that the inspection, conducted from last April to June, was aimed at making bus operations more transparent and efficient.
He said that such lax operations, including the excessive subsidies, were the main causes of fare increases.
In fact, the SMG plans to raise subway and bus fares for the first time in three years, despite tumbling oil prices.
The Incheon Metropolitan Government is also poised to raise subway fares by 200 won to 1,250 won from 1,050 won.
Bus fares in the city may also increase by up to 300 won to 1,400 won from 1,100 won, according to city officials.