Transport Committee on Oct. 19th, 2011

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

Thank you, Mr. Chair.

I'd like to thank our witnesses who are here today.

I was a city councillor in the municipality of Penticton. About 30 years ago, Penticton was one of the first early adopters of public transit. We have always had a lot of seniors in the community. It was felt at the time by the city elders that they should invest in public transit. They have actually had, for almost the whole 30 years, Berry and Smith, which has operated with an excellent safety record.

Also, just to appease the concerns that have been heard about safety and accountability, on a regular basis at the transit committees or at city council we would receive updates, and if there were questions from the public, I guarantee that they were getting service right away.

So I certainly am glad to hear that we have other institutions that are serving the public, but my first question actually has to do with asking you to elaborate a bit on transit systems receiving federal funding being encouraged to partner with private operators by competitively tendering the operation of their bus services. At previous meetings, we've discussed the necessity to come up with a formula, maybe, to make sure there are enough users to pay for a system, but I'd like you to just elaborate a bit more on this, because there might be some other criteria we may want to consider moving forward.

[Doug Switzer]

I think our suggestion is a fairly soft suggestion. We're not suggesting that every municipality has to contract out if they're going to get funding. Again, we're not rigidly ideological about whether public or private is better. Both bring things to the table. Both have strengths and both have weaknesses.

In some cases, it may not make sense for a municipality to contract out, but what we're suggesting is that part of the formula should be some evidence that there was at least a study done or a pilot run--some evidence that the municipality gave consideration to this tool. And that's really what it is: contracting out is a tool. It doesn't work in every circumstance. You don't use a hammer when you need a saw, but when you need a hammer, it's a good hammer, so use it. That's what we're suggesting. You may want to make it a requirement that they look at whether it would make sense in their community and, if it does, that they try it.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

I appreciate hearing that, simply because if, as you said, there are 20% to 30% lower costs, this may make some public transit options that may not meet the user fee formula we were discussing a real option there. I appreciate that.

I have another question. Just to go back to the profit modem, if you're in business,you're in business to serve. You don't make profits unless you're looking after your clients. Just getting back to that, profits are a good thing, because it shows that the contract is being looked after and looked after well.

In talking about levelling the playing field, I'm very alarmed to hear that there are some cases where public systems are exempted from the safety requirements that private bus operators have to meet, and that in some cities privately operated buses cannot use high occupancy lanes while public transit buses can, and then the sales taxes.... Are there any other specific things where there isn't a level playing field, in your opinion?

[Doug Switzer]

No. I think those are the three that jump out the most.

On the safety issue, again, I really don't want to get into “we're safer than public transit” or “they're safer than we are”, but I think it is worth noting that the bar is higher for private operators than it is for public operators. It's not usually substantial. For example, GO Transit is exempt from underbody inspections that private carriers have to do. They're expensive, and they're annoying for our guys, and that's why GO got exempted from them: so they could save money.

The idea that the private companies cut corners to save money and public entities don't is not actually true. Public entities find all kinds of way to save money.

If I could, I want to speak to you just for a second on the idea of profit. Companies measure profit in dollars and cents, but public entities also make profits. There is a political profit motive, where councillors or politicians will make decisions with respect to the operation of transit systems based on votes. That's a form of profit. All of these systems are run by people who are, to one extent or another, self-interested in doing their thing.

Accountability is actually stronger in a contracting-out situation because, as Réal pointed out, if you don't live up to the level of service the contractor expects, you lose the contract. If you're a public entity and you don't live up to a certain level of standard, well, there's an internal argument.... How accountable are they? Theoretically, they're accountable to their councils, but they are like any big bureaucratic institution.

Accountability in big bureaucratic systems is a difficult thing to nail down, whereas in a contracting-out system it's much more black and white: this is what you're expected to do, this is the safety record we expect, this is the service level we expect, and if you don't do it, you're gone.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

You also mentioned there's a broad amount of experience related to coming up with these agreements so that municipalities can win and, obviously, the private operators would have a level playing field. Would your organization or the associations you participate in have any kind of best practices that would help the committee further your inclusion of some of these ideas?

[Doug Switzer]

We don't, but frankly that's something we would like to encourage the federal government to do. That could be part of the strategy: the provision to municipalities of a manual, if you want to call it that, for best practices for contracting out, to make it easy for municipalities to understand how they should do it. Again, as was pointed out, mistakes have been made. There have been unsuccessful P3s over the years, but there have been many more successful ones. Codifying that and putting it down on paper is perhaps a very useful exercise, and maybe it's something that could come out of this process.

[Dan Albas, Conservative, Okanagan—Coquihalla, BC]

That's great. Thank you for your time.

[The Chair, Conservative, Merv Tweed]

Mr. Poilievre.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Thank you for an excellent presentation.

Let's start with your first point: “that transit systems receiving federal funding be encouraged to partner with private operators by competitively tendering the operation of their bus services”. Can you give me some examples of where this kind of thing has been done before?

[Doug Switzer]

Sure.

Trevor, maybe you could, since you actually do this.

[Trevor Webb]

As I mentioned in my presentation, we do two-party and three-party contract arrangements and we receive federal funding. In British Columbia, for example, the federal government puts a lot of money into transportation. That is part and parcel of some of the capital costs associated with operating the fleet.

In British Columbia, for most of the locations, there is a three-party system with a crown corporation and BC Transit, and in fact they provide the rolling stock for many of the operations in British Columbia.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Can you give us an example of where there have been partnerships with private operators?

[Doug Switzer]

Sure.

Réal.

[Réal Boissonneault]

There are some in the Montreal area. There are a lot of them in the Montreal outskirts, not in downtown Montreal, on the Island of Montreal. But in all the suburbs of Montreal, that's the way it is. This is what I was explaining--

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

They just contract out--

[Réal Boissonneault]

Yes.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

--to a private bus operator.

[Réal Boissonneault]

Yes, they send out an RFP to carriers that want to bid on that.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Do they just reimburse on a per-passenger basis?

[Réal Boissonneault]

No, it's per hour. There's a base contract, but it's mainly per hour of services.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

Does the municipality prescribe routes? How does that work?

[Réal Boissonneault]

What do you mean? The money goes back to the municipality.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

I understand, but who actually determines the routes?

[Réal Boissonneault]

The municipality does.

[Pierre Poilievre, Conservative, Nepean—Carleton, ON]

So they determine the routes.