(February 25, 2011) Urban Renaissance Institute executive director Lawrence Solomon argues that Toronto should follow the UK’s example, and privatize the TTC.
Toronto Mayor Rob Ford wants a good deal for Toronto taxpayers, who lose $350-million a year subsidizing the Toronto Transit Commission, a good deal for the Toronto economy, which loses $50-million every day that TTC workers go on strike, and a good deal for Toronto transit riders, who face increasing fares and decreasing service.
Here’s a good deal. Sell the TTC monopoly for $500-million to a company that would, as a condition of sale, guarantee to freeze fares for 10 years, guarantee to expand the frequency of service, guarantee to increase the number of kilometres logged, and guarantee to continue existing routes.
That good deal was on offer in 1999, when GB Railways, a U.K. company that ran commuter lines, tried but failed to purchase the TTC. That deal might be even sweeter today, given the city’s increased population and the TTC’s expanded infrastructure.
How could GB have made that offer? It saw what happened in the UK, 10 years after the country’s public transit systems became largely deregulated. With private sector efficiencies in play, more could be done for less. In London, where private companies competed for the right to run routes as franchises, buses logged 30% more kilometres at 41% lower cost, making public transit reliable and convenient. On busy rush-hour routes, the average wait became 1.5 minutes; elsewhere, the wait averaged 6.6 minutes. New bus routes, too, were introduced for formerly-neglected areas and bus fares dropped relative to inflation. To boot, buses became smart looking, bus drivers became courteous.
But good as the 1999 deal to buy the TTC might be, there are smarter ones around. My recommendation: Don’t convert the publicly owned TTC monopoly into a privately owned monopoly system, and don’t have the TTC franchise its routes. While franchising would yield dividends at first, sooner or later politicians would force the system to subsidize uneconomic services. This meddling by politicians, in fact, brought to ruin the TTC, until the 1950s the world’s most successful transit company.
Instead, Toronto should abandon its transit monopoly in favour of a competitive transportation system. Competition would reap billions for Toronto taxpayers, it would eliminate the TTC’s annual loss of $350-million, and it would provide transit users with good service.
Ford should let any company that meets safety criteria operate any bus service it wishes along any city thoroughfare. As in London, the average wait along busy routes would become negligible, encouraging more passengers to use transit. To avoid an excess of buses plying the same route at the same time — a problem that materialized in regions of the U..K. that allowed wide-open competition — Toronto should charge the private buses for their use of roads on the basis of the traffic congestion at different times of the day. Congestion charges such as these have decongested roads wherever they’ve been applied. To do better still, Toronto should sell bus stops along busy blocks to competing private traffic management companies. These managers would not only provide waiting passengers with shelter and other amenities, they would operate the stops to avoid congestion, the way airports manage airplane takeoff and landing slots to avoid pileups.
The city would then reap revenue from the congestion charges on roads and the sale of sidewalk space for bus stops. Passengers and car drivers alike would benefit from decreased traffic congestion.
What works for buses would also work for streetcars and rapid transit cars, which should likewise be sold to private operators. One upshot: Customers would obtain an unparalleled number of travel choices. Another: Strikes, always a worry in Toronto, would be irrelevant in this new travel environment — if one company struck, the others would quickly move in to grab its customers.
Competition should also see the light of day in Toronto’s subway system, whose dismemberment into logical business units would show its parts to be worth more on their own than when summed into a whole. Every subway station should be sold separately and to the highest bidder, generally a real estate developer or retailer who would know how to capitalize on one of the subway’s chief assets — the pedestrian traffic that it attracts. The TTC now values its buildings at about $1-billion. On the auction block, its stations would fetch many times that.
The subway tunnels and tracks would need to remain a monopoly operation, but they needn’t stay in government hands: They should be sold to a government-regulated tunnel operator to allow the city to reap another windfall, and to give the tunnel company a profit motive to both improve service on the existing tunnels and to bore new ones when a business case presents itself. The trains themselves need not be monopoly run — different train operators could ply the same tracks, offering transit users choices many would crave — value-added cars could offer passengers plush seats, drinks and video entertainment, for example.
These sales and revenue streams from transit-related properties would net the city a bonanza that could run into the tens of billions, making child’s play of Ford’s presumed challenges in meeting his tax-cutting election promises. In fact, these transit reforms would simultaneously allow Ford to meet or exceed much of the balance of his election platform. Toronto would have a much smaller government. With decongested roads, his car-friendlier Transportation City pledge would be realized. And, with transit companies competing for their customers’ business, the toughest nut to crack in Ford’s pledge to “deliver customer service excellence” — the TTC’s notoriously surly staff — would be civilized by being privatized.
Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute and the author of Toronto Sprawls (University of Toronto Press).