CONTENTS
Wednesday 15 September 1993
GO Transit
Richard C. Ducharme, managing director
STANDING COMMITTEE ON PUBLIC ACCOUNTS
*Chair / Président: Cordiano, Joseph (Lawrence L)
*Vice-Chair / Vice-Présidente: Poole, Dianne (Eglinton L)
*Callahan, Robert V. (Brampton South/-Sud L)
Duignan, Noel (Halton North/-Nord ND)
Farnan, Mike (Cambridge ND)
*Frankford, Robert (Scarborough East/-Est ND)
Hayes, Pat (Essex-Kent ND)
Marland, Margaret (Mississauga South/-Sud PC)
*Murphy, Tim (St George-St David L)
O'Connor, Larry (Durham-York ND)
Perruzza, Anthony (Downsview ND)
*Tilson, David (Dufferin-Peel PC)
*In attendance / présents
Substitutions present/ Membres remplaçants présents:
Carr, Gary (Oakville South/-Sud PC) for Mrs Marland
Martin, Tony (Sault Ste Marie ND) for Mr Duignan
Sutherland, Kimble (Oxford ND) for Mr Perruzza
White, Drummond (Durham Centre ND) for Mr Farnan
Winninger, David (London South/-Sud ND) for Mr Duignan
Wiseman, Jim (Durham West/-Ouest ND) for Mr Hayes
Also taking part / Autres participants et participantes:
Peters, Erik, Provincial Auditor
Kelch, Margaret, assistant deputy minister, quality and standards, Ministry of Transportation
Clerk / Greffier: Decker, Todd
Staff / Personnel: McLellan, Ray, research officer, Legislative Research Service
The committee met at 1012 in room 151.
GO TRANSIT
The Vice-Chair (Ms Dianne Poole): Good morning. I'd like to commence this session of the public accounts committee. This morning we are looking at GO Transit.
We did have a motion by Mr Tilson: "That the Provincial Auditor conduct an audit of the Toronto Area Transit Operating Authority (GO Transit) to determine whether the agency's recent decisions to terminate and/or reduce services on certain of its routes while maintaining service on routes also served by municipal transit authorities and to areas outside the greater Toronto region resulted in the best use of the funds provided by the province to the agency and were consistent with the mandate of the agency to develop and operate an interregional transit system for people whose travel takes them through more than one regional municipality."
This morning we have as a witness Rick Ducharme, who is the managing director.
Mr Richard C. Ducharme: Good morning.
The Vice-Chair: If you would like to identify the people who are with you. Just before you begin your presentation, I don't know whether the auditor would like to comment.
Mr Erik Peters: Yes.
The Vice-Chair: Perhaps before you begin, Mr Ducharme, we'll have comments from the auditor.
Mr Peters: Thank you. I really appreciate (a) the meeting and (b) the opportunity to outline very briefly what our expectations are from this particular meeting.
The main reasons why we like to have a meeting like this before a special assignment is undertaken is really to achieve a focus for us in three areas: First is the focus itself of the assignment that we are about to undertake; the second area is what the expectations of the committee are from this particular assignment; and the third is some idea as to the appropriateness of the timing as to when we should undertake this assignment.
Let me speak a little bit about these three areas.
The focus of assignment: In the discussion that led to this motion, many areas of focus had been identified, such as how decisions are made to cut certain services, how responsibility for service is shared between GO Transit and other transportation services and why there are service overlaps and service gaps.
These issues have policy components and they have best-use-of-funds components. Since our assignment cannot deal with policy issues, our expectation for this meeting is to receive a better focus on how we can focus on the best-use-of-funds areas.
The fundamental question which we would expect to be able to answer from the focus is: Does the reduced service provide value for money for the reduced funding level that is available to GO Transit with special regard to dealing with integration with other services, with the use of capital funds and with the use of other sources of revenues available to GO Transit, as some of the examples that we might be focusing on?
The second area is the expectation from this assignment. As I just outlined, our report should not and cannot meet any expectation with regard to policies; that is, it would not be within our domain to comment if the policies of the government, the policies of the minister or the policies of the board of directors result in the best use of funds.
The expectation that should and can be met is the report on compliance with the legislated mandate by management and compliance with the memorandum of understanding by management and whether such compliance achieves value for money for the funds provided by the province. The meeting should serve to clarify the committee's expectations from this assignment in this regard.
Fundamentally, the expectations that we have would be for us to be able to answer the following questions: Were the decisions to terminate or reduce services based on the best available information? Were there sound cost-benefit analyses prepared? Was there sufficient evaluation of options available to determine the most cost-effective ones, and were there sufficient impact analyses on the GO Transit operations themselves, on the contract partners, impact on other service providers, impact on other revenue sources -- that is, other than the province -- impact analysis on the public and impact analysis on the environment? These would be our expectations and those are areas where we would expect to go into value-for-money issues.
The third area is a little bit on timing. It's not one of the major ones and it's deliberately left to the last. Certainly our timing would be influenced by the effective date of the service termination or reductions and the proposed evaluations by management of the results of these service cuts, of the impact on the use of funds particularly.
Secondly, one would expect that these service reductions or terminations affect a number of legal agreements or contracts, which will probably have to be altered or terminated. That would involve notice periods, transitory provisions or even penalties, many of which would determine the timing of the service changes themselves and therefore may have an impact on our audit.
The other area which might impact on the timing would be alternate arrangements and commitments which have been made by GO Transit or which have to be met, and their timing. All of these matters can impact on the timing, and I thought I would put these three areas before you, that is: focus, expectation and timing, just to introduce where we are coming from and why we had asked the committee actually to have a pre-audit meeting of this kind.
The Chair (Mr Joseph Cordiano): I would like to turn to our witnesses today and to introduce them -- or introduce yourselves, if you will. Mr Rick Ducharme, if you'd like to introduce the others.
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Mr Ducharme: I am managing director of GO Transit. Here with me also is Margaret Kelch, assistant deputy minister at the Ministry of Transportation, and Bert Vervenne, director at the Ministry of Transportation.
The reason we're all here is that in putting together the service cuts package, it was really done jointly between the ministry and GO Transit. As far as looking at the budgets is concerned, GO Transit looked at the detailed operations and identified what elements we could cut, and from those elements we brought forward a decision to our board, as well as through the Minister of Transportation. That's how a package was put together.
Now, in order to address the issues, as pointed out this morning by the Provincial Auditor and from my understanding of what was brought forward at the last meeting, I thought it might be best for me to give a general overview of what happened at GO Transit as far as cuts are concerned, so that you get a general understanding of how the entire package was put together. I know there are questions on specific bus routes, why they were part of the package. We can get into those specifics, but it's better to put in perspective exactly what our cuts were, if that's okay with the committee.
Back in April, we were asked to attend the session in government as far as looking at budget cuts from the province in general was concerned. GO Transit would be part of that, as one of the provincial agencies. In the latter part of April, what was brought forward were the specific packages, which were made up of two elements affecting GO Transit: the expenditure control plan and the social contract.
In the expenditure control plan, what the government identified was a cut in GO Transit's budget of $16.5 million. Basically, $10 million of that would come out of our capital. The other $6.5 million would come out of the operating deficit at GO Transit. There were subsidies required, and to put it in perspective, that $6.5 million represented about 7% or 8% of our required moneys for this year.
Some $2 million of that basically would come out of a fare increase. What we looked at was that in order to provide cuts in GO Transit as far as subsidies were concerned, we were quite concerned that to put a major fare increase in the system -- because we had one last year -- would create a very negative effect on the organization. If you look at what happened at the Toronto Transit Commission and other organizations, you see major ridership decreases.
To put it in perspective, in total, we see a drop in ridership, but you have to be very careful about assessing what is happening at GO Transit. GO Transit is made up of rail service and bus service. The heart of the system is the rail service, and except for the rail strike in 1973, we have never had a ridership decrease. People think we have had ridership drops; 96% of our people get off downtown, where you've seen, from 1989 to 1992, 60,000 jobs lost. We've never seen a ridership decrease. Right now the rail is increasing at a rate of 5%.
The bus is a different system. I've been at GO Transit 17 years. Over the years the bus has been restructured on a continuous basis. We talk how we work with other agencies. In the GO Transit area, we work on this basis: There are municipal operations out there and there are private operations. We try to set up the ideal system where, when we coordinate our systems, we may pull off routes on the corridors in order to support local transit. In fact, our bus system peaked in 1987. The recession did not create the drop in ridership; restructuring did.
There are 14 systems in our area that we have fare integration with. We have purposely looked at the routes continually and if we're operating through their system area, we try to make certain that we go through a rationalization process. Where it may appear that we have ridership drop, it is just that ridership increases in their system and we have pulled back service.
A good example of that is that a year ago, when we extended the rail service out to Burlington last May, what happened was that we pulled off the entire Lakeshore service and reduced the train-meet-buses substantially. That change affected almost as many riders as the entire changes we've had this year. However, what was happening in that corridor is that the local systems have grown over the years. Over the past 10 years we've seen dramatic decreases in our ridership and the revenue cost dropping on the route.
That's the type of approach we take in working with municipalities. We have special committees set up. Fare integration and service coordination are very key to how we interact with them. In fact, there is now a special task force -- I'm a member of that -- looking at that to try to even improve that. Looking at the greater Toronto area and comparing it to systems in the rest of North America, we're doing a good job, but that's not good enough. We're trying to set up what people have generically called seamless systems.
Going back to what we did in looking at our service cuts, we wanted to look at cuts that would affect the least number of people, trying to leave behind services for them. In some cases, it was alternative types of services. They did not see it as being the same quality, but we were trying our best not to take service away. On the expenditure control plan, as I pointed out, that hit us 7% or 8%.
On the second element, the social contract, we were looking at, again, the idea that because of the major service cuts we had with the expenditure control plan our goal was not to have any more service cuts. It was not easy on the system and, quite frankly, without the cooperation of the union we were going to see service cuts that made the expenditure control plan look very small, because there was a major impact on GO Transit.
The requirement through the social contract generically was, I think, 5.5% as it affected most agencies, and if you signed the sectoral agreement it would come down to 4.4%. But that's not how it affected GO Transit. Because of the increases in services that we had in the previous year and the changes in our system, we were looking at a cut of 7.9%. That's why in the end these two cuts in our budget have meant that I have had to lay off in the order of 10% of our staff. Also, in the summer we bring on summer students and also work with, through co-ops, students at universities. All of those have been eliminated. There's been a big impact within GO as well as outside of GO.
When we look at the service cuts themselves, I had mentioned that we needed to cut $6.5 million; $2 million of that was through a fare increase. We put together packages that would add up to the 4.5% and, jointly with the ministry, tried to make decisions on how we identify areas that minimize the impact on the rider.
One of those elements was the reduction in fare integration that we pay out in subsidies. Right now, we have a fare integration program with 14 municipalities whereby we look at basically a seamless system where an individual in Oakville, Pickering, wherever, can get on the local system with our GO ticket and proceed on the train right down to Union Station rather than paying two fares. The way we accomplish that is that the local municipality picks up 25% and we pick up 75%. Because of the required cuts in subsidies, that was the one element we put on the table. We basically said that instead of picking up 75%, we'd pick up 37.5%. We were able to save money that way.
The second element we brought forward and implemented was the fact that we would cancel an agreement we have in southern York region. Since 1976, unlike the rest of GO Transit, where we have a basic fare structure, in southern York region we have adopted a system whereby we stick with the local fares, so that Richmond Hill, Markham, Vaughan and GO Transit would all operate with one fare and free transfers. We have a southern York region pass to look as if we were one system in that entire area. Because of the high cost of doing that, that's one agreement we will be cancelling at the end of this year.
What that really means is that we're not pulling off any service; we are changing the fare structure to the normal GO Transit fare, similar to every other route we have in GO Transit, rather than the local fare. The impact will be that the rider will have the choice of taking a ride on GO Transit at the higher fare or, for instance, Vaughan and Markham at the lower portion of York region. That's the impact, and that way we're able to solve some of the social contract issue as well as the expenditure control plan.
Thirdly, we looked at the train service between Bradford and Barrie. As far as efficiencies there are concerned, we're lucky to pick up 5 or 10 cents in a dollar. The alternative was there with the bus. The one train from Barrie to Bradford now just starts from Bradford, similar to what we had a few years ago. We have found, in looking at the ridership, basically no ridership loss because we put on a replacement bus, not only between Barrie and Bradford but also between Barrie and King City.
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The next cut that we had was that we had a train operating between Georgetown and Guelph. That was, again, not cost-effective. Because of the alternative GO Transit buses in the corridor, we eliminated that service, so that now all trains start from Georgetown, as they did two or three years ago.
Next we replaced the off-peak trains east of Pickering and west of Oakville. When we look at our service cuts, all along now I've been talking about bus cuts. Quite frankly, because of the municipal transit system, we've really tried to zero in on bus; the rail is the heart of the system. However, in order to get these cuts, what we looked at was that in the Lakeshore rail service, 85% of the people are not affected by any of these moves. The other 15% are in the off-peak.
All we did was go back to where we were three or four years ago and put bus replacements in there. Now, if you're going back home in the off-peak, in the evening or between the morning and evening peak, you get on a bus at Pickering station and travel to Ajax, Whitby or Oshawa. That was the type of change.
We haven't really seen any ridership loss, because we haven't taken service away; we've taken the type of service away. The people who are forced to transfer at Pickering see that as a change in quality of service. I don't question that. However, we were able to save a fair amount of money in doing that, and the reason we were able to do that is that when GO Transit rail service was first set up back in 1967 it operated between Pickering and Oakville. That was an ideal system, because the trains operated in a cycle from one end to the other and three consists according to Mr Ducharme CONSIST is train jargon, also known as a TRAIN CONSIST lwwere able to do it exactly to the minute. As soon as you go one station east of Pickering or one station west of Oakville, you're forced into adding another consist, and when you were operating all the way to Whitby and all the way to Burlington, we were up to five consists. So 40% of your costs are related to that type of move, and when you look at the costing of trains versus buses, the effectiveness is very clear and any audit will point that out very clearly.
Next, what we did was we looked at eliminating the GO Transit twin pass subsidy that we had. That was part of the fare integration and that became one of the issues we had to bring back to the board because the board approved the package back in May. They said, "Okay, we have to get on with the job." We had a serious issue at GO Transit. Because of the lead time we have for our crewing, what we were forced to do is make decisions because every day just added to the problem. When we were looking at needing to cut $4.5 million out of our budget, you have to realize that because some of these cuts -- for instance, the cuts in York region -- were not made until last week, as you can see, all we're getting is about six months of that money. Therefore, we had to double the problem.
In the end, the $4.5-million cut on an annual basis represents about an $8-million cut in subsidy. Because we attain about 62% cost recovery, it's almost double that again. So when you ask GO Transit to cut $25, you're really asking us to cut $100 worth of service, because of the fact that revenues are all affected and it's a spiralling effect. We had to do it on a six-month basis.
What happened was that when we went forward to change our regulations and our tariffs, to have the twin pass eliminated from the tariff, treasury board made a decision that we could not use that as one of the elements. We came back to the board with another package of elements which is I think the one that has become more contentious in cutting the following elements in GO Transit.
First of all, we had put in a new service last October in Hamilton, what we call the Eastgate Square service, to try to build ridership in there, from Hamilton, meeting the train in Burlington. So we eliminated that service.
Secondly, we had operated more buses on Highway 403 across the top of Metro. We eliminated select trips on the 403 service.
Next we discontinued service at King-Maple. Again, we were looking at the cost-effectiveness of them.
Fourthly, we discontinued the Uxbridge-Toronto downtown bus service and, finally, the Palgrave-Bolton bus service.
Again, what we looked at was inner system, what services do we have out there and which are most cost-effective as far as meeting these targets is concerned. Every time when we're trying to cut $1, we have to really eliminate $2 of service. That's what it comes down to, and the problem keeps building up as we wait, as the year goes on.
In summary, they're basically the service cuts that we have done over the time period. We feel we met the targets as brought forward through the ECP and social contract. Quite frankly, some of these service cuts were things that the budget situation made us look at closely. The cost-effectiveness of it, as far as the system is concerned, I don't think has affected GO Transit as substantially as other service cuts would have. In the social contract, as I pointed out before, we were looking at cutting service corridors. We have no choice. If we go another level into the service cuts, we're talking rail corridors, bus corridors or closing down the system for periods. This was the type of thing in the social contract. It never came to fruition and I think we're fortunate.
If there are specific questions on a bus corridor, I'll gladly answer them, because we do have the figures on what's the revenue-cost ratio and what type of moneys are we saving on those corridors, which I think is an element that people are concerned with.
To put in perspective, in the corridors where we have cut we feel there have been alternatives. I think the contentious areas of Bolton-Palgrave and Penetang-Midland have moved in and provided a bus service there. We looked at our ridership. It was in the order of about 32 riders a day. They're now carrying, it's our understanding from accounts, 15 to 20 of those.
The Uxbridge-Toronto downtown was more severely hit. We had in the order of about 81 riders in that system. Trentway-Waygar was lucky enough through its process -- we were pleased with that and we cooperated with it -- to get a licence in that corridor. They basically have picked up the service we had pulled out on September 3. The ridership counts, from what we received from them, are in the order of 77. They've basically picked up everyone.
We have tried to assess our own service, because we have an alternative from Uxbridge that travels down to Scarborough Town Centre, but because of the small numbers -- 5 or 10 -- we can't identify for certain whether they are on that system or whether they're on the bus we have over to the Richmond Hill line. As well, we have the two trains from Stouffville, where we have a train-meet-bus.
It's very difficult. Once you're starting to talk of 5 or 10 people and you're doing surveys, it's very difficult to know if you've lost those totally, and until we go through a monitoring process in GO Transit over the next six months, we don't know how close we are to our estimates of exactly how many riders are affected.
I hope that gives a general overview of what GO Transit did, the level of impacts we had and how we approached the issue.
The Chair: Thank you. Perhaps we could turn to questions from members. I will start with the official opposition and we will start with 15-minute rounds.
Ms Dianne Poole (Eglinton): Thank you for your presentation this morning, Mr Ducharme. I'm looking at a member that was dated May 3, 1993, that was issued by GO Transit, and in it you make the statement, "Last year was a very difficult year for transit systems yet GO managed to cover almost 62% of its operating costs from revenues, a record which puts it in the forefront of similar North American operations." Now, when you were talking about that, you were talking prior to the expenditure control plan. I'd just like to look at the status of GO prior to the expenditure control plan, prior to the social contract, to see how your economies were going at that stage. For instance, you covered 62% of your operating costs from revenues. How did that compare to the previous year?
Mr Ducharme: The previous year we were about in the same order. About four or five years ago we were up around, I guess, 70%. What happened in the last couple of years is that once you move into service expansion your first two or three years are going to impact you fairly significantly. Last May we put in the Burlington extension and because of the higher rail cost that forced the revenue-cost ratio down to around the 62%. The target that GO has had for the last 10 to 15 years has always been 65%. We try to aim towards 65%, and it's a target that we're trying to use for looking at the other systems in the greater Toronto areas, similar systems, like the TTC, the largest systems.
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If you look across North America, we're much higher than they are. If you look at the commuter rail systems -- Chicago, Boston, New York -- they're sitting more around 40% to 50%. Therefore, I think our system is quite efficient.
As far as where we're at this year and last year, you have to go back almost three or four years to really understand what happened as we were way up there around 70% and when you put in major expansions. For instance, the expansion that we're into now to the Oshawa station, to bring all-day service there, and the expansion we're going to have in Hamilton will affect the revenue-cost ratio. We're aware of that. We'll take four or five years to really come back to where we know we should be, because the ridership is sort of a chicken-and-egg situation: Do you go to get the ridership or do you wait till you're under severe conditions where the ridership is forcing you to grow? There's always that problem. In your initial years you're going to drop, and that's what really happened over the last couple of years, that expansion.
Ms Poole: I have two questions that flow out of that. You've mentioned American jurisdictions, where your cost ratio is much better and your revenue is better. What about Canadian jurisdictions? How do you compare with other major Canadian jurisdictions? Secondly, how do your fare structures compare to both other Canadian jurisdictions and American jurisdictions?
Mr Ducharme: I guess the best way to refer to that question is that I had mentioned before that there's a transit integration task force -- fairly senior members on it -- set up to look at the greater Toronto area. A document was presented last Friday. It's up-to-date information and it's easier to refer to that.
When we look at systems such as Vancouver, it's not so much commuter rail, but it's a system where you compare the TTC and GO. Their revenue-cost ratio is 30%. When you look at San Diego, it's 53%. I think I have Montreal here, which is 36%.
You can't always compare what are they doing and what are we doing. To put it frankly, we're successful. You can check with any agency in North America and many in Europe saying GO is one of the top systems in the world. There are two reasons to be very frank about it.
The first reason is the makeup of our board, where we have representation of all the regions in our service area. When we want to build something, when we want to coordinate service, when we want the cooperation of fair integration, where we want to rationalize services and say, "Okay, local municipalities or regional system, you operate it and we'll pull our services out," that's why that's worked.
The second big reason is the support of government. The province has been, all through the years that GO Transit's been here, fully supportive of us. People in the States are caught into very complex subsidy processes. They have a lot of agencies involved in their process. We don't have that problem. We're fortunate, and as long as we continue on that basis I think we'll always be up around the 65% or 70%, higher than most systems, because if you've got that element there of cooperation and the correct board set up in your local area, transit integration and service coordination naturally happen. If you're running into political problems as far as how the system operates is concerned, I think that's where you are never going to attain that ratio. I don't think it's always because you operate a better system; I think it's because it's better coordinated.
Ms Poole: When you're talking about the favourable ratio that GO Transit and Ontario have compared to other jurisdictions, would any part of that be because you have a higher fare structure to begin with, or are your fares quite comparable?
Mr Ducharme: We have a higher fare system compared to other elements in the States. I think in Vancouver or Montreal you're not going to see significant differences. But I have to caution on that comment, because you can't make general statements. For instance, in Montreal the way they treat the reductions on passes is much more significant than we are. They drive the ridership differently than our own, but on a sort of per capita basis ridership we're high. We have a high ridership. I'd say the fares are comparable, but not on every element of it, because they have different approaches to how you collect fares.
For instance, there are some places in the States different from the TTC, where you may have very small fares in the inner core and then zonal systems. Whether you have zonal systems or flat fare in a large area can really affect what you mean by what is the actual fare that you charge, because if you look even at our own fare structure within Metro versus TTC, there's a significant difference. However, we operate a different service and we see it as complementing rather than competing. We don't want a fare structure similar to TTC. We couldn't handle the ridership and, really, that's not our role.
The fare structure we have I think has to be tied in to what organizational approach you have in your city. It's not as easy as saying: "If this city charges $1.50, we charge $1.70. Is that comparable?" I think you have to be very careful in making general statements on that. You have to look at how do the systems work together and what role do they have. We are more into regional and I don't think we should be trying to grab more trips within Metro downtown for the specific elements until certain TTC initiatives occur. That's great.
If you look at our bus system, our goal is very clear. For 15 years now, if you go back in our system and look at what we operated, most of our routes went down to Bay-Dundas. We have purposely changed the entire system so that we have a cross-north Metro system on Highway 401 and we connect at Yorkdale, York Mills and Scarborough Town Centre. Our train connects at Kipling purposely, so that people can unload to the subway.
I can't give a straight answer as to what is a proper fare and how do we compare. We compare it on an average basis, okay, but the role we play and what we're trying to accomplish is different from other systems.
Ms Poole: I believe you stated in your opening comments that when you were hit with the expenditure control plan and then the social contract and you looked at your options, you rejected an option to increase fares because you had just had a major fare increase the previous year. Could you tell us a bit about that increase, how much it was in percentage terms, what increases had there been in the previous period to that and what impact it had?
Mr Ducharme: We looked at increases in the order of about 5%. The last was, I think, 6.5%. What we were doing in our ridership, because we were trying to learn from other systems and the TTC's impact -- and maybe we were too low on the fare increase. Some people have commented that. It's something you estimate. But based on the statistics presented by the American Public Transit Association, which represents everybody in North America, what we find is that if you increase your fares up to the inflation rate, your ridership will likely stabilize and you shouldn't lose riders. If you're going for a 2% fare increase, your revenue should go up 2%. Once you go past the inflation rate, you're getting into what they call the fare elasticity effect.
People can argue what is a right number, but we keep estimating that it's in the order of about 60% to 70%, so for every per cent you increase fares, you're going to lose 60% of that in riders. If you want to increase your fares 10% and think you're going to get 10 million, you're likely going to lose $6 million in revenue and you've driven away a lot of riders. Maybe you can go a bit over the inflation rate, but we would again try to argue to look very carefully on what people's perceptions are on what they're paying to travel in the car, because that's our competitor.
There's no question that what we're trying to do, from an environmental point of view, is to get people in transit, all transit. That's why, whether it's GO Transit or a combination of GO plus, the intent is that we're all going to gain and that's why we are into cross-subsidies on fare integration, twin passes etc, to really make it work. On the fare increase, next year, or any year I might go, I'll argue the point -- and maybe we will be driven higher than that -- not to go much higher than the inflation rate, at least not more than 2% or 3%, unless you're ready to live with the consequences, which are that you'll have a reduced deficit but you'll be driving people back to their cars. That's never been our intent to date.
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Ms Poole: When you were faced with the expenditure control plan and you looked at your options and you rejected the one option of increasing fares, because you were afraid of the impact that would have on ridership, it appears that you went to two other options, which were a combination of reduced services in areas where you considered there to be already adequate service and, secondly, layoffs. What kind of cost-benefit analysis did you do at that time before you went to those options and, secondly, what kind of impact studies? The auditor mentioned in his opening comments impact studies on the operations of GO Transit, the public, the environment, all these various impact studies. Could you tell us what kind of analysis and reporting was done by GO Transit before you made your ultimate decision to go the route you did?
Mr Ducharme: To be honest with you, as far as the timing was concerned, there wasn't a lot of impact analysis. The issue was brought forward at the beginning of April and decisions were made at the end of April. The analysis we did was really looking at basically the impact on the rider point of view. We tried to estimate corridor by corridor, here's the number of riders we have, here's the cost of operating that service. The ones that came to light very quickly -- for instance, I'll take the obvious one, the train from Barrie to Bradford. We estimated that we would lose five people, and I don't think we lost five. We would save a fair amount of money cutting that because of the high operating costs of the rail. That's the way we did it. We went and said, "Okay, here's the cost of this service today, here's the revenue, straight from statistics." The key is, what is the revenue loss, how many riders were we going to lose? Because that's the bottom line. Based on that estimate we then came up on a cost-per-rider basis of leaving that service in.
In some of our services, like the one I talk about, we were estimating it was costing us, for those five riders, likely $70 or $80 a day, just to have them on the system. This was the type of thing we looked at. As we kept going through the list, because our revenue-cost ratio is 62%, the loss per rider keeps reducing and eventually we get to a point whereby the tradeoff isn't there any more. You're going to have to cut a lot to save a little, because every time you cut $1, if it's 62%, you're only saving 30 cents. It keeps accumulating as the problem goes.
We were looking at corridors where we could estimate the best how many riders GO was going to lose and therefore how much revenue, which affects the bottom-line deficit. We went corridor by corridor and we have the numbers based on those estimates of cost per rider. We compared those to the rest of the system. Right now the deficit per rider in our system is $2.30. That's the average. The average trip length is 30 kilometres. That puts it in perspective. If you're losing x number of riders and the cost to maintain that service is $10 or $15 a rider, they're the ones that we put on the table as the obvious ones to cut. Also, what we looked at was reduced impact to the riders and what are the alternatives. As I mentioned, the alternative for the Lakeshore was buses; we put the off-peak buses.
When you look at the last set of cuts, the Uxbridge to Toronto downtown, the alternative was not municipal systems or GO systems; it was the private sector. We were aware that they were applying for those licences. Quite frankly, we have cooperated with them. When we cut the service a year ago on the Lakeshore, the private operator went in there to try to make it work but the municipalities were picking up most of the routes anyway, so that's how that was effective.
What we have now in the Uxbridge corridor is we don't have the riders but they at least have the alternative service. As I say, most of those seem to be travelling on Trentway-Waygar. In the Bolton-Palgrave area, where we were looking at in the order of about 32 riders on average per day, it appears half of those are on Penetang-Midland.
In the King-Maple area, it was more difficult because of the area served there. What we've attempted to do is that the three or four buses that went through there in that time period -- we have the bus that I mentioned operating from Brantford all the way down to King City bringing the people to the rail. We have extended it down to Maple, and in Maple TTC operates a service for Vaughan bringing people from Maple all the way into Toronto. I think their level of service is between six to eight minutes, so it's quite a high level of service. We feel that area is being covered.
It wasn't just, "What's the cost-effectiveness of that corridor?" because that is a key element. We had to look at saving x amount of dollars. The other was: "What alternatives are in that? What can we do?" That's why we got into generic items like fare integration and the agreement we have in southern York region. We're not taking service away; we're affecting special subsidies on fares. We're trying to gain as much as we could without service cuts but at the same time there were areas -- in order to save that much money, eventually you have to get into service.
Mr David Tilson (Dufferin-Peel): Thank you, sir, for your comments this morning. As you know, the public accounts committee has instructed the Provincial Auditor to complete an audit on GO Transit and the purpose of this meeting is to assist him in zeroing in on particular areas as to which direction the audit is going to go. He has outlined a number of questions, some of which you have partially answered. I assume that, before this is all over, you will be providing more answers to those questions.
If you've read the resolution, the major intent of the resolution is "to determine," to use the words of the resolution, "whether...the best use of the funds provided by the province to the agency...were consistent with the mandate of the agency to develop and operate an interregional transit system for people whose travel takes them through more than one regional municipality."
I understand that you have had problems with the social contract, as have a lot of agencies and municipalities etc. The problem that I see from my particular riding, which -- as you know, I represent the town of Caledon and the county of Dufferin. I know Mr O'Connor, who unfortunately indicated he -- I know he's interested in this area. He's not able to be here because of a commitment in his riding. But he's one of the members from the Durham area and he too is concerned with problems in his area.
One of the concerns -- and there are a number of concerns -- is the suggestion that GO bus has become a parallel service to municipal transit services in many areas. There are also suggestions that GO has run a parallel bus in areas where GO trains have been running. There's been that suggestion. I guess the question really gets to some of the detailed analysis that the Provincial Auditor is asking, because I think it's a fair question as to what studies have been made public, presumably available to this committee and available to the Provincial Auditor, on a bus-by-bus, train-by-train, stop-by-stop ridership report on a monthly basis so we can see for ourselves where these weak links are. In other words, do you have a written report that this committee could look at, looking at all of those areas?
Mr Ducharme: If you're interested in the ridership reports, we have those every month. That goes to the board. What we do when you talk about station by station, we do that, I guess, three times a year, where we purposely look at every rail station, who's getting on, getting off, where are the problem areas, where are the major constraints as far as when we get into parking problems, poor integration in that area and where do we have to improve.
Every month we do have, through the board, ridership information by corridor: all the rail corridors, all the bus corridors to give you a perspective of what is the -- the way we do it is on a running 12-month basis to give you perspective of what's happening on that corridor, is the ridership dropping? Then we compare it to the month of the previous year to say, how are we faring there. It gives you a very good idea of where the weak links are and, as I mentioned before, one of the ones that came out over a five-year period was the Lakeshore West bus all the way to Hamilton.
You mentioned, and I guess people have commented, we run parallel services to municipal systems. They're correct.
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Since I've been at GO, 1976, we have made dramatic changes in our system and when we feel the municipal transit systems can operate them, we try to encourage that and, to be quite frank, when we look at the service we have in southern York region, I think that's a good example. We're basically operating a local system. If a regional system comes in there, you won't see GO buses or we would operate for them.
Mr Tilson: They're there. That's why I'm suggesting it would useful for this committee. There's no question that GO buses are running in areas where GO Transit buses are running, where GO trains are running, where other transit systems are running. There's duplication and that's one of the concerns that has been put forward for the Provincial Auditor to look at. Certainly, there's no question the auditor will require certain documentation as to how you arrive at your decisions.
For example, in my riding in the Peel region, only the Bolton-Palgrave bus line was cut, and you referred to that. There has been no cuts made to any of the lines in Mississauga or Brampton, which has 37 bus lines, including a rail line. They also have transit systems running throughout these entire areas duplicating what GO is doing.
My question is similar to the one the Provincial Auditor has asked, have you had an analysis of these other areas, because there has been no cuts made to the other areas in Peel? Some of the Durham members may have some questions. As I say, Mr O'Connor specifically has a similar question for his area as to the duplication that is certainly going on, and there's no rationale for the decision to make the cuts that you have.
Mr Ducharme: If you look at the corridor as far as doing an audit, that's no problem, because you have to be careful. I don't really think there is duplication there, except as I mentioned, the Lakeshore bus. If you look at services just because they're running along the same corridor as the train, you have to be very careful. That's not a duplication. They are providing a totally different type of service.
For instance, Lakeshore East, if the suggestion is -- the train operates to Whitby -- that we shouldn't have a Highway 2 bus that happens to parallel that, I think you'd find you're really going to disservice people, because that function is a local interregional to a different market, which is north Metro. It's not a train market.
Mr Tilson: All I'm saying is, just to take, for example, the town of Caledon, which is one half the geographical area of the region of Peel. if you're going to call it part of the GTA, you're not going to provide any GO Transit system to that area at all and yet you're not making available to the public the analysis as to these other areas. I'll let the other regional members of this committee talk about their regions, but I am familiar with Peel and your decision simply doesn't make any sense.
Even individual bus lines -- for example, I'd be interested in knowing the ridership of each bus as to how much of a detailed analysis you've made, specifically, those that leave Sutton each weekday morning. I understand there are eight of them. The question is, of course, what is the ridership on each of those buses?
Mr Ducharme: We can provide that, no problem.
Mr Tilson: You can make that available to the committee. There are other little small areas, questions for example, which all add up to the effectiveness and whether or not GO is operating the way it should. As I understand it, most GO buses stop at several subway stations. I'm thinking specifically of Yorkdale, York Mills or Finch subway stations and the question, of course, is do you need to stop at all of those stations? In other words, I guess I'm looking at working with the various transit systems, whether it's the TTC or other transit systems, to better coordinate the transit service being provided.
Mr Ducharme: For those specifically, again we can provide the numbers. When we stop at the various subway terminals you mention, that's really been our aim, quite frankly. The buses coming in across the top from Brampton, which go across and touch on Yorkdale, York Mills, Scarborough Town Centre, are bringing people to different destinations. There's always this problem that if you stop at one subway station, that's fine. You'll give service to people going downtown and the rail basically brings people downtown. We're doing the same thing with the rail.
It's our intent, and Metro has brought out its major study on this, that we want to add another 18 stations in Metro, because the goal is not to bring everybody downtown. There are major markets in the rest of Metro -- Yorkdale. By stopping there, people can get off and distribute to other locations and York Mills.
Mr Tilson: But that's the point, except that in these transit areas, they go to other areas. There's no reason why GO should go to those specific areas as well when that's where the local transit systems are going to.
Mr Ducharme: But we don't go there. We just stop, for instance, at York Mills, so people can jump on the TTC to go up to the Sheppard Centre or to go midtown.
Mr Tilson: Let me ask another question. It gets back to the cost analysis, which the auditor has asked and you indicated that you don't have a lot of that. You've talked about cutting GO because private bus lines are taking over in particular areas; do you have an analysis as to how much money can be saved by getting GO out of the business of competing with itself -- notwithstanding what you said, and when I say "itself," trains versus buses -- competing with local municipal transit systems and indeed competing with private enterprise systems? Have you done an analysis of that?
Mr Ducharme: We haven't done the analysis because you'd have to identify those areas you feel were competing.
Mr Tilson: I can tell you right now, in the region of Peel, for example, all the municipal systems, indirectly you're duplicating.
Mr Ducharme: But they don't operate to the same areas we do.
Mr Tilson: Buses are going along the same lines, sir.
Mr Ducharme: No. But if you take, for instance -- and again that's where you have to look bus by bus, the ridership distribution. From Brampton -- you cite that example -- we operate from Brampton, Bramalea City Centre; we're taking people to Yorkdale, York Mills. No other carrier does that. We're not there to take people from Brampton to Bramalea or Bramalea within the community. If you look at the ridership distribution, you won't find we're doing that.
We were doing that type of thing on the Lakeshore. We agreed, Mississauga to Oakville, Oakville to Burlington, and we tried to get them -- it took us six years to get out of that service. We were saying, "We feel you should do it."
Mr Tilson: Have you looked at the effect of this? Again, I'm just taking specifically the region of Peel. You've only cut one line, one area, and that's the Bolton-Palgrave line. You haven't cut any other areas in Peel. Have you looked at the effectiveness of the lines in other areas of Peel?
Mr Ducharme: Yes.
Mr Tilson: Do you have a report you could let us have on that?
Mr Ducharme: If you have the specific line you want, we can provide the information.
Mr Tilson: I guess I'm looking for the rationale as to how you made these decisions as to whether the best savings are being made. In other words, you've cut two buses out of Bolton-Palgrave. Essentially, the town of Caledon, which is the northern half of the geographic area of Peel, now has no bus service, notwithstanding the fact that it's in the GTA. I can tell you that the people in my riding are most annoyed, because they don't understand the rationale of it. However, I'm sure you're aware of that annoyance.
Ms Margaret Kelch: Mr Tilson -- I wonder if I could just interject here, Mr Chair, if I may. In the line of questioning that both you and Ms Poole have taken vis-à-vis the expectation of GO as to the rules or the context within which they were to be looking at these cuts, from the ministry perspective I think a couple of things are perhaps important to put on the record in terms of how we asked them to come at this and the kind of expectation the ministry had in terms of the evaluation that was going to be completed.
Number one, I think, is one that Mr Ducharme has referred to several times, and that is minimizing the impact on the users. Mr Ducharme has talked about those numbers and I think he has offered those at various board meetings in terms of ensuring that when we looked at the potential areas where these constraints could in fact occur, they were having the minimal amount of effect in terms of the actual users. That ridership information was very much a part of the decisions as they were made.
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Secondly, and several references have been made here, there was a very specific objective given to GO in terms of saying we wanted to be assured that this evaluation was being done on a business basis. Some of the issues you've talked about in terms of potential duplication -- are we in fact providing the service according to the mandate under which GO had been established -- is the kind of evaluation we wanted back from GO as it was putting forward its proposals in terms of how best to take this constraint.
So both of those objectives were very clear in terms of the conversations we had with GO through, as Mr Ducharme indicated, a very short period of time in terms of meeting the Treasurer's objectives here.
Finally, and I think this is important because several of your questions I think are yet to be answered through the exercise or the effort to which Mr Ducharme referred earlier, there is the transit integration effort. That is a major endeavour that the former chair of GO, Lou Parsons, as well as the parliamentary assistant to the Honourable Gilles Pouliot are going to be carrying out and I think a lot of those issues you're asking about in terms of how best do we make the transit system work in the greater Toronto area are precisely the mandate that particular effort has been given.
The Chair: Mr Tilson, we've run out of time. I'll have to move on to Mr White.
Mr Drummond White (Durham Centre): I have a number of questions. These changes have produced a great deal of concern in my neighbourhood. When I say neighbourhood, I say that pointedly, because I live about two blocks from a GO train station in Whitby, or a former GO train station in Whitby.
First of all, if I could go over your approach, the point you were just elaborating on, there was a request by the ministry to cut a certain amount of moneys to GO Transit. The statement has been made by the Leader of the Opposition that there was no latitude, that the specific nature of those cuts was something that was determined by the ministry. Could you describe for us how that occurred?
Ms Kelch: Yes, I'd be pleased to. The early April time line that we have been alluding to here was in fact given to us by the Treasurer where there was a target given to every ministry which was to in fact see a constraint happen in the operating part of our budgets. The Ministry of Transportation received a little less than a $111-million target, and that was to come from operating funds only. The total ministry operating funds are in the range of $850 million, and the decision was made very early that the agencies for which the ministry is responsible would also participate. I think that has been the Premier's strong feeling right from the beginning of the expenditure control plan process, that we are all to participate.
So a target was given to GO, which was determined from that original target that was given the ministry, which was about a 13% cut on its operating dollars. The actual target that was given to GO, the $6.5 million that Mr Ducharme referred to earlier, represents about 8%, and I think Rick also mentioned that figure. We felt that was a fair proportion of the total ministry cuts that were going to have to take place and, as I say, the same kinds of principles that we applied in the ministry, saying that we really wanted to look at administrative overhead, streamlining types of initiatives before we had to revert to service impacts on the public, those principles were the same ones that were applied in the ministry as well as the ones that Mr Ducharme has just described.
Mr White: So the principles that were applied in the Ministry of Transportation were basically the same as with GO Transit and the same thing I would imagine would occur with almost any other ministry and transfer payment agency.
Ms Kelch: I believe so. I believe we started looking very seriously in terms of whether there were administrative efficiencies that could be found, and we saw the impact on the user as being the last way we wanted to in fact find these dollars, but the ministry has been through several constraint challenges over the last several years, so the opportunities that are available to us are limited.
Mr White: But there was no effort by the ministry to specifically state that this bus service or this train service should be affected?
Ms Kelch: No.
Mr White: If that was entirely a decision by GO, GO was given a figure and a principle of how to work that through in terms of administrative services being targeted first and then rider services secondly and lastly.
Ms Kelch: I think it's fair to say the target and the figures to which I referred were given to the GO board. We asked them to come back with the best business plan based on those principles we just discussed. Obviously the government would have the final say in terms of whether it accepted that plan or not, and Mr Ducharme has referred to some of the negotiations that took place.
Mr White: Mr Ducharme, I'm wondering if I could reflect upon that process. The GO board is made up of regional chairs, and they would have had to approve the plan that you devised.
Mr Ducharme: That's correct.
Mr White: And that would have had to have been done prior to that being submitted back to the Ministry of Transportation?
Mr Ducharme: Yes. As I mentioned, I went to my board meeting in May with the package, indicating, "Here's how we cut the 6.5%," and they all approved it. It was on that basis that we made the first set of service cuts in July and then the service cuts that occurred on September 3 and the change in the agreements for southern York region will occur at the end of this year.
Mr White: The GO board is made up of regional chairs and one provincial appointment, who is the chair, I understand.
Mr Ducharme: That's correct.
Mr White: Those chairs are automatically voting members of the board?
Mr Ducharme: That's correct.
Mr White: In the event that a regional chair did not wish to participate, who would represent that area?
Mr Ducharme: Well, that would be their choice to send a representative, a delegate, to the meeting. As far as the board functioning, we just need a quorum. At some of the meetings, people may be a bit late or don't attend, although most of the time we get total attendance. So when issues come up and we pass resolutions, it depends on the quorum.
You may be aware of the fact that when the GO board was set up back in the mid-1970s, initially Durham region did not want to participate and was not present on the board. Then as time went on -- I forget the exact date -- they became members of the board. They saw the tremendous benefits of working issues from the local municipality up through their own regional councils; they could bring them forward to the board, be represented and influence where GO would be going as far as service improvements etc.
That's really the role they play. They provide us with the assistance to accomplish everything we've done. The fare integration, service coordination and the expansion of services occurred because of their role -- not just sitting on a board meeting once a month. They're sitting there as board of directors making certain that the organization is properly run, that the expansions we do are something that they have bought into.
What's more important is what they do in between the board meetings, which is bring to us issues in their region. If there are issues we're not aware of or from their perspective -- they're playing two roles: They're regional chairmen, and there are initiatives they want, which may be improvements in certain areas, and that's really helped us, because they are closer to some of the elements than we are through their own regional system.
Mr White: So if I understand you correctly, only the regional chairs have votes on the board?
Mr Ducharme: Yes.
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Mr White: And they are also effective representatives of their areas, of the local municipalities and of the regional municipalities, and if they were to send someone as their designate or delegate, that person would not have a vote.
Mr Ducharme: We have had delegates come and basically they are there and we encourage it, if somebody's going to miss the board meeting, to make certain that everybody's on top of all the issues, because if the board is running smoothly, GO Transit runs smoothly. We've been fortunate that way and we want to continue on that basis. If there are people missing at certain meetings, they get all the information a week before through our board packages. So usually if there are issues, the board member phones us anyway if he's not in attendance and they're resolved before that meeting or at least they're brought to the attention of board members at the meeting if there's an issue. But a delegate can attend and they have from time to time due to the fact they have conflicts with other meetings etc.
Mr White: Okay. So the most responsible way of representing that local area is by that regional chair attending on there to represent the concerns of their area and to have an effective voice on the board.
Mr Ducharme: Absolutely.
Mr White: I'm wondering if we could explore the issue in our area, a very serious one. You were saying there were some cost savings in regard to the change from rail to bus service from Pickering to Whitby. That's a major concern for us. We have a rail service that's now only available at peak hours. I'm wondering if you could explain again how it is that there are those substantive savings and what those savings are.
Mr Ducharme: For that specific thing, as I mentioned before, you have to look at the operations. When we operate our trains, we pay on a per-mile basis a train user charge, secondly, the labour charges, and we have four-man crews. Obviously, the fewer trains you have out of there, the more reduced the costs.
With the setup of an operation between Oakville and Pickering -- and this is the off-peak that's important, because in the peak period most of our trains are dedicated to one or two trips and they bring the people in in the morning. Usually there's 2,500 people per train and they operate efficiently. In the off-peak, what we have is six-car trains flipping between the communities. Up till our expansions east of Pickering and west of Oakville, we could operate that with three-train consists. So here we have three crews, three trains operating, and you pay a user charge based on the actual wheelage.
What happened is, once you move east of Pickering, you have to put another consist in because your cycle does not meet properly. You've extended it and you don't have enough time so you put in the extra consist, and in essence that consist is waiting at the end of a line for a substantial period. When you move west of Oakville, as we did last year, you add another consist. So we were up to five consists. Very clearly, in the off-peak, that increases your costs quite substantially.
So when you look at it and we say, "Okay, how do we find $4.5 million?" some $1.9 million, plus administration on top of that, a little over $2 million, was saved through that initiative.
Why we zeroed in on that was not only the significant cost savings; we knew how the operations would be by replacing them with buses, because back prior to last May, that's exactly what was operating west of Oakville, and going back three or four years, that's exactly what was operating east of Pickering. So we knew the operation would work.
In the first month of that operation -- and I know it's too early to tell; you have to look at it for six months to be fairer -- our system has not dropped on the lakeshore east and west. We feel the riders have dealt with that issue -- and I appreciate their concerns. The quality of service as they see it, to jump off a train at Pickering and jump on a bus, is not the same quality as keeping that train going to Whitby. We don't question that.
But what we were worried about is other initiatives people were putting on the table, such as, "Let's take a train out of the system on the peak hour." That would have been disaster. The peak is the critical area in GO Transit, and 85% of the people were not affected at all. The other 15% who are in the off-peak were affected, but no service was taken away from them.
As I say, it's a continual discussion and debate, is a bus as good as a train? All I have to say is, a bus is better than no train and no bus, and that's really what we're zeroing in on. But the costs were over $2 million just for that one element.
Mr White: Over $2 million. That's a substantive amount. I'm wondering if we could --
The Chair: Mr White, I have Mr Wiseman on the list and there are about two minutes left.
Mr White: Just one brief question --
The Chair: That will use up the last two minutes, sir.
Mr White: -- and that's with regard to the issue of the extension, the capital spending to take the GO train service from Whitby to Oshawa. There has been some thinking on the part of the opposition not to reinstate the operating service but to cut the capital expansion. Certainly in my area, in Bowmanville and Oshawa and Whitby, that expansion is very, very popular. Could you describe for us when you're expecting that completion?
Mr Ducharme: Okay, you're talking of the construction of the two tracks between Whitby and the Oshawa station?
Mr White: That's right, and further to mid-Oshawa, of course.
Mr Ducharme: Okay, I'll answer the first question. Phase 1 is under construction. In fact, with most of the contracts, for us to cancel them now I think will cost you more money. The expenditure is in the order of $50 million to $60 million. It will be completed basically the end of 1994, early 1995. It's on schedule, as presented before. Like I say, there are big elements under construction. Victoria Street grade separation is well into construction, the majority of it being done. There's $11 million right there. For most of the track work that's done, like I say, to stop it now, you're not saving much because you're going to have a lot of claims through contractors. That, to me, is a commitment already there, and it's on schedule, 1994-95.
The Chair: Thank you, Mr White. I have Ms Poole. We're going to conclude with a last 10-minute round for each party.
Ms Poole: I'll be fairly brief because I know Mr Callahan has some questions, and I'll avoid asking you about market value assessment and what the impact would have been on GO with Metro's ill-conceived plan that the province fortunately reversed its decision on.
Going back to what we're discussing today and supposed to be discussing today, you mentioned with the expenditure control plan -- I think it was in your May 1993 memo -- that there would be a cost of $4.5 million to GO after you had already done the $2 million worth of reductions. You didn't mention a figure for the impact of the social contract on GO. Do you have a dollar figure for that?
Mr Ducharme: Yes. As I mentioned before, generally agencies were asked to cut 5.5%; that was the average figure. You signed the sectoral agreement; it was 4.4%. We argued at the table it didn't work for us. The problem was that they were using 4.4% on last year's budget. We pointed out the Burlington extension occurred during the year, our operating costs went up, we put in four new bus routes; therefore, our base had changed dramatically.
In essence, what happened through the process, though, was we were told still to cut 4.4%, which really was 7.9% on salaries. The actual figure is $3.8 million. That's why we had so many layoffs, even working towards the -- taking a day off without pay doesn't work at GO Transit. It was on the table. One of the elements we were considering was closing GO Transit down from December 23 to January 2, and that would only have gotten one third of this. It would have destroyed service for everybody in our system in that time period and, like I say, with the agreement of the union, we backed away totally from service reductions.
As far as taking days off without pay, we can't. How do you tell a driver not to operate that bus one day a month? If you put a replacement in there, it costs us time and a half. So that's an area that doesn't work for buses and doesn't work for station attendants, so the majority of the system couldn't buy into it. So what we bought into as the social contract was unpaid stat holidays. In other words, it wasn't affecting service, and we were able to cope with that. The rest of it had to come through layoffs. That's why we were hit fairly hard. But we stayed away the best we could from service cuts, because at $3.8 million -- like I say, the $4.5 million cut into services, but you go another $4.5 million, you're talking big service cuts. We're talking elimination of rail lines or entire bus corridors. It's not a bus here and there any more. So that's what we were able to stay away from, from that figure.
Ms Poole: So the total impact was over $10 million, with the $6.5 million plus the $3.8 million.
Mr Ducharme: Yes, the $10.3 million, which is about 12.9%.
Ms Poole: Thank you.
Mr Robert V. Callahan (Brampton South): Mr Parsons was out in my community dealing with an issue that I've been fighting for, as have been the members of my community, for quite some time: increased service between Brampton and downtown Toronto. As you know, there's a problem there. There is single tracking, I think it is from Brampton to Bramalea, that had to be resolved, and it should have been resolved probably 20 years ago when it would have cost about one tenth of what it would cost now. But it seems to me Mr Parsons, unbeknownst to me, actually, made an announcement that this was going to be dealt with. I want to know whether or not that's going ahead or if that's affected by this whole process: whether it's in the mill, whether it's on its way.
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Mr Ducharme: To answer that, I'll give you a broad answer and then a specific answer.
In the work we have done in the last two years looking at our expansion program and our business plan, because of the major growth in rail, because of the major land-use development that everybody keeps talking about in the greater Toronto area, it's not whether GO will expand; it's when we will expand. I don't think there's much alternative if you're going to have any growth in downtown Toronto.
What we have put forward in the last two or three years, as a major team dealing with both CN and CP looking at expansion programs, they have done major simulations for us, because they have assessed their own corridors: What's their freight growth, what's going to happen with Via and how does GO fit into that? So what we have now is a package of information on the Milton line, the Georgetown line and the Richmond Hill line. We've gone through the environmental process for Milton. The report has been submitted to the Ministry of Environment and Energy. For Richmond Hill, the report was submitted a month and a half ago. The Georgetown environmental assessment, the report should be submitted in the next two months.
Mr Callahan: Can I get a copy of those reports, by the way?
Mr Ducharme: Sure. In that process, even if we get approval from the Ministry of Environment that for what we're building, we have mitigated what we should as far as environmental impacts, there still is the issue of the actual construction budget. What we have had approval for through the board is to proceed with at least a design.
In the Georgetown corridor specifically, what we're doing is a two-phased project. The big problem is, if you want all-day service to Georgetown, there are major impacts. So what we are able to do with commuter rail, which is a very positive point -- it's not like building a subway, where you've got to spend $100 million to go one station; $100 million buys us the whole project. What we can do is incremental improvements. Phase 1 of that project will be to fill in the single-track gauntlet you referred to, Brampton in, as well as a single-track gauntlet in Georgetown, which would give us a couple of more trains. The next move is to add some third mainline track.
In essence, based on the ridership estimates presented by everybody we've dealt with, the key ridership movement is Brampton into Toronto. West of Brampton, the ridership isn't there to really substantiate major improvements now. That doesn't mean in 10 years from now we won't be driven to that. So we're putting the onus on especially the Bramalea station in. That's where we're looking at major improvements there, where the intent would be to have two tracks all the way up to Bramalea, with a third track and especially a pocket track right at Bramalea station. We generally design with CN to accommodate that, with the two platforms and a third track. They are into a detailed design on that second track for the gauntlet.
As far as whether the funds are there, that is the next step, but we, on a positive basis, want to be prepared to move on these things. Over the 25 years GO has been there, we've always been under pressure to expand because of major ridership growth. We still have 5% growth. We're trying to get ahead of the game with these design elements so that when it's identified, that's part of our budget, we continue to move on those expansions.
Mr Callahan: Can I get a detailed outline of what's going on there? As I say, that's been something I've been fighting for for ages. I guess the two problems were the single tracking between Brampton and Bramalea and also the fact that CN and CP don't operate on any specific schedule; they go when they've got freight. I thought Mr Parsons said there had been some discussions with them in terms of regularizing or perhaps accommodating further traffic between Brampton and Bramalea.
Very clearly, the problem we've got there is we have one of the largest-growing communities in North America. We have people who have to squirm and actually probably cause great trauma to their bodies by taking the 401. Thank God I can get off at 427. If I had to come along the 401 to work, I would have quit this job a long time ago. I'd like to put somebody in a stress helmet. It would probably be equivalent to leaving the earth in one of the rocketships, and they have to take that every morning,
So that's major, and that's where I'm concerned as well in terms of the cutbacks. Although they don't directly affect my area, they do in fact clog the highways with more buses. If the name of the game is to get people off the highways, which are totally inadequate for what -- I mean, we have the same highways, it seems to me, that we had back 20 years ago, and the population has quadrupled and so on.
The second thing I want to ask you is that there was a process in our municipality to encourage people to take our transit system and link with GO. I notice that in some areas that subsidy has been cut back. Has that been cut back in the city of Brampton?
Mr Ducharme: No. Both Margaret and myself have alluded to this Transit Integration Task Force. Because of the importance of better coordination and integration in the area and because fare integration is really the basis to it all, we're all agreeing that fare integration is very vital to make it a seamless system. People cannot be jumping off one bus worrying about second fares and that.
With transit integration, what has happened is the Ministry of Transportation has supported it, saying, "Although GO has to deal with the budget cuts and we have reduced its subsidies to 37.5%, the ministry has been able to pick up the other 37.5%, so there's no effect on local municipalities."
At our Transit Integration Task Force meeting last Friday, they have gone one step forward, because that brought it to the end of the year, and they have confirmed that they will support it all the way next year as well while they reassess their budget. So the transit integration has been left whole through the support of that committee, because everybody's trying to work towards a better system.
The Chair: Time is up.
Mr Callahan: My time is up, but I'd appreciate receiving that material on where we're at with the expansion of GO service from Brampton. It's very important to my people.
Mr Gary Carr (Oakville South): Thank you for the opportunity to share your information with us.
My question relates to the issue of selling off some of the assets that we heard about in the past. Maybe you could give us a bit of a status of where you're at with that and how you see it saving money, and update the committee here.
Mr Ducharme: We have been dealing with treasury on that issue, and it's really called the sale-leaseback of our rail equipment. It started off that we were looking at all our equipment, but as we went through the process, what made most sense was to sell off the bilevels. One of the key issues in there and brought forward to the GO board and acknowledged through treasury is we wanted to remain whole with no jeopardy to our operations as far as subsidy, no jeopardy to the operations or to the passengers as far as the equipment itself. So in putting together the deal on that issue, we're at a point now that basically all the elements have been agreed to.
The key issue that is at the table right now is that in order to make it work properly, you have to have the correct balance between the value of the dollar and interest rates, because through the deal itself what happens is the province can save in the order of $10 million over the 12 years because of the fact they can go through this sale-leaseback arrangement cheaper than borrowing money themselves, so it makes a lot of sense. So from a provincial taxpayer's perspective, we all win.
GO Transit is really the element by which we have the equipment. It won't affect the operations, the maintenance of it; all it is is really a money process. Like I said, the agencies -- treasury, GO Transit, the ministry -- are all very comfortable in the deal struck to date. Why it hasn't gone forward as a finalized project is, like I say, the balancing act of timing, timing being interest rates and the value of the dollar.
Mr Carr: The board, then, has approved the process?
Mr Ducharme: No.
Mr Carr: Because my understanding is -- and correct me if I'm wrong -- that it's a provincial initiative to help them out to make their books look better, but the board hasn't approved it. Is that what's happening with the board, that the board has not approved that?
Mr Ducharme: The final approval is not through the board. We've updated them I think five or six times, saying, "Here's where we're at." Because until we have a situation saying now's the right time -- they're saying, "We want the full package," and treasury would be represented at the board meeting, saying, "Here's how it affects GO Transit." But like I say, the environment isn't there yet where you have the ideal situation to say, "Sign the deal." But they're well aware of it through our past chairman, Lou Parsons, who's been closely involved in that. They're comfortable at this point in time, but they're saying, okay, when it's the final signing time, that's when they give final approval.
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Mr Carr: But didn't they pass some type of resolution asking the provincial government to go slow on that? They are not in favour of it, as I understand it, at all.
Mr Ducharme: No, that's not true. What they want is, they pass the resolution and they want assurance that it will not affect the passenger operating subsidies, that if we're going to go through this process, it's not taking this, which would be about $30 million a year, and saying, "Okay, that's part of your operating budget," because we couldn't handle that. The assurances are there that that's not what we're trying to gain. It's an overall provincial gain. GO Transit is really the agency that has the equipment. They'll be looking at other agencies as well.
Mr Carr: They never requested this, from their standpoint, to make them more efficient. It is, as you mention, just a provincial initiative to make their books look better. I know you probably can't comment on it, but isn't it really just an accounting procedure which is going to basically change year-over-year figures but selling it off really isn't going to save the province any money? You talk about borrowing rates. You would have thought that the province, with all its credit rating, albeit the fact it's slipping substantially in that regard, would have more borrowing power. We always have heard that the province should use its borrowing power because it has a stronger credit rating. Isn't really all this initiative just an accounting procedure to make the province's books look better?
Mr Ducharme: No. The bottom line, and I'm being very frank about it, is the savings to the province, and the estimate at this point in time, based on the financial situation, appears to be about a $10-million savings. So it's not --
Mr Carr: Would you be able to give us the reports, then, that say that, the savings, so we can go through them?
Mr Ducharme: Yes, once they finalize it. I guess, really, to be honest with you, those questions should be directed through treasury, because they're the ones that can bring forward -- it's a financial plan, a business plan. That's all the board is looking for: "How much money are we saving?" and "Let's make certain there's not an effect on GO Transit operations." That's really --
Mr Tilson: It's a relevant question, of course, though, because if you're having all these substantial cuts to the GO service, Mr Carr's question is quite valid at this particular point rather than waiting for the deal to be consummated. So why wait?
Mr Ducharme: The deal isn't consummated and, like I say, it has to go to the board for approval, and that's the bottom line they are looking for: What is the cost saving? Is it just a paper exercise? It isn't. People can look through it and say, "Justify it and prove to us that you're really saving this money," because if there's no cost savings, the intent is not to move forward.
Mr Carr: And that's the board's position, not the province's.
Mr Ducharme: No, that's the province's position. It's very clear to us.
Mr Carr: The province's position is, with all due respect, to make it look better.
Mr Jim Wiseman (Durham West): You are trying to put words in his mouth, Gary.
Mr Carr: It isn't him; he doesn't represent the province. He's talking from GO Transit. I'll tell you what the province's --
Ms Kelch: Mr Chair, may I just offer a couple of comments from the ministry's perspective? Obviously we've been a key player in this relationship. As Rick mentions, it's the Minister of Finance who has the principal role to play here.
But this is an issue which is not exclusive to GO, and we've had several conversations with Finance across many ministries and across all of us that hold assets as to whether this is a real opportunity in terms of garnering the kinds of savings we're all looking for these days.
I think Rick has indicated, but I'd like to reiterate it in the broader context, that the treasury officials, in terms of discussion with us, have been very, very clear that we need to be able to prove very real savings both on paper and on the ground if we're going to proceed on any of these fronts. But it isn't just the GO trains that are being evaluated.
Mr Carr: Yes, I understand that, and I appreciate that the board, I suspect, won't give approval if it doesn't agree. The only problem is that, as you know, giving your approval for things when you're disagreeing with the government that controls the tap and the funds is very difficult to do. But I'm sure the chairmen of the regions will not give their approval, and it's my understanding they won't, unless they see the benefits. We'll wait and see on that. I would like a copy of the report, as soon as it's available, of how it's done so we can take a look at the details.
I'll turn it over to Mr Tilson.
The Chair: There's time for one final question.
Mr Tilson: I'd just like to reiterate that you will make available copies of all reports, whether they be evaluations of operations, cost analyses, to the committee as soon as possible. The reason I say that is that there's much scepticism as to the justification in making those decisions, as I've indicated in my past questions. I had delivered to me a letter from a constituent this morning. I haven't checked the accuracy of it, but this is what she says:
"If ridership, or lack of it, is a factor in cancelling a bus, why are they still running the 5 pm Brampton bus from York Mills? This past week I have seen it come into Yorkdale with only one person on board to pick up one more and leave. This happened every day last week except for Friday, when it left with six people on board. Does he stop at another depot and pick up a load of passengers or does he make the run to Brampton with only the people he picked up from York Mills and Yorkdale?"
The point of the question, of course, is that there is much scepticism, and hopefully you will have detailed reports that will justify your decisions.
The Chair: I think we'll leave that as a comment.
Mr Tilson: But I'd like an answer to the question that you'll make all those reports available to the committee.
Mr Ducharme: As far as the analysis we had done and the figures that we brought forward to the board, no problem.
Mr Tilson: To justify your decisions.
Mr Ducharme: Yes.
Mr Wiseman: I'd like to get at a few other points, if we can. How much does it cost per mile to build a rail line?
Mr Ducharme: To build a rail? I have to be careful to give you a general answer. If you're building another mainline track based on one track or if you're building two new ones -- for instance, the Whitby to Oshawa extension, where we're building our own exclusive right of way, is in the order of $50 million to $60 million, including the station costs. But that's not what would happen in other areas. To add more trains to Georgetown, where you only have to build a portion of a second mainline track, would be a lot less than that.
It can be in the order of $5 million a mile, but you have to be careful in using that: maybe $5 million to $10 million, although Oakville to Burlington was $110 million. We built two new stations and expanded the service by additional mainline track over 10 miles. So you could say $10 million, but it's usually around $5 million. Like I said, I'm trying to be cautious in giving you an easy number to throw on the table and say that's what it's going to cost you, because it may be a lot less than that.
Mr Wiseman: How much does it cost GO to pay CN's or CP's right of way to run the trains? How do you determine that?
Mr Ducharme: We'd have to look corridor by corridor. The costing is broken down into labour costs, four-man crews, and then it's broken down into user charges on the corridor. Every corridor is different, because the way they come up with the estimate is that there are actual dollars spent on maintenance, and the use of the corridor itself then is distributed according to your traffic on there.
For instance, on the Georgetown line, where there is a lot of freight and you have Via, GO would only pay a certain portion of it. On the Stouffville line, where we're the major operator, we might pay 80% or 90% of it. On the Lakeshore line, I think our traffic is 60% or 70%, and you have Via there and the freight. So every line is based on usage for the user charges. Then, like I say, you have the right-of-way charges and actual maintenance charges, where they're distributed according to that too.
Mr Wiseman: Do you anticipate that by owning the Whitby to Oshawa line, your costs are going to be lower in the long run than they would be if you were to use an existing line?
Mr Ducharme: On an operating basis?
Mr Wiseman: Yes.
Mr Ducharme: I wouldn't say it's going to be cheaper. You have control of what type of operations you have, because we control our own destiny there where they're our tracks. You're not competing for time, for freights, and for Via. So that's where the cost savings are.
When you talk about maintenance, maintenance charges are maintenance charges. You have a crew out there doing certain maintenance. In fact, for the Pickering to Whitby section, we have hired CN, which is the most effective, to do our maintenance. There's no magic in what's needed out there, because under MTA, you have certain rules, you have a certain level of safety, so therefore the standards are very clear.
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Mr Wiseman: On the section of line between Oshawa and downtown Toronto, that line is shared with freight trains, is it not?
Mr Ducharme: All the way down to Toronto; oh, yes. Down to Union Station is shared with freight as well as with Via.
Mr Wiseman: How much of an impact does their schedule have on your ability to schedule trains? Are you comfortable with being able to schedule them as frequently as you would like?
Mr Ducharme: They have an operation where they have customers there -- we're just another customer for CN -- and their existing customers need specific windows as far as providing service. They have done the best job they can, I feel, because we've gone through assessments over the years and tried to find every which way we can to improve it, but as far as the peak hour and peak period, we're basically buying the track, because with the frequency of our trains and Via slotted in there, there's not much freight that can fit in there.
If you want to buy even more service, we're talking in that section of building another mainline track. The reason is, if you look at the Lakeshore West, right now we have four tracks out to Mimico because there's high frequency in there of our equipment trains moving from Willowbrook as well as the Via equipment trains from Mimico across the road, so you have four tracks in there. You're really operating service on two, and your equipment moves for the other service are on the third and fourth.
Then we have three tracks all the way out to Port Credit; two to Oakville. That gives us the ability to short-turn trains and start them off at Port Credit and move them in.
In the east we would like the same type of thing. We have two mainline tracks. Where we would like to improve service is that right now we're basically caught with only being able to operate local trains all the way out to the Pickerings, the Whitbys. We'd love the same situation as we have on Lakeshore West, where you can have express trains picking up Oshawa, Ajax, Whitby express all the way to Union, fitting in with local systems that may short-turn at Guildwood. So you've got a balancing act, and in order to do that, we need another mainline track.
I think there's a notion that railways have all this train time out there and the freights are not allowing us in there. It's a matter of fact: They have customers and they have freight trains. However, based on the signalling system and the track, you can go through the evaluation, and if you want a safety margin in there, which is the standard dictated through MTA and I'd want anyway -- we haven't had an accident of any kind in 26 years at GO, and we never want one. If you want to start putting more trains in there and forcing the signalling system to accommodate more than it should, you're looking for trouble. You may be happy initially with more service, but we've gone through so much detail on the simulations, I feel comfortable in what we're doing. I look at it from a general point of view and a practical point of view. When you have a corridor, if you've got two tracks of single-track sections, you're never going to have a good level of service. I don't care what CN does. Two tracks have to give you the flexibility for the meet. So that's a minimum.
When you have other elements in the corridor such as Via and freights, you'd better be looking at three-track corridors, and really, if you look at where GO is going incrementally, that's what you're going to end up with, and I think it's a very practical approach, because from a cost-effective point of view, you talk about how much per train mile, we're carrying into Union Station in the peak hour 27,000 people. That's a lot of highway that you would have to build to bring them down here. So we're moving 2,500 people on a train, and you've got four or five of those trains. If you look at Lakeshore West, you'd have to put two more decks on top of the QEW to accommodate what we carry, so on a per-mile basis, it's still very reasonable.
Putting aside criticisms of the railways, quite frankly, we've done so many simulations and assessments, I think we've really pushed them to give us the best they can, because until you get rid of their other customers -- we're a customer, Via's a customer, and will continue to be. I think they have really pulled it together and made an efficient system.
The Chair: Mr Frankford wanted to ask a question and there are only a couple of minutes left.
Mr Wiseman: I just wanted to ask a quick question. Durham region is very much interested in this transit integration initiative. Could you just very quickly give us an idea of how that is progressing and an update on it? It's important in our area.
Mr Ducharme: The Transit Integration Task Force?
Mr Wiseman: Yes.
Mr Ducharme: We've had two meetings of the task force itself. There are four major subcommittees and, quite frankly, it came out of the meeting -- we had an all-day meeting on Friday -- that there's total commitment to try to improve this. We're zeroing in on the basic element of a one-fare medium. We keep using the buzzwords "seamless system," but that's what it is, and that's what we try to accomplish with fare integration with Pickering, for instance, where you use one fare and you can travel both systems.
If you look at our existing ticketing system, you can have a 10-ride ticket on GO. That 10-ride ticket is good in 14 municipalities as long as you paid your fare according to the correct zones, as well as if you have the twin pass on TTC. We're trying to improve it, though, because technology can try to improve it so that we're not all using different technology, but at the same time there's the fare structure, whether you have zone fares and how you treat the level of fare reductions for seniors etc. That we work towards a consistent approach is what we're all trying to strive for.
Secondly, the other element is, let's make certain we're doing everything we can on service coordination whereby the meets are there. It's not whether the fare is good but do I go to a station and there are no buses, or do I have a bus there and there's no train? So it's working at both of those.
The report itself should be together by December or January, with specific recommendations on how we improve this as far as organizational changes: "What can we do better?" rather than saying, "We're doing a good job." That's fine, a good start, and now let's start fixing up all the things we feel are lacking.
I think it's a very positive committee. I think there's a high enough level that the buy-in is there, and it involves mayors from the surrounding area, it involves the transit agencies -- I'm there, Al Leach from TTC, Ed Dowling etc, the other municipal systems surrounding Metro -- to really say: "Here's what we're doing. We've worked together, but how do we all work together?" So I see it as very positive.
The Chair: Mr Frankford, one very final, brief question.
Mr Robert Frankford (Scarborough East): I'm very pleased we're discussing this because I have two GO stations in my riding, Port Union and Guildwood, and I think this is potentially a very valuable exercise in looking at the broader costs of different modes of transportation.
Are you satisfied that the recent service cuts are consistent with GO Transit's long-term goal of encouraging further transit use as an alternative to the automobile?
Mr Ducharme: I guess as with any budget cuts, from GO's perspective an easy answer would be, "No, I need twice the money." The political realities are there, and the budget realities. I had pointed out before that our target years ago was set up at 65%. We're not there. So if the objective is to move towards that, whether it's a budget cut done through ECPC social contract, and for us to move towards that, I feel comfortable with it.
On the broader question of the environmental issue, whether people should be in their car or on transit, I think I said it before: We want to improve. We want everybody to use transit. That's fine as a transit agency, but when I look at the performance we have and the support by government, it's hard for me to say that that support isn't there. It's something that's been more difficult to deal with because we've always been growing, we haven't cut, and the realities are there that we're not the only agency. I'd feel differently if we were the only provincial agency that had to buy into this program, but we're not. We're just one of many. What we're doing is taking a very close look, and quite frankly, I think we're going to be better for it in the end.
There are specific areas where people have serious concerns as far as it affects them personally. It's difficult to deal with, but from a business point of view, I don't feel uncomfortable with it. I don't think we're treated any differently than other agencies and I think we've done our job to address the issues.
The Chair: I'd like to thank you for appearing before us this morning. There are obviously some requests outstanding for further information and clarification, and we can work through our clerk to make sure that we get that information to the committee.
Mr Tilson: On a point of order, Mr Chairman: Does the Provincial Auditor require any further specific direction from the committee to complete the task we've asked him to do?
The Chair: Perhaps he would like to comment on his final --
Mr Peters: Not at this particular point in time, but I thought the closed session this afternoon was going to be an opportunity to discuss the further action on your motion.
Mr Tilson: Thank you.
The Chair: Thank you again for appearing before the committee. We are adjourned until 2 o'clock this afternoon.
The committee recessed from 1159 to 1415.
The committee continued in closed session from 1415 to 1540.