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The TTC Should Only Help Fund Low-Income Riders

11/27/2014 08:16 EST | Updated 01/27/2015 05:59 EST
Chris So via Getty Images
TORONTO, ON - APRIL 2: Lansdowne 512 streetcars pass each other at Wychwood Ave and St. Clair Avenue. TTC stats suggest that the St. Clair right of way for streetcars has improved ridership and cut transit trip times. April 2, 2014. (Chris So/Toronto Star via Getty Images)

A recent news report suggested that the Government of Ontario was weighing the prospect of subsidizing Toronto Transit Commission operations. This has since been vigorously denied.

While having more than one level of government involved in delivery of a particular service can be problematic -- witness the never-ending funding disputes between the three levels of government over capital expansions -- there is potentially a role for the province to play in subsidizing transit. However, that shouldn't take the form of general operating subsidies. Rather, the funding should be targeted directly at low-income riders. Treating transit as a social service would only undermine quality in the long run.

For all of the flack it takes, the Toronto Transit Commission does a relatively good job of moving Torontonians around the city. Most of what ails the TTC stems from disputes between the three levels of government (as well as between subsequent mayoral administrations) about capital expansions, but on the operating side, the TTC does fairly well. Despite the odd story about ticket takers with eye popping salaries, the TTC manages to collect over 70 per cent of operating revenue through the fare box. That is unheard of for a municipal transit agency in North America.

Some observers have pointed out that this puts an undue strain on low-income riders. While that is true, the solution isn't a return to general operating subsidies from the provincial government, as some have suggested. Rather, the provincial government should fund modest, targeted interventions to help low-income riders. Fares exist to ration space, to gauge demand, and to ensure a predictable stream of revenue that isn't subject to political whims. The TTC should be weary of severing the link between payment and use.

Fortunately, several other transit agencies have stumbled on an effective approach to accommodating riders who might not be able to afford to pay market rate: discounted transit passes. While seniors and students already receive reduced fare passes, low-income riders do not. Waterloo Region, Windsor, Hamilton, Halifax, Halton Region, Kingston, and Calgary have all experimented with this approach. A recent Toronto Public Health paper discussed this possibility, and the City is currently studying the issue.

Calgary spent $3.9 million subsidizing just under 78,000 monthly low-income passes in 2011. Those passes, discounted 55 per cent, accounted for 3 per cent of ridership. There is some bureaucracy involved, but the program works. Losing $3.9 million of revenue -- a high estimate, given that many of these riders might not have been able to purchase full-fare passes -- may seem like a lot, but it is modest in comparison to discounting the other 97 per cent by even a small amount.

That last point gets to the core of the problem with subsidizing operating revenue. The farebox provides a stable source of revenue that is not subjected to political whims. General operating subsidies are an easy target for governments seeking to cut spending. Since these subsidies aren't visible to the average person, they're easy to take away. By contrast, user fees are paid regardless of the political climate. Subsidized passes, unlike general operating subsidies, would be difficult to cut even in hard times. Generalities about cutting waste are politically popular, but specifically cutting funding for low-income people is hard.

Another benefit of providing low-income passes rather than cutting fares is that it can help incentivize the TTC to provide service where demand it greatest. Transit is very easily politicized, but the more reliant the TTC is on user fees, the harder it will be to make politicized transit decisions that forego revenue. Making the subsidy follow the rider means the TTC needs to actually serve that rider to earn the subsidy.

Though the provincial government should not be responsible for providing public transportation, it is responsible for social services. It makes more sense for the Ministry of Community and Social Services to pay for this program than the TTC, since it fits within the MCSS's mandate.

Public transit is not a social service, and we shouldn't treat is as such. Reducing overall fees would make it more difficult to fund high quality operations, which could make it more difficult to attract some higher income riders. That would increase the burden on lower income riders, and the City budget.

High quality public transit costs money. Someone needs to pay for it. At the moment, riders are paying a large portion of those costs. The City shouldn't change that. Instead, the province should take a targeted approach to transit subsidies based on best practices from around the country. Someone working on Bay Street and living in King West probably doesn't need a free ride. But maybe someone at Jane and Finch needs a break on fares. A surgical approach is preferable to a blunt instrument.