This article is the last section of my critique of the December 2013 review of the Metrolinx Big Move Plan written by Michael Schabas for the Neptis Foundation. It should be read in conjunction with Part I, Part II and Part III.

9. The Importance of Integration

Coupled with the need for much improved GO service as the regional network that would tie everything together and expand transit’s reach is the need for integration so that riders see one network, not a patchwork each with its own rules and fares.

Integration is what Metrolinx was created to achieve, but apathy for better funding of local service and the focus on capital expansion meant there was never an incentive to address fare consolidation. Lots of money for flashy new toys, but none to pay for basic operations.

GO is particularly to blame here. They trumpet high farebox cost recovery as a virtue, and regard “co-fares” with local 905 systems mainly as a way to avoid building more parking (paying somebody else’s bus company to bring you riders is cheaper than building a parking space for them). Service improvements that might improve the network and its usefulness within Toronto are “not our job” for GO.

The 905 municipalities have much lower transit orientation because they were built in age of cars, not of transit. There is no foundation like that in Toronto to build on (and even Toronto’s is less than impressive around the edges). The extra cost to run substantially better service for minimal ridership does not sell easily in the 905. This is partly a chicken-and-egg problem – without a robust GO network as a basis for more frequent local services as feeders, there is no single incentive to widespread improvement in coverage, frequency and hours on those routes.

Schabas’ observations on consolidation of transit under a single operator make the important point that we should avoid amalgamation for its own sake.

Local bus services act as feeders for longer-distance trips, but many passengers will always be making local trips, to schools, shopping, and recreation. It makes sense for local government agencies, appointed by elected officials, to determine routes, stops, and service standards. Logically, each local municipality also provides operating subsidies, although a portion of these can be offset by a dedicated share of the provincial gas tax. Each operator seeks to serve the local residents who fund it, and will naturally be less interested in providing services to the wider region. [Page 76]

Subsidies

Schabas is off base when he talks about the source and level of subsidies.

The Province (through Metrolinx) and the federal government provide about half of capital subsidies for municipal transit services, and all funding for GO. Special funding was allocated for development of the Spadina subway extension to Vaughan. [Page 77]

This is not true. The federal government only comes in on major projects, and on a relatively small scale for works deemed to be worth of the “economic stimulus” program. The Vaughan extension’s cost was shared equally by the federal, provincial and municipal sectors, but this was an exception to the usual pattern. After hoping that Ottawa would come in with equal funding for The Big Move, Ontario realized that it would have to go it alone on almost all projects.

It is vitally important to distinguish between megaprojects such as those in The Big Move and “routine” maintenance, commonly referred to as “state of good repair”. The TTC has a $9b, 10-year plan which is seriously underfunded in part because many cost sharing programs at senior levels have died off through sunset provisions or simply been cancelled without replacement. A notable example was a program to support bus purchases in Ontario.

Both Ottawa and Queen’s Park send gas tax funds to Toronto, but these do not come close to paying a 1/3 share of capital needs in either case.

Queen’s Park gives about $160m annually of which $71m is allocated to capital by the City of Toronto and the remainder to operating subsidies. Ottawa gives about $150m annually all of which goes to capital. These numbers pale beside an annual requirement of $900m, not to mention projects that are “below the line” and have not even been counted in the 10-year plans. $220m is most definitely not “about half” of the $900m annual requirement. To make matters worse, the TTC is short about $2.7b in committed funding for that $9b shopping list. This would almost completely vanish if the senior governments actually did pay half of the total capital needs.

The problem with these claims is that Queen’s Park shells out billions for projects like Eglinton and then lumps their value into discussions of how they “support transit”. Building a $5b line on Eglinton does not represent a contribution to the system we already have, and it quietly falls apart even as the tunnel borers inch their way across the city.

In summary, the lion’s share of day-to-day transit capital and operations, especially in Toronto, is funded by local taxes.

But Metrolinx has failed to use its powers to ensure that the local operations are coordinated to deliver regional benefits. [Page 77]

Metrolinx has no power to compel local governments to spend money they don’t have on services they don’t want. This is not a case of local councils misallocating provincial subsidy dollars, but of Queen’s Park presuming influence when it is not a full partner at the table. Recent statements by Transportation Minister Murray imply municipalities are not getting any more dollars, and that they should be happy with the gas tax revenue already provide.

The Metrolinx Investment Strategy suggested that 25% of any new revenue streams should go to municipal projects, but there was no mention of this idea in recent provincial policy announcements.

Integrated operation does occur, but there are issues of jurisdiction and revenue sharing. If Metrolinx does not address fare/revenue pooling, it cannot simply reallocate services and demand that local operators carry “foreign” passengers at a lower consolidated fare, or operate service outside of their territories. Changing the TTC’s exclusive right to operate transit service in Toronto requires amendment of the provincial City of Toronto Act, something that is in Queen’s Park’s power should they feel the urge to let others compete for transit service within the city.

Fare integration is definitely a problem. Not only is there the issue of lost revenue through lower “integrated” fares, there is the fundamental issue that GO doesn’t want to play in that game for exactly the same reason as the local operators. GO wants to hold onto every penny of revenue they now receive. The provincial agency is the worst offender in the fare integration arena.

Schabas states:

Passengers travelling from, say, Scarborough Centre to Mimico must purchase separate fares if they want to use the faster GO train as well as the TTC, although TTC has now introduced a “TTC Times Two” policy which allows use of TTC, then GO, then TTC without requiring payment of a second TTC fare. [Page 78]

This implies a recent change in fare policy by TTC when, in fact, the program has existed for well over a decade (although it is little known among TTC staff and, it would seem, certain consultants).

What we did lose was the GTA Twin Pass that was valid for both local systems and GO Transit, but that was a GO decision, not one by the local agencies.

The question of lost fares through integration brings a counter-argument that there will be more riders and the whole thing will be at worst revenue neutral, possibly even generate a profit.

TTC seems to believe that fare integration inevitably means a loss of revenue. We think this view is mistaken. While simply providing free transfer onto TTC from GO might result in a loss of revenue to TTC, international experience shows that a carefully designed integrated fare structure can increase overall system ridership and total revenues at the same time.

This statement dances around the basic question of whether either a local system or GO would have less revenue after integration.

GO has traditionally has resisted “funding” the TTC through revenue sharing. Schabas writes as if this were a matter TTC foot-dragging rather than a systemic problem brought on by the overall funding scheme for each operator. Nobody has an incentive to integrate. Moreover, from the TTC’s point of view, more passengers are not necessarily wanted if they would add to peak point demands while generating little new revenue.

That “international experience” needs to be examined in more detail to verify that the situations cited are actually comparable to the GTA, especially regarding the improved use of surplus capacity at little net cost simply by providing more attractive fares.

Integrated Land Use & Transportation Planning

Anyone living in Toronto has heard all about the need for integrated planning since the dawn of time, and one more lecture by a consultant isn’t going to change anything. The basic problem is that development industry, politically well-connected, rules about where stuff gets built and this is unlikely to change. They want cheap land with low taxes and don’t care about implications for transportation on the assumption that autos will always served and, where needed, transit will be expanded. We face similar issues with utilities such as sewer and water, and moreover the growing 905 municipalities have become dependent on development charges as a way to shield existing homeowners from property tax hikes.

Powerful political forces work against the idea that planners can actually direct growth in a form and location that best suits a future transit network. This will only change when building on the fringe rather than upscaling in existing locations becomes uncompetitive.

10. Funding Considerations

There is little doubt that with smarter fare policies, and more efficient operating practices (including changes to work and overtime rules for operating staff), the TTC and GO systems could recover all operating costs for existing services from fares and even generate a surplus that could go towards service improvements. Current operating subsidies may be supporting inefficient operating practices, rather than expanding services for passengers. [Page 80]

This is a bogus argument based on ideology, not fact. If Schabas wants to demonstrate this claim, he is welcome to try, but he will need more than a simple assertion of “little doubt” that it is true. Once again, he takes a shot at work practices as a potential saving and makes unspecified assumptions about fare structures that would generate more revenue than the current scheme. The assertion that any savings would be ploughed back into service directly contradicts actual experience with governments who seek only to limit tax increases, not to provide more for the public. We have three years and counting of this in Toronto.

Schabas mixes the idea of unregulated “profitable” private sector operations on busy routes without fare regulation, with the larger issue of providing “service” based on full time accessibility to transportation. These are two fundamentally different views of the role of transit.

As for the supposed better labour practices of the private sector, GO Transit’s rail network is a contracted service to Bombardier. Infrastructure maintenance is also contracted. If there are “inefficiencies”, it is the private sector operator’s fault.

On the TTC, a large amount of service does not run profitably because of the flat fare system – long trips cannot possibly recover their costs. As previously discussed, this was a political decision in 1973 as a quid pro quo for suburban tax support.

It is easy to say that work and overtime rules should be changed, but one needs to prove how these penalize transit today and what benefits would be obtained. Many issues – the ratio of in service time to paid time, garage and crew change mileage, the Labour Standards Act and federal rules about hours and size for train crews – cannot wished away simply because Schabas thinks we can solve transit funding problems by rewriting the rulebook.

Finally he says:

Nevertheless, it is true that very few subways (metros) can generate sufficient revenue to pay the massive costs of construction, maintenance, and renewal, especially of expensive tunnels and stations in urban areas. Almost inevitably, these systems require capital subsidies. [Page 80]

And so, Virginia, there is no Santa Claus. We cannot have free subways, or even more optimistically ones that generate profits to attract private investment. After a swipe at labour practices and claims of some metro systems that run at a profit, Schabas admits this is rare.

The London success in building transit ridership and cutting core area traffic is not news, but a big difference there is the existence of extensive metro/tube and commuter rail/overland networks. It is noteworthy that while Toronto suffered a loss of 20% of its riding in the 1990s, London continued an almost unbroken period of transit growth. [See chart on page 83] Clearly different factors were in play for that city compared with Toronto.

Levies on road users through gas tax or mileage fees presume these users (a) have alternative ways to travel and (b) will see benefits even if they personally cannot use new services such fees would pay for. Until the recent announcement of quarter-hourly off peak GO plus electrification in 10 years, commuters had no reason to believe they would benefit from transit spending. (Indeed, with the historical ratio of announcements to implementation, “no reason” may only be upgraded to “little reason” rather than unbridled joy and street festivals at every GO station.)

Many GTA trips are not covered by new transit infrastructure because concentrations mainly exist in 905-to-core travel thanks to the rail networks – both TTC and GO. It is much harder to build a 905-to-905 network, and problems of travel time (cited as issues even for LRT trips in Toronto) are magnified due to very large distances involved and the diversity of origins and destinations. If the majority of new spending continues to focus on major nodes like downtown Toronto, many regional travellers will see little benefit for their trips from transit spending. This includes the imputed reduction of congestion because that can only occur in corridors where travel can actually be redirected to transit.

With a zone fare system and some differential for peak and off-peak prices, TTC might be able to recover all its operating costs from fares, while attracting more riders. The current operating subsidy of about $450 million could instead fund service improvements and further capital investments. [Page 85]

Now we really are getting out on a limb. Proposing the reintroduction of zone fares would be political suicide. Not only would it undo a 40-year old flat fare arrangement, but it would bring the inequity of giving cheaper fares to well-off folks who can afford to live relatively close to their downtown destinations and already have short trips.

They pay $3 for a trip that they would willingly pay $5 or more to make. [Page 85]

I challenge Michael Schabas to stand in a room and say this to happy suburban riders who already think that TTC is overcharging and that downtowners get too much service and infrastructure. We have totally left the realm of studied examination of rider attitudes and behaviour and replaced it with ideological statements to suit the political fiction that transit doesn’t have to cost the public purse anything.

There is a fundamental issue of whether fares are intended to be full cost recovery and what this implies for overall network design. Do we boost fares to cross-subsidize less-profitable trips at an average 100% recovery rate, or do we selectively increase fares on less productive services? What are the social and economic goals of having transit readily available for travel throughout the region at most times of day, seven days a week? Schabas totally ignores these questions.

Speaking of fare inequity, GO provides a higher proportional subsidy per rider to long trips than to short ones – the fare per kilometre is highest for the shortest trips. GO claims this is because there is a fixed cost of having a space available on a train for the shorter trip to occupy even though the “seat” rides to the end of the line. Of course during peak periods, that “seat” was likely occupied by someone boarding at an outlying station and the short-haul rider has the compound disincentive of a higher relative fare and being forced to stand.

TTC buses into operating into the 905 “charge a fare supplement” according to Schabas. In fact these are contracted services, and the extra fare is set by the 905 agency, not the TTC, to offsets contract fees. These routes exist because they provide through services notably for York Region and avoid the cost of separate YRT-based operations.

Revising the TTC fare structure is long overdue. Change may be unavoidable as the subway is extended across the city boundary into Vaughan. Many students who travel from places like Woodbridge and Brampton to York University, using the VIVA or Züm express buses, will instead be expected to transfer to the subway at the Vaughan Corporate centre and use the subway to finish their journey. This may save them a few minutes, and it will allow Züm and VIVA to save a substantial amount of money. However it will be deeply unpopular with travellers if it means they must pay a $3 extra fare each way. TTC’s problem is that it has no way of distinguishing whether passengers boarding at Vaughan are travelling just to York University, or all the way into downtown Toronto. [Page 87]

This is already an issue in York Region with proposals to remove all bus service directly to York U whose plan is to have a bus-free “common” in place of the current throngs of TTC and York Region vehicles. Fortunately, the subway opening is now delayed until early 2017 and PRESTO conversion will be finished by then to support whatever fare scheme is concocted.

However, this remains a TTC issue because any discount, or foregone TTC fare for York students coming from York Region, would violate expectations in the original cost sharing agreement with the Region. That agreement is fundamentally unfair to the TTC as previously discussed, but as for York students, it was York Region who made the deal that would now penalize them.

Once again, Schabas presumes that riders from outlying areas would pay higher fares when the subway has been built on the expectation that a single zone TTC fare would apply to riders all the way to Vaughan Centre Station.

A more intelligent fare system for Toronto might copy that of London, which has a system of radial zones, with a premium for use of faster modes (commuter rail and subway) (but not a full additional fare), and with reductions for off-peak travel. [Page 87]

This presumes a predominantly radial travel pattern, one which is not valid today and will be even less so with the growth of trips that are not core-oriented.

To introduce “smart pricing,” TTC would need to introduce “touch out” points at station exits, just as GO now does at rail stations. [Page 87]

Touching out might be possible for subway stations (although there would be difficulties with passenger flows in some locations), but on the surface network it would be a nightmare. Schabas appears to forget that the world of bus and streetcar operations is very different, but these networks are an integral part of the TTC system. Any move to distance-based fares cannot avoid measurement of trips on surface vehicles, not just within the subway.

The extra time needed for departing passengers to tap out is an extra potential source of congestion we do not need. It is worth noting that bus and tram passengers in London are not required to tap out with their Oyster cards. Schabas should know this because he lives there.

Even GO Transit avoids having regular riders tap out by defining a “standard journey” for their PRESTO cards which is presumed for any tap-in at the end points.

GO’s biggest capital cost is rolling stock, which must be purchased to carry peak demand. [Page 88]

This may no longer be true. Infrastructure costs will become larger part of GO capital, especially the one time costs for electrification. In the early days of service on most routes, GO was able to take over existing track capacity, but as service frequency improves and the desire for operational flexibility mounts, more track is needed simply to accommodate GO’s trains. The multi-track reconstruction of the Georgetown corridor is a particularly striking example.

It is no longer simply a question of buying a few trains and laying down the most rudimentary of station facilities. This decouples costs from individual service increases and one could argue that the greater investment in infrastructure should be exploited with service to the greatest degree possible.

Charging for parking [Page 88]

I agree that this is long overdue. GO claims that people will drive if they have to pay to park, but this implies a low threshold for price sensitivity. By comparison, motorists routinely “eat” the extra cost of market increases in fuel and associated tax.

Shifting trips away from the peak presumes that there is a surplus of parking (or frequent, reliable local bus feeders). This is not true as shown by full lots early in the AM peak. GO is addicted to building parking as their primary way of attracting passengers with a ratio of roughly two spaces for every three commuters. This model is not scalable, nor is it workable for off-peak and counter-peak riders.

By implication, shifting trips could reduce or eliminate the need for more peak trains. However, latent demand is the issue here and shifting one group of riders simply allows backfill. Most importantly, this presumes riders actually have the choice to rearrange their work and home time commitments to suit GO’s fleet planning and scheduling. Some do, but many do not.

Capital spending has been erratic, less than $0.5 billion through decade to 2003, but rising sharply since then to almost $3.5 billion per year at present all of it provided by federal and provincial governments. [Page 89]

This is a creative fiction borne either from ignorance (the actual numbers are available in the TTC’s budgets and financial statements) or from a desire to imply that senior governments are carrying all of the load. Toronto is paying about 20% of the Spadina extension’s cost plus roughly 75% of routine capital expenses thanks to the wind-down of various capital funding programs at both the provincial and federal levels.

12. Conclusions

Schabas documents that Metrolinx will not achieve the ridership growth claimed in The Big Move, and I agree. Some parts of the plan will never be built, and Metrolinx has been too slow with the vital expansion of GO, although this may finally be changing thanks to Queen’s Park’s new outlook.

However, for the network as a whole, I do not agree that the only “benefit” should be the number of net new riders even though this is obviously linked to the diversion of trips from road to transit. There is also the matter of providing more comfortable travel, indeed even space, to handle transit demand and making transit a more attractive option. Network effects, not just new riders on each line, are important.

Schabas has a scathing overall view of Metrolinx:

“… Metrolinx is not adhering to its own guiding principles. It is not investing “where it matters most.” Most of its funds are going towards schemes with little or no regional focus, with costs in excess of benefits, which will deliver poor value for money. The schemes reflect the priorities of individual municipalities, but do not add up to an integrated plan to serve the region.

Metrolinx is not aggressively pursuing the most important scheme, the upgrading of GO Rail into a regional express rail network. Instead, it is focusing largely on secondary schemes that have strong local champions, but that will bring much less benefit without the regional rail backbone.

Nor is the organization living up to the principle of accountability. Metrolinx has not published a detailed financial plan, showing what it plans to build, how it will be paid for, and what this will deliver. “Benefit Case Analyses” have not been issued for some schemes. The BCAs that have been issued omit key information. The BCAs for the two most expensive schemes, the Eglinton Crosstown line and the Downtown Relief Line (DRL), were not made public until we obtained them for this report through a Freedom of Information request. In any case, Metrolinx seems to be ignoring their conclusions. The BCAs for the Transit City LRT schemes, including the Eglinton LRT, shows a very low Benefit:Cost ratio, yet Metrolinx is proceeding with the $5 billion Eglinton scheme, in contravention of its own principles of prudent financial management and accountability.

Unfortunately here, Schabas’ view of the economics, the benefits cases, is clouded by his own errors of methodology and his preference for automation and general changes in labour practices.

A problem common to Schabas and Metrolinx is that “regional focus” is a matter of boundaries. Toronto itself is a large “region” with the highest transit usage. Just because a route is inside the city does not mean it is unimportant. Such routes will tend to be more expensive because of demand levels and technology issues (e.g. underground construction on Eglinton is more a factor of local conditions than demand). That’s life in the big city where everything is bigger, demand is higher, and space isn’t conveniently available to tuck every transit plan away in its own corridor.

The term “regional plan” has been used to cherry pick projects that are claimed to have a “regional” importance even though this is clearly not the case in several instances.

Metrolinx has done a poor job of achieving its stated goals and the Neptis/Schabas report is right to call them out on that account. However, some of the alternatives proposed are not rooted in the same level of careful, credible analysis the report would expect of Metrolinx.

The Appendices

A detailed review of the cost and ridership estimates for proposed transit lines might be worth my time, but there is a point at which an extensive review like this must stop. I believe that there are enough errors of assumption and fact in the Neptis proposals that any cost estimates and business cases must be completely revisited.

And finally …

I agree with some of Michael Schabas’ conclusions, notably those related to the regional role for an expanded GO network, but we fundamentally disagree over many other options. I cannot escape a sense that his paper is as much an argument to justify a large-scale rollout of ALRT technology, something with which he has a close association, as it is an independent review of Metrolinx plans.

Were it not for the number of errors scattered throughout his analysis, I could take this report as a bona fide contribution to transit in Toronto, but one should not have to write thousands of words just to get back to something like a balanced debate.

[This article was modified on April 25, 2014 to correct typos and to make some minor stylistic changes.]