Updated: Further information on the history of seniors’ fares has been added at the end of this article.
With the never ending problems of balancing the TTC’s budget, the question of trimming or eliminating various forms of fare subsidy are back on the table. This shows up as a quick fix to revenue problems with the assumption that “if only riders paid more, there wouldn’t be a problem”. The target group varies from time to time, but the premise is the same – somebody is freeloading and “my tax dollars/fares” should not be paying their freight.
A basic problem with this argument is that it will not fix the revenue shortfall permanently, only increase the cost of using transit by whichever group is targeted. If, for example, all discount fares were eliminated in 2017, we would be right back at the same position in 2018 wondering how to deal with increased costs, but without that convenient list of scapegoats.
A quick review of the “concession fares” is in order to put the question in context.
- Adults who are willing to purchase tokens up front (or preload their Presto cards) get a discount relative to riders who pay cash.
- Adults who want to prepay even more can purchase daily, weekly or monthly passes which cap their costs within a time period.
- Special passes and validation stickers are available to extend the range of services covered by adult passes to premium fare routes and to other transit systems.
- Daily pass holders get a special “family” deal on weekends and holidays when up to six people, maximum two adults, can travel on the pass.
- Monthly pass holders can obtain various extra discounts based on a commitment to buying 12 months’ worth of transit (the Metropass Discount Plan or MDP), and bulk-buy discounts are available to organizations that resell passes (the Volume Incentive Program or VIP).
- A Convention Pass is available to allow for bulk purchase of transit service for large groups at a price considerably below the cost of a day pass.
- Students and seniors have passes priced at a 20% discount from adult passes, and MDP pricing provides for a further discount. Cash and ticket fares are discounted about 33% from adult rates.
- Children ride free.
- A limited number of designated groups (the blind and war amputees) travel free.
- WheelTrans users are entitled to be accompanied by a Support Person at no extra charge.
Some of the concession fares have been around for a very long time:
- Children’s fares predate the TTC’s formation in 1921 and until recently floated between 1/3 and 1/2 of an adult fare. A “child” was defined by height with rings embossed on the stanchions at vehicle entrances to give operators an unambiguous measure. Older vehicles (PCCs and the Peter Witt) bear witness to how the standard was changed over years as the average height of children rose.
- Scholars’ fares date from the 1950s, and they lie partway between the fare for children and adults.
- Seniors’ fares came along by the 1970s in recognition of the then-new issue of a growing aged population and their relative poverty. The CPP was less than a decade old, and “house rich” oldsters benefiting from the real estate market were unknown.
- The Metropass dates from May 1980, and its cost has fluctuated between 52 and 47 “token” fares depending on the prevailing political and fiscal mood.
- Post-secondary student passes were added to the mix in 2010 after several years of lobbying by student groups.
- Free rides for children were granted in early 2015 as a political move by then-new Mayor Tory to “do something” quickly on the transit and poverty files.
As part of their recent Operation Budget, TTC staff included a table showing the marginal revenue that they expected to gain if various discounts were dropped.
Collectively the discounts against fully-priced passes represent $29.6 million of which 45% is due to the Post-Secondary discount. Concession fares for seniors, high school students and children have a total cost of $44.4 million. If all of these were eliminated, the $74 million in revenue would not offset the current shortfall, roughly $100 million, in the TTC’s operating budget let alone make any contribution to pending cost increases in 2018 and beyond.
This table does not include any estimate for the complete elimination of passes or even “token” fares (in effect charging the same fare for all trips). Both of these would have a huge effect on TTC fares generally and would be a large de facto fare increase for the majority of TTC riders.
Before any group of riders is treated as potential sources of added revenue, it is important to see the discounts in the wider context of a transit system’s purpose. Discounts for riders who make frequent use of the system, and especially those which cap their costs over a period of time, are important to building loyalty among riders and encouraging a view that transit is a “first choice” because it has no marginal cost. That outlook can be undone by unreliable service where the “cost” of taking transit includes substantial inconvenience and unpredictability. In effect, a trip may be “free” but convenience trumps cost.
There is a social “good” in having more people take transit because this removes autos from roads, and allows the city to provide mobility on transit as an alternative to the need for car ownership. Getting more people on transit increases the political constituency for transit funding, and transit can grow based on delivering a good product at a cost riders perceive to be reasonable. Billions are invested in the infrastructure to move people around, and there is a broad agreement that this is good for the city’s economy and residents. All of them.
A breakdown of TTC ridership is available on the City’s Open Data website, and the excerpt below shows recent years. This table does not break down fare media into their discount groups such as MDP and VIP, but gives a sense of the relative importance of each type of fare and rider in the overall mix. Travel by some form of pass is the overwhelming majority for all trips, and even the relatively expensive senior/student pass attracts one third of its market.
However, it is important to distinguish between rides and riders. Those who use passes take more trips than those paying by cash, tokens and tickets, and so the larger discounts go to frequent riders. The chart below from the TTC’s most recent Customer Satisfaction Survey gives a very different picture of the mix in fare media used by riders.
Only 38% of the survey respondents use the TTC once a day or more, and so it is no surprise that passes figure much lower among fare media than tokens, and that cash is relatively high. This reflects the profile of transit riders in the population overall, and begs the question of what would be needed to shift people into higher categories of transit use.
Not Just Fares, But Service Too
Although the level of fares is typically the major part of budget debates including arguments for and against various types of discount, a great deal of transit policy affects costs by way of decisions on service.
- Riders on subway routes enjoy very frequent service (every 5 minutes or better) independent of the level of ridership. Subways have a high fixed cost from infrastructure operation and maintenance, as well as for the staffing of stations, but they have proportionately lower cost increases to operate more frequent service.
- Service is provided every 10 minutes on a core network of routes during all service hours, and at least every 30 minutes on the entire network with buses and streetcars running from 6:00 am to 1:00 am.
- All night service is provided every 30 minutes on the “Blue Night Network”. Some busy routes run more often at least for the “baby night” service if not the entire overnight period.
- Loading standards during off-peak periods are based on an average of a seated load on surface vehicles, although this is not always achieved.
- Fares cover about 70% of the operating cost of transit service, but make no contribution to capital costs including those for vehicles and infrastructure.
Possible rollbacks in the service policies include:
- Elimination of maximum headway constraints such as subway service frequency, the 10 minute network and the 30 minute maximum headway.
- Removal of service from routes, or sections of routes, during times when ridership does not exceed a target threshhold.
- Elimination of some or all of the Blue Night Network.
- Changes to crowding standards to serve existing demand with fewer vehicles.
Most of these were costed as options in the operating budget report.
The idea of shifting some capital costs to the operating budget has also come up on occasion, but the effect of even a modest change in this regard would have a large effect on fares because of the capital budget’s scale.
All of the policies about planning and operating the transit network are just as much decisions about subsidies as are the questions of fare levels. Unlike fares, service and infrastructure decisions benefit or harm all riders. The only service that is specific to one rider group is WheelTrans, and it has legislated targets for service and eligibility. It is ironic that cutbacks to the “conventional” system could stymie efforts to shift WheelTrans users away from their dedicated services.
The Fair Pass
At its December 1, 2016 meeting, Toronto’s Executive Committee endorsed the beginning of work toward reduced fares for the less well-to-do. The scheme would not come into effect until 2018 as it depends on Presto for implementation. Then it still has to make its way through the budget process and Council, but with Mayor Tory’s endorsement, this is fairly certain. The other key factor is that at least in its initial stages, the new discount would target only a small group of riders and therefore come at a low cost. Whether Council will simply add this on to the mounting TTC operating deficit, or actually come up with “new money” remains to be seen. City staff intend that it be at no net cost to the TTC, but nothing prevents Council from juggling the books simply by giving the TTC less subsidy than it might otherwise have received. The hard decisions will not come until the next term of Council for 2019 and beyond.
The program is designed for implementation over three years with progressively greater eligibility.
Phase 1 – staring in March 2018 – includes only Ontario Disability Support Program and Ontario Works clients not in receipt of transportation supports
Phase 2 – starting in March 2019 – extends eligibility to residents receiving housing supports or child care fee subsidy whose household income fall under the Low-Income Measure +15% eligibility threshold
Phase 3 – starting in March 2020 – extends eligibility to all other Toronto residents living with an income below the Low Income Measure +15% threshold
The cost builds in over time with the full effect in 2021 (year 4).
The “Low Income Measure” varies depending on the size of the household from $22,537 for an individual up to $45,075 for a two adults and two children. This cutoff embraces 706,730 people in Toronto including seniors and children who already receive a transit discount.
The proposed new fare would be at the same level as the current senior/student rates, in other words a 20% discount on pass pricing and a 33% discount on cash fares. The estimated population falling within the income cutoff who do not already receive a subsidy but who would be transit users is about 193,000, the number shown for the third phase of the program above.
A separate Community Engagement Report looked at the profile of potential recipients of the new subsidy. Respondents were divided roughly equally between the city’s four quadrants, and over 80% of them used the TTC regularly with 43% using it daily.
The source of the 193,000 figure is not immediately obvious, but the following table gives a good indication.
Of the total target population of 482,550, a substantial number already receive a subsidy of some kind, either the free children’s fare, or the student fare which is equivalent to the proposed “fair pass”. The table above is dishonest in that achievement of the $100 cost per low-income resident occurs because everyone who is already getting a discount is included. The $48.2 million cost should be allocated against the 193,000 potential beneficiaries giving a cost of about $250 each. Similarly, the high cost/person for children, students and seniors is achieved by allocating the entire cost of each subsidy only against those in the target group. A “saving” would only occur if these subsidies were ended.
This is the sort of analysis that suggests a different agenda was once on the table – eliminating discounts for all but the target low income-group – but that this was subsequently dropped. When a section is titled “Efficient Allocation of Funds” it is clear that reallocation of subsidies from some riders is the intent.
The demographics of low-income Torontonians implied by the table above are quite interesting. Under 40,000 seniors would even qualify for the Fair Pass program, less than 2% of the city’s population. Children and students outnumber the seniors by over 4:1. The largest group contains roughly 280,000 who do not fall into an already-subsidized category.
Advocates for low-income fare subsidies argue that even at a 20% discount, the Fair Pass will not be affordable to many in the target group, although the 33% single fare discount would be the more likely to be widely used.
The report misses a few key implementation points that are snarled up in TTC policy decisions. First is the question of a timed transfer. If the TTC made one fare valid for two hours without its byzantine transfer rules, all riders including those on low income would save money by avoiding charges for “trip chaining”, grouping several short hops together in one outing. Second is the matter of fare capping. If the “fair pass” were implemented as a monthly cap equal to the cost of a pass ($112), then riders would not face the need to pay out in a lump sum at the start of the month. Both of these options are easily within Presto capabilities because they are provided to other GTA transit operators.
Slicing Up the Pie
The central problem of all fare debates is that none of the potential funding governments wants to shell out more money, but the politicians want the photo ops, the air time that bragging about some new benefit will bring. At Queen’s Park, we have Metrolinx conducting a “fare integration” study doomed to failure by treating the problem as a zero-sum game where any fare reduction and lost revenue in one part of the network must be balanced by gains elsewhere (with the added caveat that Metrolinx won’t give up a penny). In Toronto, the idea of looting the existing concession fares has surfaced regularly, and we hear constantly about how affluent seniors are unjustly receiving civic benefits, not to mention the subsidies given to children of the “middle class”.
Ironically, at the same Executive Meeting, Deputy Mayor Minnan-Wong moved, and the committee endorsed, that any tolls implemented on Toronto’s expressways be capped so that seniors would not pay more than a fixed amount. I suspect that seniors who drive frequently on the expressways are unlikely to be among the target population for lower transit fares.
In this debate, nobody appears to be taking the part of ordinary transit users who could face service cuts to pay for increased fare subsidies. There is an assumption about the affluence and ability to pay by those who do not fall under the low income threshold that would be laughed out of Council if the subject were property taxes.
Collectively, Toronto is a rich city and more revenue must come from its residents and businesses to pay for everything we would like to have. Despite the prosperity, Toronto also has a growing poverty problem affecting many city services including transit and housing, and there is little money on the table to pay for a growing and expensive list of civic baubles.
If Council simply shuffles responsibility for the Fair Pass subsidy onto the TTC and hence to the riders and the service plans, that is no leadership at all. If there is to be a debate about targeted subsidies, then Toronto should have that debate, and be prepared to face those who now have lower fares but would no longer qualify.
Cutting existing discounts may be a quick fix for one year’s budget problems, but it will not address the full need for transit dollars. Such a policy, coupled with the inevitable service cuts, would signal a transit system in decline. Why have multi-billion dollar transit plans but drive away riders?
Postscript: Seniors’ Fares
Mike Filey passed along a cutting from The Star about the decision to implement Seniors’ fares effective January 1, 1971.
When they came into effect, Metro Toronto paid the TTC a special subsidy of $1.363 million per year to cover the cost, and although there were still two fare zones within Metro, a senior could make a cross-border trip for one half-price senior’s ticket.
Until 1971, a smaller group of 60,000 people were eligible for half fares because they were over 70 and receiving the Guaranteed Income Supplement (GIS), or between 65 and 70 and qualified for free hospital and medical premiums based on low income.
Executive Committee had recommended that the lower cost fare be extended to all people without a means test who were 70 or older, but Council extended this to all over 65s. Thus were the current seniors’ fares born.
Meanwhile, this gem:
North York Controller Paul Godfrey said the moves are steps toward the day when no one will pay fares and public transit will be paid for by tax revenues.