Free buses for the old, but the young will get the bill

Joo Jung-wan

The author is an editorial writer at the JoongAng Ilbo

“There is no such thing as a free lunch.” The famous saying by American economist Milton Friedman reminds us that even when something appears free, someone ultimately pays the bill. Rather than welcoming any benefit labeled “free,” policymakers should first ask who bears its hidden costs and how those costs are distributed.

That question has become central to a heated debate in Seoul over free bus rides for older residents. On June 24, the Seoul Metropolitan Council passed the Seoul Senior Transportation Support Ordinance. Under the current system, people aged 65 and older may ride the subway free of charge, while bus passengers pay regular fares regardless of age. The new ordinance would extend free bus service to residents aged 70 and older.

The measure advanced through the council with unusual speed. The conservative People Power Party (PPP) and the liberal Democratic Party, which frequently clash on political issues, found rare common ground. A PPP council member introduced the bill on June 9, shortly after the local elections. On June 15, the council's Transportation Committee approved it unanimously without holding a public hearing. It then passed the full council by an overwhelming margin only two weeks after its introduction. The rapid process inevitably raises questions about whether both parties were responding to the electoral influence of older voters.

The ordinance now awaits a decision by Seoul Mayor Oh Se-hoon. If Oh does not exercise his veto authority by requesting reconsideration, the ordinance will take legal effect. The city government would then determine when the benefit begins and how it will be implemented.

The central issue is not whether older Koreans deserve support. It is who will pay for the additional benefit. There are only two realistic options.

The first is to raise public transportation fares. In that case, the financial losses created by expanded free rides would effectively be transferred to other passengers. Minutes from the June 15 Transportation Committee meeting illustrate this concern. Responding to council members, Yeo Jang-kwon, head of Seoul's Transportation Office, said officials would need to examine the possibility of increasing fares. Even before the ordinance, city officials had repeatedly argued that higher fares would eventually be necessary to reduce growing deficits in both the subway and bus systems. Expanding free bus rides would only increase that pressure.

The second option is to cover the cost through taxpayers. Seoul already spends hundreds of billions of won every year supporting private bus operators. Since introducing its semi-public bus system in 2004, the city has compensated operators for operating losses. Annual subsidies, once around 100 billion won ($64.5 million), have grown to approximately 450 billion won this year. Even with that support, accumulated deficits have exceeded 1 trillion won.

Against that backdrop, the new benefit would place an even greater burden on the city's finances. The Seoul Metropolitan Council Secretariat's fiscal analysis estimates that implementation would require about 580 billion won over the next five years. The estimate assumes that by 2031 Seoul will have 1.62 million residents aged 70 or older, and that each will take an average of six free bus trips per month. If actual usage exceeds those assumptions, the fiscal burden will rise accordingly.

Nor is this a temporary issue. Seoul has already become a super-aged society, with people aged 65 or older accounting for more than 20 percent of its population. The number of residents over 70 is expected to continue increasing through the 2050s. Policymakers should therefore determine now how long such a program can remain financially sustainable.

Some argue that raising the eligibility age for free subway rides from 65 to 70 would reduce enough spending to offset the cost of free bus rides. That argument overlooks the broader fiscal picture. Given the enormous long-term costs, the subway's own free-fare program arguably should already have undergone comprehensive reform. If the current system resembles a patient suffering severe blood loss, merely reducing one source of bleeding does not justify creating another.

The Seoul city government has since announced plans to hold a joint public hearing with the Seoul chapter of the Korean Senior Citizens Association. Such discussions should have taken place before the ordinance reached the council floor. Even so, the hearing should carefully reflect the views of younger generations, who will ultimately finance today's decisions. They must not be invited merely to endorse a predetermined outcome. Once welfare benefits are introduced, they often remain in place for decades, perhaps indefinitely. The people who will continue paying for them are today's young Koreans and the generations that follow.