Improving Transit in Toronto
The essential role of government is deciding. Government may later, itself, do what it has decided should be done.
But equally it may not. Its basic intention is simply to see that what should be done is in fact done
- Citizens League of the Twin Cities
Cuts in provincial subsidies, Metro officials say, will force a
25 percent fare increase on Toronto Transit Commission (TTC)
riders. If TTC takes a business as usual attitude, riders are
indeed likely to pay more for less service. But around the world,
transit systems have faced greater financial challenges without
raising fares or reducing service. The starting point is the
recognition that business as usual is not good enough; public
transit can maintain its important contribution to the community
only by focusing its resources on a single objective --- serving
Lonndon (UK) reduced its bus operating subsidies more than 80 percent
while expanding service more than 20 percent. Los Angeles
services threatened with discontinuation due to budgetary
pressures were saved and subsequently expanded through
competitive tendering. London and Los Angeles were able to expand
service despite declining subsidies as a result of competitive
tendering. The strategy these transit systems chose deserves
consideration in Toronto.
Under competitive tendering, the transit agency continues to
decide what transit service is provided --- the routes and the
schedules --- it determines the fares, and it establishes safety
standards and service standards. Competitive bids are sought from
private companies to provide particular routes and services under
contracts that must be re-bid every three to five years.
Employees of the public transit agency are permitted to bid under
the same terms and conditions as the private companies. The
contract is awarded to the responsible and responsive bidder who
submits the lowest bid. Riders are unaware of any differences
except for lower fares and higher service levels that are made
possible by the savings.
Entire transit bus systems are being converted to competitive
tendering or have already been converted in London, Copenhagen,
Helsinki, Stockholm, Goteborg, Melbourne, Adelaide, Perth,
Wellington, Christchurch, Auckland, Las Vegas and elsewhere.
The savings have been substantial --- ranging from 15 percent to
60 percent. But, more importantly, the cost escalation curve has
been shifted radially downward. In London, costs per kilometer
have declined by more than 30 percent relative to inflation. In
Goteborg, Sweden, costs have been reduced by half --- and much of
the service is still operated by transit agency employees. In
Perth and Adelaide, public transit agencies have reduced their
costs per kilometer by more than 20 percent, virtually overnight,
in preparation for competitive tendering. Price Waterhouse
documented 60 percent savings in Los Angeles, and noted that
service quality and safety were improved under competitive
tendering. In San Diego, despite constrained funding, competitive
tendering savings have permitted a more than 50 percent increase
in bus service, while allowing the transit authority to commit
more resources to its new light rail system.
There is no doubt that TTC and its riders face a crisis. But it
is a cost crisis, not a funding crisis. Over the past 10 years,
TTC costs per mile have risen substantially in relation to
inflation. If its costs had been held within inflation, TTC would
have needed $125 million less to operate its services in 1994. If
costs had been held within inflation, TTC could have operated
without a provincial subsidy or reduced fares by 25 percent.
It's not a lot to ask. Where transit agencies have converted to
competitive tendering, below inflationary cost increases have
been the rule.
But TTC faces a related and more threatening crisis. Ridership
has dropped 15 percent since 1990. Worse, virtually all of the
lost ridership has been full fare passengers --- the passengers
for whom the alternative form of transportation is invariably the
automobile. Business as usual could relegate TTC to a much less
important role in Toronto, not unlike many American transit
systems that have become largely irrelevant.
There are obvious barriers to competitive tendering. TTC's
unions, in particular, oppose competitive tendering. Competitive
tendering would bring an end to overly costly work rules and
compensation that is far in excess of what comparable employees
are paid in the private sector.
It is never easy to change course. It is especially difficult
when strong interests oppose reform. But TTC is at a critical
juncture. It is confronted by the most fundamental organizational
choice. Will TTC focus its resources to serve transit riders, or
will special interests continue to cream off subsidies and fare
revenues at the expense of the riding public?
Transit plays a pivotal role in Toronto. It is not just TTC that
is at stake.
(c) 2001 www.publicpurpose.com --- Wendell Cox Consultancy --- Permission granted to use with attribution.
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