2.2. Subsidies
As stated above, although bus operators in Japan were obliged to
balance revenue and expenditures, many subsidies from sources
such as the general account of the local government are granted to
help in the management of the public operator. They are justified in
the name of securing public welfare. If this transfer of funds from
the government aims for ex-post balance of revenue and expenditure,
it may have a negative influence on public bus operators’
performance.
We define a subsidy as the sum of ‘transfer for fare rebate’,
‘national subsidy’, ‘prefectural subsidy’, and ‘local subsidy’. From
this viewpoint, Table 5 shows that about 30% of the total revenue is
obtained through subsidies. Among these subsidies, one can
confirm that fare transfer is the biggest item, followed by local
subsidies6. These two items account for a large amount of the total
sum of subsidies granted to public bus operators. National and prefectural subsidies accounted only for about 0.1% of the total
revenue of public bus operators in 2006. The point to be noted here
is ‘Transfer of fare revenue’. By definition, this is one of the fare
compensation measures for ‘fare-discount (concessionary fare)
schemes’ (e.g., old age pensioner passes and welfare passes), which
are set by local authorities. In Japan, this scheme was introduced
from the 1970s for public bus operators. Thus far, most local
governments that own municipal bus companies have implemented
this scheme. This policy measure was aimed at improving
the welfare of senior citizens and the disabled; therefore, it is not
precisely identical to the actual subsidies. Since the fare discount
for senior citizens and the disabled is not stipulated by law, there
are considerable variations among local authorities regarding
concessionary fare schemes (Terada, 2007).