This article contains the text of my address to the TTC Meeting of November 17, 2009.
- Report 2a 2010 TTC Operation Budget – Fare Increase
- Report 2c Review of Smartcards at the TTC and the Presto Smartcard System
Today the TTC will consider fares for 2010 as recommended by staff as well as a number of alternatives that will come forward from both the Commission and from other deputations at this meeting. Also on the agenda is a report detailing conditions for the the TTC’s participation in the Presto Smartcard project. These items are related.
First, with respect to the fare increase, my position is simple:
- A fare increase is unavoidable, and indeed might have had less effect both in the media and in the general public if there had been an increase for 2009 rather than a fare freeze.
- The proposed increase will not raise all of the $100-million plus shortfall forecast by the staff report. Additional funding will have to come elsewhere either by added revenues or by adjustments to the budget and service. Having no increase at all is not an option.
- The proposed increase in the Metropass price multiple from roughly 48 to 50 fares is contrary to the direction the TTC has been taking with the Ridership Growth Strategy, and there has been no public discussion of this or many other possible changes in the fare structure.
I concur that a 25 cent increase in the base adult fare is reasonable under the circumstances, but all other pricing including passes should rise proportionately without penalizing any subgroup of riders.
Metropass users now account for over half of the adult trips on the TTC, and this proportion continues to grow. Indeed, with various incentives such as the monthly discount plan, volume purchases and the income tax rebate, passes are well on their way to being the dominant form of fare payment in Toronto as they are in many other cities.
As the TTC moves to smart cards, the distinction between a “pass” and a single “token” fare will become even more blurred and pricing will likely move to a more general discount system based on volume of use within a period of time (week, month, holiday period, etc). This is hardly the time to be tinkering with the Metropass multiple, especially when many other possible changes in the fare structure are on the table.
A troubling comment in the report notes that overall costs will increase in 2010 by 7% due to several factors, and that this rate of increase will continue for the foreseeable future. This is an alarming projection, and staff should produce considerably more detail to substantiate this claim. How much is a presumed allowance for future service improvements, for labour, for materials and energy? If this rate is unavoidable, how will the TTC’s funding sources – fares, municipal and provincial subsidies – keep up? This is a vital part of TTC planning comparable to the long-range projections in the recent Capital Budget debates, and it should form a core part of the Operating Budget report in December.
Fare policies are rarely debated except when a fare increase is proposed, and the discussions are always in the context of a change that must be approved “today”. Alternative proposals emerge, some on the day of debate, and they are considered in the political heat of the moment rather than as part of an overall fare strategy.
With the Ridership Growth Strategy, Transit City and more recently the Transit City Bus Plan, the TTC put forward a range of options, discussed the implications of each, priced them and estimated the benefit for ridership and overall system attractiveness. I believe that the same process is essential to a review of fare policy.
Recently, we learned through the media that extension of student pass pricing to post-secondary students would be proposed today by deputants and championed by Chair Giambrone. The estimated cost is cited as $2.5-million, but there is no source material for this, nor do we know if it is an annualized cost, or merely the cost to provide the lower-priced passes effective in September 2010.
We also learned that a time-based fare which would provide, in effect, a time-limited pass in place of a transfer would cost $15-million a year, and the Chair dismissed this as an unreasonable cost. Is it? Has there ever been a debate on the issue relative to the many other changes both in service and fares the TTC might implement?
How might a combination of distance and time-based fares work to address both cross-boundary and short-trip convenience issues that are often parts of fare debates?
The TTC will move to Smartcards starting likely in 2012. This technology is integral to all-door loading on the new streetcars, and it is a condition of funding by Queen’s Park for the Transit City network which will open beginning in 2013. The TTC will put forward its business requirements for a Smartcard system, and it is essential that these requirements capture all of the options for a future fare structure. The last thing we need to be told, after spending nearly half a billion dollars to implement the system, is that “the computer can’t do it”, or that some option we might have had wasn’t in the specification and is, therefore, not available.
Before the TTC finalizes its business requirements, there must be agreement about just what those requirements are. These would embrace not only fare media (stored value systems, credit/debit cards, cell phone) but fare structures, payment systems and distribution schemes that take into account the wide variety in TTC user locations, riding patterns and demographics.
The TTC’s network is by far the most complex and the most heavily travelled within the territory that Presto will eventually serve. Toronto must not be hamstrung in fare policy by a simplistic model based primarily on commuting trips, limited network connectivity and simple trip patterns.
Although Presto is a provincial initiative, the TTC and the City of Toronto should seize control of the debate on fare policy and technology which will overwhelmingly affect TTC riders. I strongly urge the TTC to launch such a debate. Final approval of the TTC’s participation in Presto may be hard to withhold given the straightjacket Queen’s Park placed Toronto in with respect to Transit City, but that approval should only be given once Toronto is sure which capabilities it wants in that system.
In summary, I urge the Commission to:
- Approve a 25-cent increase in adult token fares with proportionate increases in other fare prices as shown in the first of three scenarios in the staff report.
- Ensure that a detailed explanation for the anticipated ongoing 7% increase in operating costs is included in the Operating Budget report for December 2009 together with a description of how these increases might be addressed and contained.
- Launch a fare policy review program including a report on fare options, costs and ridership effects; consultation with the public, members of Council, group and agencies representing various constituencies such as students and the poor.
Steve Munro 
I agree with the need for a better understanding of what the fare structure could look like in the future and what we want it to look like. Otherwise anytime it is discussed, we will be in the current situation of token rationing because people understand tokens.
The TTC needs to get out of the box they are in that seems to see only three types of fares per user group (cash, tokens, metropass). They need to embrace variation. In Barcelona, I had the option of one ride for 1.20, ten rides for 0.70 each, a 20 day ticket (valid for 30 days) and various other multiples depending on zones and train type. If we don’t imagine these possibilities now, we will be stuck in the box forever.
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The presentation by the TTC CFO mentioned, glancingly, that expenses are going from $1.3B to $1.65B over the next four years, and nobody, by the time I’d left, had even asked him why. When he raised the issue, he referred to energy prices and “general costs”, which smells like an evasion. To me that is a huge story that deserves more investigation.
The TTC is fond of stating that 80% of their costs are labour, and as far as I know they have 3% increases under current contracts. Given the CFO’s analysis assumed no increase in service, all the expense must be on non-labour items. So let’s do the math.
Current year: Expenses 1.3 billion @80% labour = $1.04B in labour costs. That means general expenses are $260M.
In four years: 3% year over year takes labour costs $1.17B. Since there are no service increases, non-labour expenses are now $480M. Per year, in the final year of the 4-year analysis. So, nearly doubled. An extra 200 million per year… for what?
The further you get away from the driver driving, or the mechanic fixing, or the supervisor supervising, the greater the opportunity for useless wheel-spinning. The costs for Metrolinx integration are pegged near $500 million. I’m sorry, but $500 million pays for a hell of a lot more information technology than that, and I say this from a position of considerable experience on the topic.
It’s clear to me that the way the TTC is funded is broken. More than just the instability of year to year operating budgets and subsidies. In particular, the capital/operating budget distinction is completely borked. The TTC occasionally wedges money out of the federal or provincial government, but these are always tagged for capital projects only. I don’t understand: they’ll pay for a subway, but not the operators to run it, the cleaners to clean it, the mechanics to fix it, and the HR people to make sure everyone gets paid? If a business was managed this way, the shareholders would run the managers out of town.
I departed the meeting when it became clear it had been stacked by the Canadian Federation of Students, arguing in favour of a fare concession which will be funded by magic. I’d rather have my afternoon.
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Typo: November 17, 2010 should be November 17, 2009.
Steve: I am getting to far ahead of myself! Thanks.
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I think a useful tool for fare versus ridership calculations would be the incremental cost of accomodating another rider at peak versus off-peak. If the fare structure encouraged a better balance in ridership between peak and off-peak hours, the TTC could reduce their overall capacity, and save money overall. (Or more likely, grow capacity more slowly, and save money overall.)
My gut feeling is that the incremental cost is nearly zero to add new passengers off-peak, as the TTC is operating well below capacity just to maintain an acceptable frequency. No new vehicles, operators, inspectors, or maintenance people would be required to handle more people riding off-peak. There would be slight increases to the fuel cost and token handling, and that’s about it. Just like airlines offer huge discounts to fill seats on half empty planes, the TTC should consider offering discounts to get new fares off-peak. Some of the new off-peak passengers will be former peak travellers who switched to save, and this will cost the TTC money. But others will be new riders, attracted by the lower prices.
On the other hand, new peak passengers force the TTC to increase capacity (vehicles, drivers, maintenance, etc.) or degrade service (crowded vehicles, slow loading, etc.) If a reduced off-peak fare encourages some riders to travel off-peak, the money lost through the cheaper fare might be more than saved by the slowed demand for new capacity.
Or maybe not. Perhaps during rush hour the TTC is at it’s most efficient from a revenue point of view, and they actually make money per passenger, in which case they should expand rush hour capacity to encourage more peak passengers to subsidize the money-losing non-peak rides.
I’d love to know the actual figures.
Steve: It’s a bit trickier looking at peak and offpeak ridership and cost recovery. First off, some services (peak and otherwise) have strong demand over the day, and a variety of trip attractors. They’re not all about getting people to one location in one direction. These routes tend to do well all day. A route that has strongly directional load (in for the AM, out for the PM), and lower off-peak load will tend to do worse.
Although the capital costs don’t show up on the operating books, they still represent invested resources. Subway tunnels, stations, track, power systems, vehicles, garages are all driven by peak period demand and service. If these are taken into account, the offpeak service costs far less because it has no marginal cost on the capital side.
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I went to Milan this year. A single ride costs only 1€ ($1.60 CAD) for 70 minutes. A day pass costs 3€ ($4.80 CAD). Note the break-even is 3 rides rather than the 4 in Toronto. And you can easily get to ride a vintage Peter Witt; there are still many, many in service. However, transit seems to be the only bargain for tourists in Milan. The restaurant prices will more than wipe out your transit savings.
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I understand the need for fare increases and the reasons behind them.
However it really is getting to the point that driving is going to become cheaper than taking transit.
The TTC is should be noted has I believe the lowest fares in the GTA, when it comes to cash and tickets. However when it comes to Monthly passes the TTC is much too expensive.
It is time that we see cash and ticket fares rise like planned, but Metropass rates should stay the same or decrease.
$121.00 is really pushing it to the point that many people who own cars but take transit, will just start driving for all trips.
In one of my planning classes, a student did calculations for a report, and showed the class how it is actually cheaper to drive(if you already own a car) than take public transit with the prices the TTC has.
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In most cases nowadays, driving is cheaper than taking the TTC. The fixed costs of owning a car are there whether the car sits in the garage or not.
The cost per trip is simply gas + parking.
If parking is free at your destination, it’s a no-brainer … car wins.
If you’re bringing along a passenger, it’s a no-brainer as well … car wins.
If you factor in the price for your time wasted on the TTC smelling people’s armpits, again, it’s a no-brainer … car wins.
For short trips in the core where a bike or your feet will do, it’s a no-brainer as well … transit loses.
If you didn’t have to own a car, well, that’s a different story, but in this city, a car is a must.
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“In this city, a car is a must”?
Maybe if you’re talking about Mississauga, but if you’re talking about Toronto, you’re deluded.
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M. Briganti,
A minority of the TTC’s riders are “captive”. That is, have no choice except to take transit. The majority are there by choice, as in they have other viable options to get to work. Last I heard the split was 35/65.
It’s easy to get by without a car. I’m 35, and haven’t owned a car since I was 16. I get by with a bicycle, motoryccle, and autoshare, and I live in a walkable neighbourhood. The motorcycle hasn’t moved since August.
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I’m sorry folks … there’s no solution whatsoever …
Sure we can improve somethings / increase efficiencies but in the end that’ll amount to minimal savings – from a budget perspective.
The only solution here is simple, take your pick:
1) expect more and more transit increases, we’ll always be the most expensive – the metropasses are the ones hurt MOST by a lack of government subsidy.
2) Stop complaining to the TTC and start complaining to the other levels of government responsible here.
I’m in part glad that at least a few articles of late have highlighted the last issue – of course, looking at the majority of comments in such articles, … well, you can imagine – it perplexes me how naive the majority of our population is. A few comments down it turns into a bashing on bus drivers “bastards” as they put it, and how they’re overly paid.
Steve: The issue of operator pay shows up in a comment on another thread, and it’s worth repeating the info here. The comment claimed that operators and police make the same, and this just could not be justified. Here is my reply.
Wage information can be found in the ATU Collective Agreement and on the Toronto Police Services website. The “Sunshine List” of public sector salaries can be found in the Ministry of Finance site.
The hourly rate for an Operator at top pay is $28.20. For a base work year of 251 8-hour days (2,008 hours), this works out to $56,625.60. The rate for a First Class Constable is $78,081. Operator shifts are often longer than 8 hours, and they are paid accordingly, but for the purpose of comparison we need to use the base figures.
Both positions offer substantial opportunities for overtime. If you look at the “Sunshine List” under “City of Toronto”, you will find many, many more constables from the Police Service than you will Operators and Station Collectors.
Your comparison of pay for the two positions is simply wrong. Period.
Yes, there are issues with service. One of the biggest problems is that politicians don’t want to more tightly regulate and enforce traffic, and a lot of congestion that plagues transit comes from coddling car drivers who want to be able to stop and park anywhere, any time. Meanwhile the police are busy with “real crime” and only sporadically enforce traffic bylaws. Tow-away provisions in Ontario, unlike some other provinces, require authorization by a Constable. My attitude to illegally parked and stopped cars, taxis, delivery vans, tour buses, whatever, is to ruthlessly tow them away. It’s like grafitti. Nail the first one and you won’t have to worry about the second and third.
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M. Briganti said:
“If you didn’t have to own a car, well, that’s a different story, but in this city, a car is a must.”
If you can’t afford the purchase price and the insurance and the inevitable repair bills, you don’t buy a car in this city. Looking at things via a simple price per trip is unrealistic. You find friends for occassional trips, but you rely on the TTC to get to work, school, and lifes other necessities or pleasures.
The option of a car isn’t there for many of us. Which ultimately means the price of transit becomes like rent, a discussion of how much a social necessity is going up.
We massively subsidise the social necessity of a car for those living in communities where there is no choice but to use a car. But, as that is budgeted at three different levels of government across many different departments, it’s never going to be as easy to quantify or ask people to pay a fee to reduce that subsidy.
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I read M. Briganti’s posting on “transit loses”.
My wife and I started using purchased or borrowed Metropasses this year. Starting this December, we both have a 12-month Metropass subscription.
We both like the convenience of unlimited stopovers, not having to drive (we don’t enjoy driving), not having to find parking spot downtown and not having to return to where the car is parked (in case we wonder off). For grocery shopping in Chinatown, we now take along a few backpacks.
I feel I got addicted to the Metropass. (OK. I must admit an additional incentive that starting my subscription in December deferred the threat of a fare increase. But I was contemplating a subscription anyways.)
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M. Briganti, you have overlooked a very important component in your analysis.
While it is true that most households need a car, the question is, do they need more than one? In 2006, my wife and I asked ourselves this very question and we quickly realized we did not need two cars. We each sold our car, bought one “family” car, and now, on a daily basis, one of us uses the TTC to get around.
So in our case, having one of us use the TTC is saving us over $5000 per year, once you factor in the cost of owning a second car (monthly payments, insurance, fuel, maintenance, registration and parking) vs the cost of a Metropass. So in our case, transit usually wins, at least during the work-week.
You are correct that when our whole family needs to travel, the family car is the cheaper option, because it’s sitting there anyway. But nothing would convince me to give up my Metropass for a second car, no matter how high fares go.
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Use money from Daddy Dalton to fix the current system … not build things such as the Sheppard East LRT. I am tired of new projects being funded when old problems continue to be neglected.
Steve: One big problem is that Daddy Dalton wants his picture on a nice job-creating construction project, not on the Queen Car that is several miles away from wherever you want it to be, probably headed in the wrong direction.
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I decided to compare the cost of car ownership versus public transit for Toronto. This web site gives the costs for the ownership of 5 different types of cars for 5 years in Victoria, BC. I will make no claims to the accuracy of his figures; they were the first ones that Google found.
The author subtracts out the money saved by not having to pay transit. I will put it back in and also double his insurance cost to get them more in line with the GTA. When you do that the monthly costs vary from a high of $670.00 to a low of $580.00 At $121 per pass this would buy between 5.5 to 4.5 monthly passes. I don’t think this guy put in the cost of parking either. At a low of $10.00 per day for downtown parking and an average of 21 days per month this adds an extra $210.00 per month.
If we add in parking to the most expensive option the cost would be $880.00 per month. For this you could buy 8 adult passes at the MDP rate or 2 adult an 7.5 student/senior passes. If we use the cheaper option and assume free parking then you could buy 5 adult passes at the MDP price or 2 adult and 3.7 student/senior passes at MDP. The only problem is most people will never admit to the true cost of owning a car and since they “need one anyways” they will only look at the extra cost for gas and parking. Most will ignore the extra maintenance and earlier depreciation costs.
It is interesting to note that he figures his transit cost in Victoria for 5 years will be $3300.00 or $55.00 per month. It almost makes you want to move to the left coast.
Steve: The calculations on this site are a bit suspicious. First off, I noticed that for purchased vehicles, the author uses straight-line depreciation when we know that vehicles lose a staggering value the moment they are sold, let alone in the first few years. Only if someone actually keeps their car until it falls apart could they account for it on a straight-line basis over the life of the vehicle. More typically, they will sell a new car part way through its life for considerably less than half its original cost, and all of the interest payments up to that point will be written off as a sunk cost. A used car if sold will likely have only minimal residual value.
If you refer to the Canadian Automotive Association’s cost estimates (based on 2007 data), the cost of ownership, all in, is over double the level cited in the document you link. Taking a value roughly in the middle of the range, $10k per vehicle/year, this translates to $833/month, but that’s before parking. Note that many people don’t get free parking at home. Either they pay for monthly parking or they own a parking space in their condo which has a capital value of its own, probably more than the cost of their car.
Yes, some people view the cost of car ownership as fixed, and yet the CAA tables are interesting as they show a big effect of the marginal cost of driving the car a larger distance.
Another important point about the availability of transit at a reasonable price is the avoidance of a second car. Car-free families are comparatively rare, but if people only need one car for trips where transit is impractical, that’s a big saving.
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It is time for the TTC to come to the table and start cutting service wherever they could. Torontonians want every little service provided in this city and it is time for them to start learning to do without some things.
Steve: Maybe they should stop construction of the Spadina Subway extension seeing that it will run at a substantial loss.
The problem with looking only at costs of services is that we ignore the value these services have in widespread mobility and convenience. People complain about the TTC running half-empty buses into low-density areas at off hours, but are quite content to buy houses in such areas and then complain that everything is a long drive away. Also, many people do not have the economic means to locate both close to their job and in an area with good transit services.
The operative word here is “service”. Far to often, services “I” use are essential but everything else is a frill. On that basis, I can think of several highways we don’t need, except possibly on holiday weekends.
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Steve: “The calculations on this site are a bit suspicious. First off, I noticed that for purchased vehicles, the author uses straight-line depreciation when we know that vehicles lose a staggering value the moment they are sold, let alone in the first few years. Only if someone actually keeps their car until it falls apart could they account for it on a straight-line basis over the life of the vehicle. More typically, they will sell a new car part way through its life for considerably less than half its original cost, and all of the interest payments up to that point will be written off as a sunk cost. A used car if sold will likely have only minimal residual value.
“If you refer to the Canadian Automotive Association’s cost estimates (based on 2007 data), the cost of ownership, all in, is over double the level cited in the document you link. Taking a value roughly in the middle of the range, $10k per vehicle/year, this translates to $833/month, but that’s before parking. Note that many people don’t get free parking at home. Either they pay for monthly parking or they own a parking space in their condo which has a capital value of its own, probably more than the cost of their car.
“Yes, some people view the cost of car ownership as fixed, and yet the CAA tables are interesting as they show a big effect of the marginal cost of driving the car a larger distance.
“Another important point about the availability of transit at a reasonable price is the avoidance of a second car. Car-free families are comparatively rare, but if people only need one car for trips where transit is impractical, that’s a big saving.”
I was pretty sure that his costs were low but I thought that if a low ball cost gave such transit favourable results then no one could claim I was “cherry picking” results that favoured transit.
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We can’t stop the Spadina line – we’d lose all the pretty stations the press couldn’t wait to show the mockups of.
Steve: And if you look closely at some of those stations, the probability that all of the escalators and elevators needed to get from platform to surface will all work at the same time is miniscule. But the stairways will have natural light.
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(another) Steve wrote: “It’s clear to me that the way the TTC is funded is broken. More than just the instability of year to year operating budgets and subsidies. In particular, the capital/operating budget distinction is completely borked. The TTC occasionally wedges money out of the federal or provincial government, but these are always tagged for capital projects only. I don’t understand: they’ll pay for a subway, but not the operators to run it, the cleaners to clean it, the mechanics to fix it, and the HR people to make sure everyone gets paid? If a business was managed this way, the shareholders would run the managers out of town.”
I tend to agree – of course the TTC and the city are also responsible! For example, if I were running the TTC, I’d only agree to the extension of the Spadina and Yonge Lines if the provincial coughed up money for the operational and other capital (i.e. more subway cars) costs. If the money isn’t provided (or money is available in the TTC’s operating budget), then there would be absolutely no extension to the lines.
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I despise cars even more than the TTC, but I am done with a commute that takes three times as long by TTC, the TTC hoarding tokens because the province and feds won’t pay their freight, the 2km walk from the station I had tonight, followed by seeing three streetcars in a row in both directions once I had arrived.
I am overjoyed to be leaving Toronto on work for two years, hopefully never to return, but if I have to return, I will be adding a planet-and-society-destroying machine to the roads, because my home and work is provided with parking, but this city is inadequately provided with usable transit, even downtown.
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If the TTC had raised fares last year, the media would be all over that as well. Toronto’s media are leeches feeding off of City Hall. Not including the discontinuation of the Metropass parking, will have been frozen for nearly 3 years. If they had raised fares in 2008 and 2009, the media would have blasted the TTC more so, simply because of the economic climate.
While the TTC froze fares, other GTA transit operators continued to raise fares annually with virtually no media attention. After many consecutive years of annual fare hikes, this year some operators are freezing fares, I found this out from a piece on CP24 that tried to make them look like “the good guys” compared to the TTC because of this!
When it comes to TTC fare increases, the media should be embarrassed by how poorly they inform their viewers about the situation. While fare increases suck, in the Golden Horseshoe there is no contest for a transit system offering as good a value on service as the TTC.
Steve: Too much media coverage thrives on finding a conflict to report, a disaster in the making, bad news generally. Nobody wants to hear a piece about how the TTC’s fare increase is reasonable.
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Ben wrote: Not including the discontinuation of the Metropass parking, will have been frozen for nearly 3 years.
Actually, fares were frozen for a little over 2 years. Last fare hike was in November 2007. I think people got too fond of years with no increases that they forgot that farest used to increase every single year in the 1980s. Every year from 1981 to 1992 (twice in 1992) there were fare hikes. After 1992, there were hikes in 1995, 1996, 1999, 2001, 2002, 2005, 2006 and 2007.
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If the TTC is so short of cash, why do their employees keep getting pay raises every year? The TTC should look for places to cut their budget (TTC ticket takers earning six figures) before they want more money from riders and the tax payers. Why do people in the public sector think that they are entitled to a pay raise every year? I work in the private sector and I earn less now than what I did six years ago. A fare hike does not help me and many others. I think it’s time the TTC employess helped out the TTC with a wage cut! Dave
Steve: I have already pointed out many, many times that employees in the $100k club work a lot of overtime, and have provided a link to the Local 113 contract where you can look up the wages for yourself. As for wanting annual increases, I’m not going to try to speak for the public sector as a former member of it myself. However, I do believe that the 3% raises negotiated by ATU are the last they will see for some time.
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Comment?
Steve: That $85-million isn’t revenue, it’s a liabaility (future revenue) for rides that have been paid for but not yet taken. As for investing the money, it would be in the short term market. Let’s be wildly optimistic and assume that the TTC could get 4% on the money. That’s $3.4-million per year, or a bit under $300k/month. Assuming all the tokens are sold by the start of December, and used (on average) by mid-January, that’s say $450k. It’s a bit, but barely 10% of the loss they took by not switching over immediately to tickets and withdrawing all of the tokens before they could be hoarded.
It’s also worth noting that token sales continued into this week after the availability of tickets was announced.
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