Auckland's Privatized Transit a Warning for Toronto

[M II A II R II K]

Auckland transit blues


June 16th, 2010

Jim Stanford



Read More: http://www.theglobeandmail.com/news/...rticle1605487/

Toronto’s main business lobby, the Board of Trade, recently called for the outsourcing of public transit services to private companies, part of their free advice to the next mayor on reducing the city’s deficit. On one level, it’s an unremarkable proposal: just the latest in a chorus of business demands that governments fix their deficits by selling, contracting out or eliminating public services. But it caught my eye because I am residing temporarily in Auckland, New Zealand’s biggest city, where the transit system is the most fragmented, expensive and maddening I’ve ever used. And it’s 100-per-cent private. The gory details provide a caution for those who believe the private market always does things better.

- In the 1980s and 1990s, New Zealand municipalities were forced by conservative national governments to sell off many public assets, including transit. They assumed free-market forces would cut costs and improve productivity. The reality has been the opposite. Indeed, since the 1980s, productivity has fallen far behind other OECD countries, yet costs and taxes remain relatively high. The government even had to buy back some of the privatized companies that failed entirely, such as Kiwi Rail and Air New Zealand.

- This hodge-podge is all the worse because each company accepts only its own tickets, and not those offered by competitors. Since inter-company transfers are impossible, bus routes can be insanely circuitous. My daughter’s bus trip to school takes three long detours through different neighbourhoods, doubling what should be a five-kilometre route.

- Tickets are expensive. Passengers pay according to how far they travel (and then pay again if they need a transfer). Trips of just a few stops cost as little as $1.70 – but another $1.70 is added each time the bus passes through another invisible “stage.” Travelling 40 kilometres from the city’s north to south costs $12.70 to $16.50 (depending which company is used) and takes two hours. A passenger travelling the same distance in Toronto (say, from Scarborough to Etobicoke) would pay $3 once, and require less than half the time.

- Yet Aucklanders still pay for transit – three times over. Once through taxes – subsidies to private transit consume half of all property taxes collected by the regional government. Then again at the fare box. And finally a third time through inconvenience. No wonder Aucklanders take transit one-quarter as often as Torontonians. So before you get carried away with enthusiasm for the inherent efficiency of the private sector, visit Auckland. It’s beautiful. But you’ll need to rent a car.

Take note, Toronto: The private sector doesn’t always do it better

[seaskyfan]

Privatization = Union Busting

[ue]

Duh the prices went up. Auckland's transit authority realized people relied on the transit and could make a killing off of raising prices (the whole point of business) because people would try to use it if they didn't have a car no matter what the price. It's like that with private health care and the like. A public/government run transit system is run by the city, which gets money from all sorts of places and has the goal of keeping the people happy (or they'll be booted out) not maximizing profits.

[BTinSF]

Private systems can do it cheaper because they can pay less for labor, especially if they can be non-union. Public sector unions form an unholy alliance with politicians to benefit each other at the expense of the public. But just because private service providers can lower costs doesn't mean they'll charge less--they are in business to maximize profit after all. They also need to be regulated, especially if they have a legal or de facto monopoly. Like any utility, they should be allowed a set and regulated profit margin which should be negotiated before they are allowed to get into business. And preferably they shouldn't be subsidized--or if they are the terms and limits of the subsidy should also be strictly set by contract before the service is established.

[miketoronto]

Private transit systems need to be subsidized by the government, or they would not be operating the service, as these services don't make a profit.

Basically Auckland tenders out bus services, the way almost all Australian cities do.
This causes residents to have to know different bus company schedules, etc.

Auckland is trying to tie everything together with a common brand name, etc.

[vid]

If it is gonna cost 15 bucks to cross a city as small as Auckland you might as well own a car. Public transit fail, imo.

[Doady]

Toronto is such a large system, serving such a large population, I can see some benefit to outsourcing different divisions of the system to different companies and still keeping the actual service public.

The point is not to get rid of unions (because bus drivers for private companies are still unionized), but to reduce their power. The point of unions is allow some defense against management and the employer, but when they start using the power to hold 2.5 million people (which include many workers) hostage, it starts to undermine the whole point of unions in the first place. Unions are for defense, not aggression.

A 100% private system would never work in Toronto though, or many other cities for that matter, let's not even think about that. Transit is a social service, and making it completely private and run for the profit of greedy business would undermine the whole social aspect of it even more than the greedy and overpowered union does...

When the ridership decreases due to complete privatization, what happens? Increased congestion, increase strain on road infrastructure, and so increased cost to the taxpayer anyways, even the ones who aren't paying the higher transit fares. Then of course increased health care cost do to increased sprawl, increased pollution and reduced fitness. In the end, everyone has to pay more for privatization, so it doesn't make any sense.

[vid]

The only parts that could be successfully privatized are the parts that are making money. If the city loses those, its cost for the transit system will just increase, unionized workforce or not. Only about 20% of TTC's budget comes from the government. How much will it have to pay if the profit making parts of the system are lost?

[SpawnOfVulcan]

This is why you don't completely privatize. You have to maintain a public stake in the system, or else you're gonna get crappy service and of course low productivity and route cuts. T

[BTinSF]

Originally Posted by miketoronto

Private transit systems need to be subsidized by the government, or they would not be operating the service, as these services don't make a profit.

If you need a taxpayer subsidy, you probably don't need a private operator. But, as I said, if you do have both, the subsidy needs to be strictly limited so the private operator has the same incentive to control costs as if there were no subsidy.

[J. Will]

Privatization would just lead to worse service frequency. There is no way we'd have the Yonge bus running every 7-8 minutes 7 days a week at 4am with privatization.

[waterloowarrior]

In London and in major Scandinavian cities (among other places), the city plans the routes/schedules/fares and tenders the operation of the routes to bus companies. The bus companies get paid per km or per service hour, typically with some incentives/penalties based on service quality.

[cslusarc]

Originally Posted by waterloowarrior

In London and in major Scandinavian cities (among other places), the city plans the routes/schedules/fares and tenders the operation of the routes to bus companies. The bus companies get paid per km or per service hour, typically with some incentives/penalties based on service quality.

I totally dislike "full" privatization, but I like the Transport for London co-ordinated model.