Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

TransLink proposes tolls on all Metro bridges, new vehicle levy

with 8 comments

Vancouver Sun

I am only going to look at what is new in this announcement – not go over again all the arguments about who pays for what.

The vehicle levy has long been an option – but road pricing was regarded as an alternative, not in addition to a levy, mainly because a levy can be put in place quite quickly, but installing tolling technology takes much longer. Since the vehicle levy is at best a coarse tool – one that impacts everyone no matter how far, when and what they drive – it could be replaced by one that varies by type of vehicle, time of day (and day of week) and distance driven, which obviously has much better effect on travel patterns. The suggestion that all bridges get tolled has always stumbled on the fairly obvious – which bridges – and the fact that if there is to a set of “cordons” at which the toll is levied, presumably based on distance from Vancouver in concentric arcs, there are a lot of people along the Burrard Peninsula who escape. A drive from north east Coquitlam to UBC would be toll free, while Ladner to downtown crosses three water bodies. (The story does not say “tunnels” but I would bet the Massey would get tolled but not the Cassiar.) Obviously some places like Richmond get hit much harder than Burnaby – which has a much greater range of destinations available without a bridge on the way. The devil, as they say, is in the details and this announcement seems remarkably light on detail.

Road pricing is one of those things that makes obvious sense to economists (The Economist newspaper endorsed it many years ago) but is very hard for motorists to accept. First there’s the use of the word like “freeway” (which actually refers to the flow of traffic not the cost) and ideas like the freedom to travel where and when you like that is part of the illusion sold by the car industry. And the fact that we pay for roads through our taxes already – even though the taxes directly levied on fuel and vehicles are well below the cost to society of road use. This is also the problem with the levy – motorists in the region will feel even more put upon, especially when compared to those who can register their vehicles outside the region. But secondly, and more importantly, road space is a highly perishable commodity – like seats on planes. For many hours of the day it has very little value – but at peak periods its value soars. That ought to be reflected in road pricing but so far this element seems to be greatly neglected. It is not just the use of the road that causes the problems, but the use of the road when everybody else wants to use it. Without a price system to ration demand, we resort to queues. Just as they did in the Soviet Union for almost everything. Or how they allocate seats at Bard on the Beach.

Without new revenue, TransLink is projected to go into deficit by 2011, as it subsidizes the private operators of the Canada Line and the Golden Ears Bridge for four to five years until they reach projected ridership figures. [emphasis added]

Now that is news. I have been tracking both these projects for a while – and the general discussion about how wonderful P3s are supposed to be and I have not heard of these requirements before. If you know differently than I expect you to provide a citation and a link to the evidence. My understanding of the P3 case was that it removed the need for public sector funding and that the private sector would take on the risk, which obviously includes low revenue in the early years in return for a bigger share of the fat years at the end of the deal. I have always been critical of the way that these two projects have sucked up Translink’s resources since neither should have been such a high priority in a region that is starved of basic bus service.

And that is the second bit of news – that all of this appears to be implemented ahead of transit improvements for most of the region. This is just stupid. In London, when the congestion charge was introduced, bus services – and bus priority measures – were significantly increased when the new charge was imposed. Obviously people have to have some alternative – in London’s case much of that could be satisfied simply by diverting since many car trips through the centre did not need to go that way at all. There were already other, better routes available. Imposing new fees and charges now and promising better service later will not do at all. Because the whole point is to change behaviour at the same time as raising revenue. This is why this plan will once again be characterised as a cash grab. Because there is no alternative but to pay more, becuase there is simply no bus to get on.

Translink has been put into an invidious position – partly by the province’s unreasonable demands and policies but also by its own decisions to press ahead with expensive capital projects and then noticing too late that it dod not have enough to fund even existing operations let alone new ones.

It is also the case that the province has always stuck to the policy that tolls can only be applied to new infrastructure – which was why the Golden Ears got built and the ferry was not replaced because only the bridge could be tolled. So all of this simply puts Translink at loggerheads with long established provincial “principles”.  Nothing new there then.

UPDATE 2pm

TransLink must look for in-house savings before passing on transportation costs to taxpayers said Premier Gordon Campbell at a press conference today.

“I think that before people start talking about tax increases, they should start talking about savings in their own organization,” said Campbell.

This just in on the Sun webpage. In other words even before the review he commissioned has started, he has determined what the outcome will be.  Of course he does not just talk about tax increases – he has just brought in a big one under the guise of “harmonisation” – and pretends that will reduce costs. Which it will for the province and some businesses but will cost taxpayers plenty. I don’t see him rushing to pay big chunks of his own compensation either – something Maggie Thatcher liked to boast about (without mentioning the wealth of her husband of course).

He also said the transit authority overstepped their boundaries in planning tax increases.

“What I’ve heard of the report is that it is outside the framework of their legislation. …and I think everyone’s disappointed they haven’t acted within their legislation and they have a responsibility to do that,” Campbell said.

This is called being disingenuous. If they act “within their legislation” and also try to implement his “$14bn transit plan” the books don’t balance. In fact they don’t balance if they just keep on going as they are. Pretending this can all be sorted out by cutting Board members compensation and a few mythical savings is assinine. As is the provincial requirement to install faregates on SkyTrain which will be a huge money losing proposition.

Campbell can find $3bn for Highway #1 widening  but he can’t find any money to keep the buses running. And this is called ” a balanced plan”.

Written by Stephen Rees

July 31, 2009 at 9:18 am

8 Responses

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  1. Good for TransLink! they are obviously getting back at the BC liberals by floating outrageous propositions that can only enrage the automobilist hordes and get them mad at a Provincial government that doesn’t take transit seriously. Either that or the TransLink bobble heads had a sunstroke while waiting too long for a bus.

    Red frog

    July 31, 2009 at 11:08 am

  2. Presumably the formulas for operating “subsidy” would be based on actual ridership (which is yet to be determined) versus the level at which operating line would break even. It makes sense for TransLink to budget for a worst case scenario – i.e. low ridership. If the Canada Line is wildly successful, then there may be little operating subsidy to be paid out.
    And remember that if the line was not a P3, any initial operating loss during the period of ridership build-up – like that for the Millennium Line – would still be paid for by TransLink.

    Ron C.

    July 31, 2009 at 2:18 pm

  3. Ron

    My point is not that ridership might be low in initial years but that the possible need for public subsidy was not exactly trumpeted in the initial announcements about the “need” for a P3 and how this was supposed to reduce public sector indebtedness. The whole P3 scheme has been sold through misrepresentation. Risk was not transferred. Costs were not reduced. The public remains on the hook for any revenue loss/cost overrun. And that does not just apply to BC’s badly skewed process – it seems to be generally the case with privatisation.

    Stephen Rees

    July 31, 2009 at 2:27 pm

  4. “This is called being disingenuous.”

    Ah, go ahead Stephen. Use the L word. There is a definite pattern here. Premier Deceiver long ago gave up any moral commitment to truth telling.

    http://northerninsights.blogspot.com/2009/05/you-cant-handle-truth.html

    Norman Farrell

    July 31, 2009 at 3:53 pm

  5. Stephen as usual you are making too much sense. Unlike the provincial government, who put on a big show of financial responsibility and talk it up, but really are the least accountable and most irresponsible money managers we could have. Just look at the expanding deficit.

    This financial review is more lip service and dissembling. If they wanted to control this type of spending, why give the boards such “independence” in the first place

    Now of course if they cut compensation amounts to these board members or the executives the money saved will likely not end up being used for more transit at all. It will go to fund more pavement. Remember they still have to pay $3,500,000,000 plus for the Port Mann and another $1,000,000,000 or so for the South Fraser Freeway which has preparation work underway right now. Where is that money coming from? Well they keep cutting social programs, will be chopping hospital and school budgets, adding a harmonized sales tax and getting $1.6 billion to implement it and now you say that Translink has to use bus money to pay for Golden Ears and Canada Line.

    Thanks to the Liberal government taxpayers are paying money in taxes and tolls to fund pavement so private companies can make profits on pavement and cars. Then there are all sorts of other programs that add to the traffic mayhem. How much for example does air care cost, or the Scrap It program, both of which get people into new cars. These programs do not get cut, but day care funding does. The Map Van program gets cut. Hospitals needed to care for all the people injured in automobile accidents and from car exhaust pollution get funding cut.

    And they will not put significant amounts towards expanding transit to resolve the problems.

    Bernadette Keenan

    August 1, 2009 at 10:22 am

  6. This document includes a summary of the “Allocation of Risks Between Public (Public Sector Comparator) and Private Sectors”:

    http://www.canadaline.ca/files/uploads/docs/doc177.pdf

    Ron C.

    August 4, 2009 at 11:37 am

  7. Canada Line Info Bulletin No. 16 – April 13, 2006:

    http://www.canadaline.ca/files/uploads/docs/doc496.pdf

    Concession Agreement and
    Allocation of Risk

    The project is governed by the Concession
    Agreement signed by CLCO, GVTA and
    InTransitBC which sets out the rights and
    obligations of each party in the delivery of the line
    over 35 years. The Concession Agreement was
    released in March 2006 and is available at:
    http://www.canadaline.ca.

    Under the terms of the Concession Agreement,
    InTransitBC is responsible for building and
    operating the line. Costs and the project
    completion date are set out in the Concession
    Agreement. Payments to InTransitBC will be
    made when identified milestones are achieved
    during the construction period. During the
    operating period, payments will be made against
    specific performance targets that measure, for
    example, train frequency, safety and ridership.

    The key principle behind the design of the
    Concession Agreement is that risk should, where
    possible, be allocated to the party most able to
    manage and mitigate it.

    The majority of the construction cost and
    operating cost risks have been allocated to
    InTransitBC. Any risks retained by CLCO during
    construction including, for example, property
    acquisition, unidentified contaminated soils, and a
    share of utility relocation costs, are covered by
    specific contingency funds.

    While most of the operating cost risk has been
    allocated to InTransitBC, GVTA retains the
    majority of the ridership revenue risk. This is
    because GVTA controls the majority of the
    integrated Lower Mainland transportation system,
    sets fare levels for bus and rail systems, optimizes
    bus routes and integrates them with rail systems,
    and markets transit to the public.

    CLCO developed a comprehensive approach to
    forecasting ridership revenue that allowed
    Proponents, their lending institutions and the
    Agencies to have confidence in the forecasts. The
    ridership forecasts were completed independently
    by an expert consultant with significant
    international and local experience. The
    independence of the consultant and the quality of
    the modelling contributed to the fairness of the
    evaluations of the unique proposals submitted by
    the Proponents.

    Ron C.

    August 4, 2009 at 11:42 am

  8. […] The BC Liberals favor a regressive tax system that emphasizes tolls and flat rate levies as the preferred way of raising revenues for transportation. Why not use punitive gas taxes to encourage better fleet efficiency and raise revenues for transit. If the Liberals allow tolls on all bridges and a vehicle levy as desired by BC Transit, a person driving a Honda Insight rated at 72 mpg will pay the same as one driving a BMW M5 with its 500 HP engine delivering 13 mpg. Read the current story at the fine blog of Stephen Rees. […]


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