Contracting-out works in some cities, but London’s troubles show it can also be risky
Published On Wed Mar 03 2010
Tess Kalinowski Transportation Reporter
It’s the conversation some say Toronto’s council has been afraid to have — whether contracting out could lead to a better, more affordable TTC.
Until the mayoral race and budget deliberations suddenly brought the issue to the surface, “There’s been an absolute refusal to even consider it,” said Councillor Peter Milczyn, who sits on the Toronto Transit Commission. “There may have been people in the civil service who’ve seen the value of this, but they wouldn’t be allowed to pursue it.”
Privatized transit might be a radical notion in downtown Toronto. But at least two major regional transit operators already contract their operations.
GO Transit is about halfway through a five-year contract with Montreal-based Bombardier Inc. to crew its trains. Worth about $23.9 million annually, the contract was designed to ensure a higher level of service than the previous supplier, CN. It was also expected to save GO $1 million to $2 million per year.
York Region Transit’s regular bus service and its premium VIVA bus rapid transit are based on the system of contracted providers inherited from communities such as Markham that were amalgamated into the regional system a decade ago.
“It’s good value for our citizens and we have very substantive contracts,” said York Region chair Bill Fisch. “We have a process. If they do badly they lose money; if they do well they get bonuses.”
York, which has four private bus providers, also contracts some routes to the TTC. Each supplier is allowed to operate in only two of the four regional service zones so the system is unlikely ever to shut down entirely because of labour or operational issues. When VIVA drivers employed by Veolia Transportation went on strike two years ago, riders still had the option of using the YRT routes.
The flip-side is that the employer, not elected officials, are responsible for how long a labour dispute drags on.
Phoenix, Ariz., has a similarly contracted-out transit system that uses three major suppliers, including Veolia, that provide service on a price per route-mile basis. The companies can’t come after the city if the route is a money-loser.
Like many U.S. cities, however, Phoenix is struggling financially right now and is in the process of cutting back its bus service, according to Marie Chapple of the Phoenix Public Transit Department.
“As we reduce service, we will reduce employees. Through the private contractor, it’s easier to expand and reduce staff,” she said.
But customer service rather than labour relations could be the motivation for contracting out parts of the TTC, suggested Ben Dachis, a policy analyst at the right-leaning CD Howe Institute.
The TTC would be able to dictate its service parameters in its supplier contract, specifying performance measures such as adherence to bus schedules that could be monitored by GPS, he said. “What you can do to create buy-in from the unions is to allow them to bid alongside the private organizations.”
If you divied up the bus service into geographic zones, you could have various bidders vying with the union for that piece of business. That’s something Dachis believes will be more important in the future as regional transit agencies are increasingly integrated.
But nobody thinks wholesale privatization of the TTC is a good idea, said Dachis. “We’re talking about incremental change here. You can’t just start operating a subway. It’s not a turn-key operation,” he said.
London, England, is proof of that, says a veteran of that city’s experiment in privatized transit, which has resulted in a hybrid of public-private operations on the London Underground and bus services.
One of two companies contracted to maintain the London subway, Metronet, went bankrupt, leaving taxpayers on the hook for what some have estimated to be more than a billion pounds.
“That risk, in reality, always remains with the taxpayer. It was a silly model,” said Mike Challis, who lived in Toronto in 2008 and spent lots of time studying the TTC.
“Government had lulled themselves into the belief that the private sector is far more efficient than it is. Taking the huge amount of investment off the government books — it’s just creative accounting, and in the long run it costs the taxpayer more,” he said.
“I think the TTC is quite efficient and accountable to its public. It’s actually pretty good, certainly for North America: high levels of service; frequent service, integration of subway is very good. It would be crazy to throw all that away.”
With files by Paul Moloney