Argentine train crash sheds light on need for transportation reform

A commuter train crash yesterday – the latest in eight rail accidents in Argentina since 2008 – is shining a light on the government's unaddressed transportation problems and poor regulatory standards.

The Buenos Aires metropolitan train system was privatized in 1991 as the government faced budgetary pressure due to a deep fiscal crisis. Four private companies took over and were responsible for the seven lines serving the Buenos Aires area. But these companies largely failed to expand and improve transportation services after taking the helm, and the Buenos Aires train system has slowly deteriorated over the past two decades.

The exact cause of Wednesday’s crash is still under investigation, but it reflects the dire state of the Argentine rail system. An estimated 50 people died and nearly 700 were injured in yesterday's accident. Services including upgrades and safety checks to the Sarmiento Line train, which failed to brake yesterday as it entered the Once Station, were deemed “acceptable,” said Roque Cirigliano, director of Trenes de Buenos Aires (TBA), the company responsible for the crashed train.

"We've invested more than a lot of the other train companies," Mr. Cirigliano said.

Some find Cirigliano’s statement worrying. A 2008 report issued by the National Auditor’s office found numerous deficiencies in trains operated by TBA.  The shortcomings listed include a lack of emergency brakes and inoperable hand brakes.

Representatives of Argentina’s railroad union have been trying to call attention to poor conditions in the commuter train system since 2005, they say.  Their calls for action were consistently unmet, union representatives say, and they blame "perverse administration" for the system's problems.

Subsidies to blame?

In the aftermath of the economic crisis of 2001, transportation prices were frozen and the losses of transportation companies were covered by expanded subsidies from the national government, which kept costs low for commuters. Commuters in the suburbs of Buenos Aires pay roughly 25 cents for a commuter train ticket, lower than most regions in Argentina and the rest of Latin America. A similar ride on a commuter rail in Santiago de Chile costs almost $2.

Transportation businesses receive the majority of their income from government subsidies with little or no conditions attached, states a recent report from the Center for the Implementation of Public Policy for Equity and Growth (CIPPEC), a Buenos Aires-based think tank.  Because of this, private transportation companies “have few incentives to improve services," says the report. Even as government subsidies have soared in recent years, the number of commuters per rail car has increased, along with the age of the fleet, indicating lower quality of services.

President Cristina Fernandez de Kirchner recently announced cuts in universal subsidies, saying only low-income groups should receive them, but these changes have not yet gone into effect.  One of the aims in reducing subsidies was to put more onus on private companies essentially overseeing the safety and efficiency of the rail system. But the government is facing a budget deficit and high inflation, with subsidies exacerbating both, and this reduction in subsidies was also meant to keep deficits in check.

No oversight 

“The levels of noncompliance [by TBA] in 2008 were very high,” said Leandro Despouy, director of the National Auditor’s office on Wednesday.  The government could have used that evidence to break their contract with TBA, he said.

The transportation sector represents a medley of mismanagement, from regulatory agencies to the private companies, says Lucio Castro, an economist at CIPPEC.

Regulatory agencies are easily wooed by political interests, and because of this "there are basically no controls on what the companies do with government cash," Mr. Castro says.

Investment in transportation infrastructure has increased threefold since 2005, Castro says, but most of it goes to highways and roads because those investments are cheaper and create more jobs.

"Trains are the ugly duckling of our transportation system. We need to make sure our regulatory agencies are independent and demand accountability in order to turn it around," he says.