(The following is a personal commentary reflecting the opinions of the author alone. It does not necessarily reflect the overall opinion of the members of Transit Toronto)
Mayoral candidate George Smitherman was recently interviewed in the Toronto Star (see here), calling for the privatization of city services such as garbage collection and the Toronto Transit Commission. Although he promised not to take such bold steps without ensuring that “outsourcing doesn’t diminish services while saving money for taxpayers” he said that “we need to look at outsourcing where it makes sense, given the state of the city’s finances, while protecting our citizens.”
I don’t have the full text of the Star interview in front of me, so I don’t have the full context of what Mr. Smitherman said about privatizing certain routes on the TTC, but from what I have read of Mr. Smitherman’s comments, he does Torontonians a disservice by offering up piecemeal privatization as a panacea for the city’s problems. His solution as presented is especially simplistic for the TTC.
Mr. Smitherman is quoted as saying, “If you say outsourcing and you say the TTC, what do they do? They buy buses and they run them up and down routes for the collection of a fare.” He then offers London, England as an example, despite the fact that the example has been criticized, and ignoring the fact that London is significantly denser than Toronto, giving public transit there a significant advantage that the TTC does not have.
He makes it sound so easy, doesn’t he? Just offer up contracts and private companies will beat a path to city hall, offering money to purchase TTC vehicles and operating them for no further cost than the right to collect their own fares. A beautiful solution, isn’t it? Who could possibly find fault with it? Indeed, why haven’t we thought about this in the thirty-eight years since the TTC last made back its operating costs completely from the farebox?
Mr. Smitherman unfortunately seems uninformed when it comes to the finances of the TTC, otherwise he would know that there isn’t a single surface route on the system which makes back the full costs of its operation from the farebox. Only a handful (most of them streetcar routes) come close. Even though the TTC is the second-least per-rider subsidized system in North America (75% farebox recovery; only GO Transit does better at 81%; even New York City gets more subsidy from its governments to operate, at 62%), the only parts of the system that might conceivably be profitable are the subways, and they subsidize the operation of the entire surface network.
If you cut out the subways of the network — the only part that a private company could conceivably come forward to purchase and operate without subsidy — you end up increasing the amount of subsidy required to keep buses and streetcars on the road operating frequently. If you cut out the surface routes which are the closest to making an operating profit, then you might decrease the total subsidy required to operate the remainder, but you are forced to ask yourself what steps the private companies will make in order to ensure that the services they purchased make a profit for them.
To his credit, Mr. Smitherman makes further promises, saying “If you’re going to outsource the delivery of bus service on one line or five lines or 10 lines, the fundamental conversation … has to be that the frequency of service will not drop,” so, no cuts in service will be allowed. Will these routes be required to accept TTC transfers? Will they be required to accept TTC fares? One would think so, which means that the bulk of the savings required for private companies to operate the service for fares alone will have to come from a reduction of labour costs.
For the knee-jerk anti-union types, this is an obvious and desirable solution, although it’s worth pointing out that TTC drivers’ wages are not significantly out-of-whack compared to their private counterparts. Indeed, there are reports that the TTC and GO Transit are having difficulty hiring and keeping bus drivers, in spite of the wages they offer. After taking the TTC’s driver training courses and getting their special bus driver licenses, a number of new personnel have been known to quit the transit agency and take up jobs with the private charter companies, where the passengers they pick up are happy to be on the bus, and where the drivers themselves get to keep tips.
Mr. Smitherman would do well to note that York Region Transit operates under an amalgamation of multiple contracts, some of which have been offered to private companies (a legacy of YRT’s creation from the merger of nearly a half-dozen smaller transit agencies). There have been benefits from this arrangement, such as when one contract ran out and a strike occurred, only a part of the network was shut down. However, even with this contracting out of service, York Region Transit has not come anywhere close to eliminating its operating subsidy. Its farebox recovery is less than fifty percent. Even the privately run VIVA service — by all accounts a winner with riders — still requires taxpayer subsidies to run.
If Mr. Smitherman wants to consider the contracting out of the TTC, perhaps he should be bolder than he is. Rather than talk about “one line or five lines or 10 lines”, perhaps he should talk about a system where tenders are called for private companies to come forward to operate the TTC, division by division, for a taxpayer subsidy that one expects to be less than the current subsidy required to operate. It’s a debate Torontonians deserve to have, and there are potential benefits to this arrangement, even though it would require a lot of political capital to implement, make for an interesting few years in the labour relations department, and may not in the end produce the results that some proponents of privatization expect.
However, Mr. Smitherman owes Torontonians more than suggesting that the changes he offers are both bold and simple. Bold they may be, but they aren’t as simple as he claims, and they won’t save Torontonians from the need to pay for the transit that they deserve.
(This post has been reposted on James’ personal blog. To comment, go here)