In his continuing assault on the City of Toronto, one of Premier Doug Ford’s early promises was to take the TTC subway system completely off of the City’s hands. That scheme was cut back to handing Metrolinx the responsibility for planning and building new lines, with the existing TTC system left for future consideration.
Now, the Star’s Ben Spurr reports that the upload has fallen off of the table and a new “deal” will be proposed:
In exchange for Toronto supporting Ford’s pet project, the “Ontario Line” between the Science Centre (Don Mills & Eglinton) and Ontario Place (south of Exhibition Place), Ford would leave the existing subway system in Toronto’s hands. This is a huge retreat for a man once bent on eviscerating City Council’s control over transit, and it raises the question of “what next” for Toronto transit politics.
I have written before about the high cost of subway ownership:
In brief, there is a myth that the subway network “breaks even” because its high ridership, and hence revenue, more than pay for the cost of operations and maintenance. This has two fundamental flaws:
- Much depends on the allocation of fare revenue, and the amount of the fare carrying a rider on a bus+subway trip, for example, belongs to each leg of the journey. There are various ways to do this, but they all produce distortions in a flat fare system with extensive free transfers between routes and modes. This process is even more difficult in the era of monthly passes and two-hour fares.
- There is a huge ongoing capital cost for subway renewal, for systems, vehicles, stations and much more that do not last the mythical “100 years” subway boosters claim, but which must be refreshed on a regular cycle. Even the physical structure, the tunnel, needs major repairs to achieve its intended lifespan.
Cuts to provincial funding started years ago, and the Ford government has reversed plans to increase Toronto’s share of provincial gas tax revenue. The provincial contribution to ongoing capital maintenance is small. As for operations, the City pays the lion’s share of the subsidy and the riders pay most of the rest.
If Queen’s Park takes over the subway, it would hardly be fitting for Toronto to continue paying much of the cost of maintaining this asset, and it would become a new drain on provincial resources. Premier Ford never tires of telling us that these are stretched to the point where major cutbacks, not additional costs, are the focus of all government planning. True, the province would give up its share of surface system costs, but that is a small contribution compared to what the City already pays in operating and capital subsidies.
Doug Ford’s dream of being the Tsar of Toronto Transit Planning comes with a big price tag, and there is a good chance that the government is having second thoughts about whether the proposed changes are worth the bother and expense.
The challenge for Council is, however, more complex that one of embracing the Ontario Line, popping the sparkling wine, and celebrating the Premier’s retreat.
First off, if Toronto keeps the subway, it keeps the costs associated with it, and there is a large, unfunded backlog of major subway projects in the pipeline. The City counted on increased gas tax revenue promised by Premier Wynne to offset some of this backlog, but Premier Ford was quick to turn off that funding tap. Big dollars appeared to be coming from Ottawa through the infrastructure fund, but almost all of this has been tapped for a few major projects leaving a lot of the necessary but unsexy work with no funding. The first round of “infrastructure” spending went to a very large order of buses because this was the only work that could be accomplished in the politically-imposed timeframe for spending that would, in theory, be part of an economic stimulus package.
Second, if Toronto buys in to the Ontario Line project, the City will be on the hook for close to $4 billion assuming a one third share of the total cost, and this will be spent in a fairly short time given Ford’s claim that the line would open by 2027. That puts a huge capital burden on the City just when it has no headroom in its (self-imposed) budget rules to borrow more money. This will almost certainly elbow other badly-needed TTC work off of the table.
As for Ottawa, the two major parties have different positions on the Ontario Line:
- The Liberals argue that the “plan”, including the “Initial Business Case” from Metrolinx, is far too simplistic for a federal commitment. They had already signed on for the TTC’s Relief Line project, but have yet to embrace the Ontario Line as an alternative.
- The Conservatives say that they will “support” the Ontario Line, but are vague about the dollar amount. Some in the media have claimed that the Tories would pay 100% of both the Ontario Line and the Richmond Hill extension, but that is not supported by actual statements. Moreover, no federal government can afford to get into the business of fully funding transit capital projects because there would be a long queue of cities elsewhere clamouring “me too”. Indeed, it would be ironic to have an “Ontario” line fully funded by the federal government.
But wait! If we cast our minds back to Premier Ford’s plans for transit and Metrolinx’ so-called benefits case, we see that the whole thing is supposed to be magically financed and built by the private sector, not with public money. Why should the municipal or federal governments even have to contemplate “support” for the project when it is intended to be a P3, a private-public-partnership, that is in effect a long-term lease to be paid over (at least) 30 years, not an outright purchase.
Any government “signing on” to the Ontario Line needs to be sure (a) just what they are getting into and (b) make a long term commitment to pay their share of the future lease costs.
Ontario under both the Ford and Wynne/McGuinty governments claims that it needs to be in control and have ownership of projects because the province can “amortize” the cost and therefore do more, faster, than the City could. This is a pile of accounting trickery, to be polite.
Whether a government borrows money or enters into a long-term contract for someone else to build (and possibly operate/maintain) something with financial arrangements stretching over decades, it’s a debt, a need to pay back in the future what was borrowed, one way or another, today. The difference with provincial ownership is that on the books, any debt is balanced by an asset – the brand new line – and there is no change in the net provincial debt. In a P3 arrangement, there is no debt per se, only a long-term commitment to pay off the P3 contract.
Of course, the only way one could realize the value of the new line would be to sell it, but on paper, the debt that built it vanishes. This arrangement is not available to the City, and its debt is supported by property tax revenue. not the City’s physical assets. That, in turn, limits the amount of debt the City can float, unlike Queen’s Park.
In all of the excitement about the Ontario Line and the on again, off again upload, a few other projects in Toronto have disappeared from view notably the Scarborough Subway Extension. How much of the money earmarked for that project will be siphoned off to the Ontario Line? How does Premier Ford plan to pay for the SSE, and how much does he expect to get from municipal and federal levels? Do we even know what the three-stop version of the subway will cost, or is this still a state secret?
This is further complicated by Mayor Tory’s own pet project, SmartTrack, although if any more pieces fall off of that plan, all that will remain are the blue and green colours of the campaign posters. Today, SmartTrack is nothing more than eight extra GO stations to be built at the City’s expense. Or maybe not depending on how the Ford-Metrolinx something-for-nothing scheme for transit oriented developments and contributions to capital funding actually works out.
Metrolinx remains evasive about actual service levels at the new stations and repeatedly fails to answer basic questions about which service plan they will actually operate. The City’s buy-in to SmartTrack, not to mention its projected ridership and network benefits, depend strongly on the service level and fare structure it will have, but neither of these has been nailed down.
Lurking in the background of all discussions about transit are two coming elections. The first, quite soon, may or may not displace the Liberals from power federally. If Ford does not gain an ally in a Conservative government there, he won’t be able to count on support for his Ontario Line or any other project lacking a rationale beyond his own need to meddle in Toronto’s transit planning. Even so, anyone who thinks a Tory government federally will bring better transit funding beyond a few election promises is dreaming. Recent pronouncements of “support” for the Ontario and Richmond Hill lines have much more to do with vote-getting than anything else. Just ask the people in Scarborough how they are enjoying that new subway they voted for.
The second, in 2022, will depose Premier Ford, although what or who he will be replaced with remains to be seen. The day is not far off when those making ten year transit plans must ask “what will the post-Ford era look like”. Do we spend the next few budget cycles pretending that current plans are real, or do we contemplate a “plan B”?
The entire Ford transit scheme has been half-baked from the day it was announced with all the weight of a finished plan that only later was shown to be very much a work-in-progress. The financial implications for both Toronto and Ontario of shuffling responsibilities for parts of the transit system have never been publicly explored, and frankly even our own transit Commissioners do not understand much of the detail in the TTC’s budget and plans. Now we may have a new plan, or rather the old plan with a few new provincial projects grafted onto it.
Toronto’s Executive Committee will consider this cat’s cradle of projects, costs and political promises on October 23, with the report going to the full Council on October 29. Important questions to be asked include:
- Just what is the “Ontario Line” beyond a doodle on a map? What detailed engineering has been done to substantiate that it can actually be built as proposed, and what will be the effects on neighbourhoods through which it will pass?
- How much will it cost, and how much is each level of government expected to contribute to the capital funding?
- What proportion of the capital cost will be born by the private sector partner in a DBFOM (design, build, finance, operate, maintain) contract, and how will this translate into future annual costs to funding governments and/or the transit system and riders?
- Can the City afford its share of the capital cost within its debt envelope, and what effect will this have on the timing and financial viability of other City projects?
- If the province does not upload the existing subway system, what are the financial implications for the City and for the backlog of transit capital projects especially considering the loss of expected provincial gas tax revenue?
Toronto’s transit riders cry out for better service, reliable service, all over the city, but calls for more buses or streetcars bring “we can’t afford it” and “we have no vehicles”. Valuable though parts of the Ontario Line (especially the north branch to Don Mills) may be, that $11 billion project will not make transit one bit better for riders waiting on many street corners across the city.
Before we break out the bubbly to celebrate defeat of the Tory Visigoths, what is the real future of Toronto’s transit system? Do we continue to spend every available penny on vanity projects, or do we look at the wider system, determine what is needed and commit to funding that need rather than propping up political egos and trolling for future votes?