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(Toronto) — A study prepared for the Ontario Motor Coach Association (OMCA), which compared operating costs between private bus operators and government run transit, has found that government could save 21% by tendering out bus services to private operators. For large transit operations the savings could exceed $100 million per year.
According to OMCA President Doug Switzer, “This study shows that there is a third alternative for governments trying to choose between service cuts and tax and/or fare hikes. We need to take a fresh look at the way governments deliver essential services like transit and consider how we can do things differently to break out of the intellectual trap that keeps leading us back to either cuts or tax hikes”.
He went on to point out that, “The authors of the report make an important point – governments need to focus on growing services to the public rather than focusing on growing government run public services.”
Switzer added that, “While there are several reasons identified in the report why private operators are more cost effective, one of the key factors seems to be productivity. A 2010 Conference Board of Canada report on productivity in transportation found that between 1981 and 2006 productivity grew by 3.6% per year for rail freight, 2% per year for airlines, and 1.8% per year for trucking while productivity in public transit declined by 1.2% per year. Between 2003 and 2009 transit subsidies in Ontario increased 194% and operating costs doubled, while over the same period passenger trips only increased 16%.”
He concluded by saying, “It’s been said that the definition of insanity is doing the same thing over and over again and expecting different results. When it comes to transit that’s exactly what we do, repeatedly do the same thing – throwing more money at the problem – only to find that we haven’t achieved a different result. The next year we’re right back where we were, debating services cuts versus tax/fare hikes. It’s time to stop the insanity and try new approaches. Engaging private sector operators in a constructive partnership to reduce operating costs and improve service should be an obvious one.”
*Materials originally published in September 2011.