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Selling off the TTC is back on the table. Is it time?

‘It is large; it’s expensive … it doesn’t adapt to the future’


From Saturday’s Globe and Mail

May 3, 2008 at 12:11 AM EDT

Last weekend’s snap TTC strike not only left commuters stranded and the city scrambling for answers, but it also dragged up a prickly issue in its wake. Privatization, considered to be a dirty word by many Torontonians still wary after the Harris years, was floated at council on Monday.

Advocates say the time is right to explore the idea of contracting out parts of the mighty 10,000-employee Toronto Transit Commission.

For Rob Ford, the Ward 2 councillor who raised the spectre of privatization, it presents a way to break the stronghold of the Amalgamated Transit Union. Other proponents advocate contracting out subway expansions, dividing the TTC into separate specialty units or handing overall control of the region’s transit to the province.

“I think we’re living a myth,” Ward 16 councillor Karen Stintz said. “We’ve told ourselves a story that we have a world-class system, but we’re not. We’re not a leading-edge transit provider any more.”

Despite Ms. Stintz’s clarion call, councillors and analysts of all political persuasions admit that full privatization in any guise will not find traction soon, since council and community sentiment weighs heavily in favour of maintaining the current system.

Advocates say privatization will cut costs and improve services across the city. Detractors warn that it could lead to a mish-mash of companies servicing only the most popular routes, leading to poorer overall service, less central cohesion and no significant savings for the city.

“For thousands of Torontonians, the TTC is critical to their lives. They’ll be very careful about changing the status quo,” Ward 34 councillor Denzil Minnan-Wong said. “Just selling the TTC outright to a private company and putting a ‘for sale’ sign outside the doors of the TTC is unacceptable to the public, because it’s so important to them.” So what is there to gain or lose by whittling down the TTC?

Despite regular commuter gripes about late service, the TTC is one of the most efficient transit systems in the world, in terms of operations, according to a TTC-commissioned study in 2003.

At cost per kilometre and cost per passenger, the system is judged better than most peer cities in North America, with significantly lower subsidies per ride than comparable U.S. systems.

But former city budget chief, David Soknacki, describes the TTC as “dinosauric”: “It is large; it’s expensive; it moves in old-fashioned ways; it doesn’t adapt to the future; and it consumes a lot of food, which is cash,” he says.

He argues that it’s vastly outdated: People no longer simply live in the suburbs and commute to the core. They need flexible service.

But outright privatization, he warns, could lead to private enterprise “cherry-picking” the most profitable services - and leaving the taxpayers to fund the rest. Instead, Mr. Soknacki suggests something in between: Split the TTC into specialty divisions and create one controlling body to oversee it and other Greater Toronto Area service providers.

“The administration has the choice of making fundamental changes to the TTC or watching those changes being made for it,” he said. “It’s a shame, because the TTC could be leading [transit provision] instead of following.”

London is held aloft by both camps as an example of the pros and cons of privatization. Those trumpeting the cons include TTC chair Adam Giambrone, who points to the failed privatization of London’s iconic Underground as a cautionary tale. Contractors were paid to maintain and renew the Tube network while the government agency Transport for London (TfL) retained ownership of tracks, trains and stations.

But last year the five-corporation body called Metronet Rail BCV Ltd. that took on two of the three $34-billion contracts incurred debts of at least $4-billion, leaving TfL and the City of London to cover the loss. “There are no other major centres [outside London] that run privatized operations. There’s a reason,” Mr. Giambrone said.

Above ground, however, London’s bus reform is a glowing privatization success story, said Ben Dachis, a policy analyst for public-policy think tank the C.D. Howe Institute.

“The bus services in the U.K. after privatization are just off-the-charts better than they were before,” he said. “Prices are way down, service is way up. … The best way to get around London these days is on the bus. No one takes the Underground.”

Mr. Dachis says there are two options for privatizing the TTC: Contract out some services, such as maintenance; or overhaul the entire transit system. Both approaches offer substantial gains, he said.

Through piecemeal outsourcing, the union could compete alongside private companies for TTC contracts. Where this is done in other cities, unions win 90 per cent of contracts and the city’s costs are driven down thanks to competitive pricing. This could lead to lay-offs, but Mr. Dachis said in other privatized cities only 3 per cent of jobs were lost. Many workers found jobs in private companies or elsewhere in public service.

Fundamental reform would see the TTC open up internal services and transit routes to private providers.

“Until recently, only a few people had been talking about the benefits of having other transit providers, but I think the last TTC strike really struck a chord with people,” Mr. Dachis said. “They thought, ‘We need this [service], but we can’t rely on the TTC, so what can we do?’ “

Fear is keeping the issue off the city agenda, though. The TTC and the executive council have misconceptions that outsourcing will lead to massive job losses, Mr. Dachis said, and there is a strong desire to retain the TTC monopoly over transit. But the idea must be considered. “In the long run, I really do believe we should be emulating the London model … of public services, public routes being provided by private bus companies. This is absolutely something that can happen in Toronto.”

Ms. Stintz shies away from putting operations to private tender, but she sees capital expansions, maintenance and other work as ripe for a new approach. The TTC currently manages every aspect of capital projects, like new stations and subway lines. In a $100-million project, parts that cost less than $10,000 must still go through the TTC’s bureaucratic machinations for approval and implementation.

The TTC estimates that paperwork adds 20 per cent to project costs, said Ms. Stintz, who commutes on the subway three days a week.

“If we could find a way to manage that 20 per cent better by using Infrastructure Ontario, by using Metrolinx, by using corporations that have the project management expertise, we should do that,” Ms. Stintz said, adding the saved cash could be directed into operations and service improvements.

But service was not the focus for Mr. Ford. He is more interested in challenging the transit union. By giving control of operations to private business, he believes that the unions will lose their strength and commuters will no longer face threats of strike. (Mr. Giambrone, however, said unions would have legal protection, even under private operators.)

“People are just fed up with the system as it is now,” said Mr. Ford, who uses the TTC five or 10 times a year. “That last strike just sent the message to the taxpayers that they [the TTC] don’t care. “

The call to have the province deem the TTC an “essential service” - and therefore stripping workers of their ability to strike - could achieve a similar end. The mayor has pledged a debate at his executive committee in September, and after that at city council.

“I think the TTC is a gem in Toronto,” Mayor Miller said. “With appropriate investments … the TTC can again lead the world.”

With files from Jeff Gray