Re: Fw: FACTS FROM THE FRINGE Newsletter: June 17, 2010

[Sieg Holle]

Thanks for this -as discussed here is one example where the city transit union delivers more on a measurable basis  ( here is where competitive  scale benifits prevail   merry Xmas  Sieg b

Subject: FACTS FROM THE FRINGE Newsletter: June 17, 2010 Running Up a Profit, Running Down a City No. 200, June 17, 2010 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 how to reduce the city’s deficit. On one level, this proposal is unremarkable: just the latest in a chorus of business demands that governments fix their deficits by selling off, contracting out, or eliminating altogether some of the public services they provide. (Funny, when the economy was strong and governments enjoyed surpluses, I don’t recall any business group demanding that government buy up new assets and expand public programs. So maybe it’s not about the budget, after all.) This particular proposal caught my eye, however, because I am residing temporarily in Auckland, New Zealand’s biggest city.  (I’m here for a few months trailing after my brainy spouse, who’s on sabbatical here.) Not having a car, we rely on public transit. Auckland’s is without a doubt the most fragmented, expensive, and maddening system I’ve ever used. Oh, and by the way: it’s 100% private.   The gory details provide a useful caution for those who believe that the private market always does things better. New Zealand municipalities were forced by conservative national governments in the 1980s and 1990s to sell off many public assets, including transit. They assumed free market forces would cut costs and improve productivity. The reality has been quite the opposite. Indeed, since the 1980s New Zealand’s productivity has fallen far behind other OECD countries (including neighbouring Australia), yet costs and taxes remain relatively high. The government even had to buy back some of the privatized companies that failed entirely (like Kiwi Rail and Air New Zealand).   Today Auckland’s regional government contracts a dozen different private firms to supply bus, rail, and ferry services. A complex network of interlocking ownership links many of these suppliers (so much for the mantra of “competition”). The biggest, Infratil, is a $2 billion giant with a broad portfolio of privatized assets, including transit, electricity, and even airports. (That’ll surely catch the Board of Trade’s attention!)   The hodge-podge is all the worse because each company accepts only its own tickets, not those offered by competitors. Since inter-company transfers are impossible, bus routes are insanely circuitous (in order to maximize the area covered by each individual route). My daughter’s bus trip to school takes three long detours through different residential neighbourhoods, doubling the 5 kilometres she would otherwise travel.   Tickets are expensive. Passengers pay according to how far they travel (and then pay again if they need a transfer). Very short trips (of 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 kilometers from the north end of Auckland to the south costs between $12.70 and $16.50 (depending which companies are used), and takes two hours. Passengers traveling the same distance in Toronto (say, from Scarborough to Etobicoke) pay $3 once, and can do it in less than half the time.   City planners impose various pseudo-quantitative performance indicators on the contractors, like sophisticated GPS systems to monitor on-time performance. But even this minimal nod to public accountability produces all sorts of unintended consequences. Bus companies fear being fined for missing on-time targets – but are driven by the profit motive to ruthlessly minimize outlays on equipment and drivers. The resulting pressure is intense on drivers (some of whom don’t even get paid overtime) to meet unrealistic timetables; a media exposé last year showed this often requires breaking the speed limit. Several times we’ve waited for a bus, only to see it careen by without stopping, the driver shrugging helplessly and pointing at his watch.   That anecdote sums up perfectly the irrationality of this system. The top priority becomes ensuring that a private company reaches its profit targets, not picking up people who need a ride.   Yet Aucklanders still pay for transit – three times over. Once through their taxes: subsidies to private transit consume half of all property taxes collected by the regional government. Then again at the farebox. And finally a third time, through the inconvenience of a fragmented, mismanaged system.   No wonder Aucklanders take transit one-quarter as often, on average, as Torontonians. So before anyone gets carried away with enthusiasm for the inherent efficiency of the private sector, come and visit Auckland. It’s a beautiful city. But you’ll need to rent a car; don’t bother with the bus.   A version of this commentary was originally published in the Globe and Mail. ================================================ THIS IS AN AUTOMATED MESSAGE PLEASE DO NOT REPLY ================================================ Manage your online subscriptions at http://www.caw.ca/mail/user-login.aspx To Unsubscribe from this list please follow this link http://www.caw.ca/mail/user-unsubscribe.aspx?s=671&l=5&e=HBJR...@YAHOO.COM&p=67215

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