To the Editor
The London (Ontario) Free Press:
The recent letter from Ken Foster of the Amalgamated Transit Union missed the point. The limited space of this letter is best used to outline transit privatization accomplishments, rather than to refute the Foster letter point by point.
A revolution is underway in transit. Around the developed world, public transit systems are being converted to competitive tendering --- an approach that maintains full public control of services and fares, but which relies on services provided by the lowest responsible and responsive public or private bidders. To riders, there is no difference other than lower fares and higher service levels that are made possible by the savings.
Entire transit systems have been or are being converted in London, Copenhagen, Stockholm, Goteborg, Helsinki, Melbourne, Adelaide, Perth, Auckland, and elsewhere. Unit cost savings are typically 20% to 40%. Stockholm has just competitively tendered part of its subway system. In the US, the experience has been less extensive, but the cost savings have been greater. An independent audit by Price Waterhouse put Los Angeles savings at 60%, while KPMG Peat Marwick found Denver savings to be 31%. San Diego is the best US example, however. For 16 years, San Diego has been gradually converting to competitive tendering. More than 35 percent of bus service is now competitively tendered, which has driven an overall cost per kilometer reduction of one-third (inflation adjusted). There have been no lay-offs. San Diego has used the savings to increase service, and ridership has increased substantially. In Canada, which often justifiably compares itself favorably with the United States, there has been little progress.
If London Transit had followed San Diego's competitive tendering example over the last 10 years, and achieved similar cost savings, operating costs would have been $10 million lower in 1994. This is a considerable amount --- enough to increase transit service by 60 percent or to reduce transit fares by nearly 70 percent. Over the last 10 years, London Transit ridership has dropped by more than a third. Conversion to competitive tendering would make it possible for London Transit to survive a challenging future without forcing the riders to pay through higher fares and curtailed service. It's long past the time to put the public first.
Conversion to tendering is driven by the undeniable failure of public monopoly, which frustrates the efforts of the most talented and dedicated public administrators. The perverse incentive structure inevitably brings higher fares and less service. Competition is the missing element.
Sincerely,
Wendell Cox,
Principal, and
Former Member,
Los Angeles County Transportation Commission
