TTC needs change, experts agree — but is privatization the answer?
The Star takes a look at the privatization debate, including what — if anything — could work in Toronto

Toronto Star
February 21, 2014
By Kim Nursall

The privatization of the Toronto Transit Commission could literally be the city’s third rail.

Any mention of the TTC being packaged up and sold off, as an article last week in the Star’s Big Ideas series suggested, is largely met with intense opposition. But despite resistance to change, many experts argue that a re-examination of how Torontonians get around is overdue.

Those same experts are divided on the outcome, but in the face of traffic standstills, dilapidated infrastructure and long-term costs, they’re willing to put everything on the table just to get the conversation started.

“There are so many different models that the TTC and the province, through Metrolinx, could be looking at, that we should be considering all options,” Ben Dachis, a senior policy analyst with the right-leaning C.D. Howe Institute, told the Star.

“We need to find ways to provide the lowest-cost service, lowest-cost construction, and lowest-cost operation for our transit if we’re going to keep growing as a city.”

On Feb. 12, Patrick Luciani, senior fellow in urban policy at Massey College and co-founder of the Salon Speakers Series in Toronto, argued in the Star that Toronto should auction off bus routes and sell air rights at subway stations “to entice companies to build a state-of-the-art transit system.”

“We should be drilling subway tunnels 24/7 with the best technology for the next 20 years,” wrote the senior fellow at the Global Cities Institute — a statement he reiterated in an interview with the Star on Thursday.

“Privatization couldn’t be any worse than what we have now. It’s been a tremendous drag on Metro Toronto.”

But for Dachis, the best plan — at least in the short-term — is not full privatization but rather contracting out transit operations, examples of which already exist in the GTA. York Region’s Viva bus rapid transit system is modelled on a private-public partnership, and Bombardier is an integral part of the region’s GO Transit system.

“We don’t necessarily need to assume that a private company is going to be the best way to provide any kind of services,” Dachis stressed, pointing to the unique contract between Metrolinx and the TTC for the operation of the Eglinton Crosstown LRT.

“If the TTC is able to provide below-cost services compared to a private company, then the TTC should,” he said. “The mechanism that provides the cost savings for Metrolinx and the end user isn’t necessarily privatization, it’s competition.”

Dachis also points to Vancouver’s Canada Line — built and operated on so-called P3 agreements — and the extensive competition associated with the bus system in London, England, as other notable examples of successful contracting.

Critics of privatization argue that if the government steps back entirely, selling off subway lines and giving up control over fares, some of the poorest riders will no longer be able to afford transit.

“If we’re talking about selling the TTC to a private company without any sort of oversight as to what the fares are going to be, then yeah, there’s going to be something to these sorts of concerns,” Dachis said.

Luciani, however, thinks the government should find other ways to serve the poor — direct subsidies, for example — as opposed to building and administering “a very inefficient transit system.”

“The poor are paying dearly for our system, because it keeps them on transit much too long through very long commutes.”

Although Luciani believes Toronto should focus on a homegrown transit solution, he praises the success of Hong Kong’s rail operator, the MTR corporation. Since privatizing in 2000, it has become one of the few profitable transport services in the world.

But as quickly as Luciani can name effective privately run systems, Unifor economist Jim Stanford can point out others that have completely missed the mark.

In Auckland, New Zealand, for example, Stanford said privatization has made the system increasingly fragmented and has actually undermined efficiency.

“It makes it impossible to plan the overall system well, and for passengers to make connections,” the Torontonian said in an email from Australia, where he is currently on sabbatical.

As happened in Auckland, Stanford sees any form of TTC privatization as leading to more fragmentation, because the transition between Toronto transit and regional providers is already cumbersome.

Stanford said an even bigger issue for the transit debate is the uncertainty of funding and what makes this subject a third rail to begin with: politics.

“The politicization of the capital process (where LRTs and subways become political footballs for politicians) is appalling,” he said. “We need to develop a long-term capital plan that makes the most sense, then stick with it.”

“Does Toronto’s system need to change? Oh yeah,” he said. “But privatization isn’t going to bring about the change we need.”