Thank you.
The bottom line is that the savings to taxpayers that can be achieved by partnering with private operators are substantial. A recent study conducted for the Ontario Motor Coach Association compared the operating costs of a group of private carriers with those of large regional public transit operators and concluded that competitive tendering of bus operations could save the public transit systems approximately 21% on their operating costs. We’ve provided a copy of that study to the clerk. I understand that he'll be circulating a copy of it to you shortly.
I want to dispel one myth about contracting out services: the idea that savings are achieved by replacing well-paid union jobs with lower-paid non-union jobs. That’s simply not true. Most private sector operators that would be able to take on significant transit contracts are in fact already unionized and their drivers are paid wages similar to those of public sector drivers.
Private operators are able to achieve lower operating costs through better equipment utilization, more flexible work rules, lower maintenance costs, and lower management overhead costs--in short, through higher productivity and efficiency levels. These savings can be returned to taxpayers through lower transit fares, reinvested by systems by expanding services, or used to reduce municipal, provincial, or federal subsidies in order to reduce budget deficits.
How the savings should be spent is a decision for governments to make. You may wish to make a recommendation about that in the strategy, but what we can tell you is that the savings are there to be had if we have the courage to change our thinking--and they are substantial.
We would therefore recommend that the national transit strategy contain a recommendation that all transit systems should explore possible partnerships with the private sector for the provision of bus operations. In our view, it should be a requirement for receiving federal funding that such a review of the feasibility of tendering services is undertaken.
Our second recommendation is that governments at all levels cease discriminatory practices that unfairly treat public and private transit operators differently. For example, sales tax is charged on tickets sold by private operators of scheduled bus services, but not on transit fares. Public systems are exempt from some of the safety requirements that private bus operators have to meet. Also, in some cities, privately operated buses cannot use high occupancy lanes whereas public transit buses can.
The national transit strategy should place private and public transit operators on an equal footing as equal partners in the transportation system. Private bus operators should be treated the same way that public transit is with respect to certain tax issues. Private buses should have the same access to infrastructure as publicly operated buses. Also, all bus operators, regardless of whether they are public or private, should comply with the same safety standards.
Finally, it is unnecessary and wasteful of taxpayers' dollars for publicly funded transit systems to expand their taxpayer-subsidized service in direct competition with existing scheduled services being offered by private operators. Expanding public transit service into areas already being served by scheduled service from private operators--and requiring additional subsidies to displace existing services that were operating without subsidy--is a waste of taxpayers’ dollars.
It's equally unproductive for government-funded systems to begin aggressively expanding into the provision of charter services--again in direct competition with private operators. This forces the private sector operator to reduce or even abandon their service to that community, which then has to be replaced by more taxpayer-subsidized services. This insourcing by transit systems--displacing viable private services with services requiring taxpayer subsidies--is a trend that should be discouraged as a waste of valuable resources that could be spent better elsewhere.
In the end, the goal of the government-run systems should be to increase services to the public, but not necessarily public services.
With that, I’d like to turn it over to Réal to make a few concluding remarks.