Why GNB should reject a Crown transit corporation.
Acadian bus lines’ decision to cease operations in the Maritime Provinces has lead to a serious political debate about public transportation in our region, and in New Brunswick specifically. On the heels of this announcement many groups began calling for the establishment of a new Crown corporation to provide public transportation to our citizens.
Most recently, a guest column from Glen Carr, president and business agent of the Amalgamated Transit Union Local 1229, appeared in Monday’s Daily Gleaner. In the article Mr. Carr rightly points to a number of deficiencies with the current transit environment, however his conclusion that a public transit service paid for by taxpayers is the solution to the current turmoil, is ill conceived.
Public transportation is not a profitable enterprise and the government would begin losing significant revenue from Day One, revenue it does not have.
The Province of New Brunswick requires policies that will make our economy competitive in the 21st century. The most important areas on focus should be on developing economic policies that will allow the Government of New Brunswick to properly fund it’s education systems (early education to post-secondary/trades), assist in attracting top notch 21st century employers, and returning to balanced budgets.
These are the policy areas that will allow New Brunswick to prosper in the future. Unfortunately the current deficit situation will prevent New Brunswick from being able to fulfill these policy objectives in the short term. As such, any policies that would jeopardize the province’s ability to carry out these objectives in the long term should be rejected. A public transit corporation is that sort of policy.
A Political Landmine:
The decision made by Acadian bus lines puts the province and those people who rely on inter-city and inter-provincial bus service in an extremely difficult position. Indeed, the decision to end services in November seems to have been motivated to put maximum pressure on New Brunswick politicians, specifically those representing David Alward’s Conservative government. The chosen date, right before the Christmas season, will cause significant outrage from students, their unions, and their parents. The general traveling public will also be more engaged during this time of year as it will significantly impact traveling over the holidays. Being close to Christmas, the added pressure of some 180 Acadian bus line workers being left unemployed will add to the voices and pressure to find a solution – with Acadian or without. The real impact on people’s lives, and the political fallout for the government will not be insignificant.
It is not just the needs of the traveling public that will be hurt. Many businesses rely on the courier service provided by Acadian bus lines. The courier service provides a vital mail service connecting rural communities with each other and the province’s urban centers.
The issue has sparked a conversation about inter-city and inter-provincial transportation in each of the affected Maritime Provinces. In New Brunswick, the Tories have suggested reviewing the current regulations and making changes to permit more competition from smaller providers. I am not accustomed to agreeing with the Conservative Party, however on this issue I agree that the solution to this issue is found in reforming regulations to increase competition among private enterprise.
In my opinion the question that should be asked is this: does the establishment of a Crown corporation make sense given our financial state? In other words, it’s a question of priorities. When the province struggles to pay its debt, and fund its education system – a key to economic prosperity in the future – should the Government of New Brunswick add the cost of providing a transportation service? Is the enormous cost of a Crown transportation company justified when we struggle to just barely fund services that will have long term, positive economic benefits to New Brunswick?
The Saskatchewan Transportation Company
Many proponents of a public transportation system have pointed to the STC as an example of a provincial Crown corporation providing transportation for New Brunswick to emulate. Established in 1946 the STC is the longest operating and only Crown Corporation providing public, inter-city and inter-provincial transportation in Canada. In its long history it has rarely made a profit, endured sustained periods of ridership decline, and has been impacted by a national industry trend away from government regulation. The establishment of a Crown corporation is no small matter, and should not be entertained lightly.
A quick review of the STC’s annual reports from the past decade shows that the Crown Corp lost just over $7.5 million. Between 2001 and 2003 significant investments in capital infrastructure were required leaving annual losses of $1 million in 2001, $930,000 in 2002, and $2 million in 2003. Indeed the only year that the STC made a profit in the last decade was in 2010 when the company posted an operating profit of just $9000.00. Despite a 7.4% increase in ridership in 2011, an increase the STC President and CEO Shawn Grice noted has happened “very few times since the company’s origins in 1946, the STC still posted an operating loss of $299,000. To Mr. Carr’s point that part of Acadien’s issue is that they have not advertised in years, the STC has increased it’s advertising budgets, the result of which has been an increase in ridership but has done nothing to increase it’s profitability.
Providing public transportation in provinces with large rural populations spread over large geographies is not a profitable business. Acadian bus lines’ financial struggles are a case in point. Citing declining ridership and increased costs to operate rural routes is not unique to New Brunswick. Faced with similar financial realities in Alberta, the government allowed Greyhound bus lines to stop servicing unprofitable rural routes as a solution. In 2006 the Liberal government in Quebec issued a report titled “Better Choices for Citizens: Quebec Public Transit Policy” which noted declining ridership in rural Quebec and vanishing public transportation links when routes became unprofitable – over 20 routes in 50 years.
Other Factors to Consider
Aside from questions of profitability there are other issues to consider. In general the history of Crown corporations is not one that inspires confidence. Crown corporations are not known for efficiency and often become the subject of political manipulation. New Brunswick’s own history with Crown Corporation underscores this reality as NB Power and NB Liquor become subject to political patronage at the executive level and below. There is no reason to think a ‘NB Transit’ would be immune to this pattern.
A 2011 G8 report entitled “National Strategies on Public Transportation,” argues for the establishment of a national transit fund that would help financially sustain public and inter-provincial transportation links. The report does not advocate for government ownership of public transportation, favoring government regulation with private enterprise partnerships instead. Reviewing government owned transportation companies the report notes that:
” … private operators can help reduce spending on capital assets and human resources, lower costs as a result of competitive bidding, lower potential for labor unrest, and allow the use of existing operators’ knowledge of market demand, routing and scheduling.”
In other words, private enterprise is ideally suited to avoid the pitfalls that plague Crown corporations. We know from our own experience that the current regulations make it difficult, if not impossible for private enterprise to make a profit. There is no reason to think government will ever be able to make a transit corporation pay for its self. As a result I must conclude that it is irresponsible to pursue this policy.
As with any issue that arises in New Brunswick it is difficult to find alternative solutions. This particular issue is one that has the potential to be politically damaging to the Tories, however, their current approach is not unreasonable. New Brunswick cannot afford a Crown transit corporation and Acadian bus lines cannot make a profit. The regulations need to be changed. To that end I propose the following:
- In the immediate short term the Government of New Brunswick should support regulation reform that will allow Acadian bus lines to stop servicing the majority of unprofitable, rural routes while maintaining service of the urban areas in the south and at least one route connecting Northern New Brunswick to Southern New Brunswick.
- The Government of New Brunswick should consider removing the monopoly granted to Acadien buslines to service the Southern inter-city route (the only profitable route) opening it to competition.
- Government of New Brunswick should encourage the establishment of smaller, private transportation operators to service rural routes.
- The Government of New Brunswick could explore allowing municipalities to generate tax revenue dedicated to paying for satellite bus service. (This is a policy that has been put forward in Quebec).
- Announced in the short term, the Government of New Brunswick should study the current research related to a national transit fund in Canada. Such a fund would primarily be paid for by the creation of revenue streams by federal government with the provinces providing additional funding.
- To date the national transit fund has primarily been concerned with providing funding for urban public transportation, however interested provincial governments with large rural communities and smaller urban centers could make a case for being able to spend national transit fund dollars to meet the unique needs of their citizens.
This position reflects my own conclusions based on research that I have conducted on my own. The idea of a public transit company is appealing to many, including myself, but it is financially irresponsible given our economic realities.