Anne Golden: The Lecture for “Rethinking Transportation” – Jan 28

Here is the complete and slightly revised text of Anne Golden’s lecture at SFU Vancouver on January 28, 2014:

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Breaking the political gridlock to address the transportation challenge: Lessons Learned from the Greater Toronto and Hamilton Area

 Introduction

I am pleased to be here to talk about the review undertaken by Ontario’s Provincial Advisory Panel on transit funding late last year. While urban transport issues in Metro Vancouver and Greater Toronto differ in a number of important ways, there are enough similar challenges that I believe you will find our experience interesting and relevant.

Here’s the starting point: the Greater Toronto and Hamilton Area (GTHA) of more than 6 million is expected to grow by 2.5 million people over the next two decades. That means one million more cars on our roads. And it means we have reached a tipping point in congestion on roads, and crowding on transit.  Because we have neglected transport infrastructure for so long, the impending influx of people and cars makes for an intolerable situation. But while there is consensus on the urgency for action, there is no agreement on how we pay for it.

I recall when the Greater Vancouver Regional District (GVRD) was in the process of creating TransLink back in the mid-90s. In 1996, I was chairing the Task Force on the future of the Greater Toronto Area (GTA) and wrestling with similar issues. My Task Force argued that we needed a strategic and integrated approach to city-building (given that the total population was expected to reach 6 million residents by 2021 – and we’ve exceeded that already!). I came to Vancouver to study your property tax assessment system, and met with Ken Cameron, a colleague when he was in Ontario, to catch up on the GVRD’s Livable Region Strategic Plan.  So at about the same time that you created TransLink in 1998, I was calling for a new regional government in the GTA that would make possible coordinated decision-making on regional matters including, regional planning and infrastructure development, including transportation.

In fact, Metro Vancouver has led the way: first, by creating the region-wide GVRD, then with your Livable Region Plan, followed by the creation of TransLink, and with your land-use policies. While in Toronto we have continued to sprawl, you preserved your agricultural land and developed policies on intensification, which are much more ambitious than anything we have dared to do. (I understand that your target is for 70% of new development to take place in compact urban form; our target is just 40%.)

And here I am, eighteen years later, talking about integrating land-use and transportation planning for a metropolitan region – in my case, without the benefit of a region-wide government or body – and how to make that happen.

So as Yogi Berra said, in some ways “it’s déjà vu all over again”.

The Transit Panel’s Terms of Reference said that our mandate was to review the Metrolinx Investment Strategy and give the Province our advice on funding tools. But the real motive was undoubtedly to try to break the political gridlock. After all, there had been several reports on revenue tools: Toronto Region Board of Trade, City of Toronto staff report, Metrolinx and now my Panel.

I propose this evening  to describe the context for our report, present our key recommendations, and talk about lessons learned. There were three, which I will mention briefly now, so as not to keep you in suspense – but elaborate on later.

Role of the Media

First, the role of the media: I found the media reaction to our report somewhat frustrating. The broadcast media the night we released our report, was all about “oh my god, they’re going to raise gas taxes”, while the print press editorials and columns were mostly laudatory. Our report was described as “breaking new ground”, “doable”, and “practical”.

Trust

Second is trust. When trust is broken between the government and the governed, it’s almost impossible to generate support for public policy changes even when the proposals are right.

Governance

Third is governance: There is no easy answer with respect to transportation governance, no template that we could use as a model. I have followed your experience with TransLink governance, and know that you too have struggled with the challenge of creating an ideal system that achieves effectiveness and efficiency across a region comprising several municipalities and at the same time adheres to the principles of responsiveness and accountability. This is a challenge that besets all metropolitan regions.  More on this later.

Making the Move: Choices and Consequences

When Premier Wynne and Minister Glen Murray asked me to lead a panel to advise the Government on how transit in the GTHA should be funded, my reaction was both hesitant and excited:

·          The timing was very tight – a fast turnaround was needed to allow the Government to meet its 2014 Budget timeline.

The Panel, already chosen, was very big: Could 13 individuals with diverse views and backgrounds come to agreement
on such a contentious issue in 12 weeks?

·          The political context was daunting. We had a minority government at Queen’s Park. And we had a Mayor at City Hall doing his best to mislead the public on transit (and other) matters. No doubt, you have heard of him.

But I knew I had to accept. Transit infrastructure is an issue I have cared about deeply for two decades or more: it was highlighted in my report on the future of the GTA back in 1996; it was a major theme in my work on cities at The Conference Board of Canada; and it is one of the cornerstones for success of city-regions in the course I teach at Ryerson.

When the Premier announced the Panel, the initial reaction from the media and the public was understandably cynical. Some believed the government was just postponing an unpopular decision on revenue tools. A transit fracas on a proposed new line in Scarborough was dominating the news, with decisions being made apparently “unimpaired by information.”  This just confirmed the public’s distrust in how transit decisions are made.

However, the Panel was not cynical; we were determined to figure out the best way to generate the needed funds to create the regional network so urgently needed in the GTHA. We would not duplicate the work that Metrolinx – our regional transit agency – had done; we would build on its research and input from extensive consultations. We were committed to coming up with a viable plan.

And I believe we have done so. Producing a consensus report that had the unanimous support of all 13 Panel members – representing all major stakeholder groups, from across the political spectrum — has been a gratifying and heartening experience. Our hope is that this unanimity of support will give heart to the Government to act on our recommendations in the upcoming budget.

Our plan is simple and it works: It starts with a few revenue tools to create a reliable revenue stream that levers a reasonable amount of debt that unlocks the billions of dollars needed to build the highest priority “Next Wave” projects within a decade.

Our revenue plan calls for a fair and balanced contribution from all stakeholders, without asking too much of any one group.

Before going into the details of the revenue strategy, a word about how our thinking evolved.

We began with three to four weeks of intense orientation in order to identify the key issues and areas for further research; we then met with dozens of stakeholder groups and organized public meetings. We had to focus the discussion and move beyond the myths and distortions that were making the public debate so irrational. Without a clear fact base, a mature conversation would not be possible.

Framing the Issues

That’s why our first paper laid out what we called the Hard Truths about Transit in the Toronto Region:

Subways are not the only good form of transit. What matters is matching the right transit mode and technology to the proposed route to avoid wasting scarce capital, reducing funds for other projects, and creating burdensome debt.

Transit does not automatically drive development. To be successful and affordable, transit routes must connect with current and anticipated employment.

The cost of building the transit is not the main expense. Lifecycle operating, maintenance, and financing costs are a major portion of the total cost of transit and must be included in the analysis leading to decisions. I am proud of the chart we produced, showing publicly for the first time the true cost of transit construction.

Transit riders are not the only beneficiaries of new transit infrastructure. Everyone benefits – economically, socially and environmentally – from new transit infrastructure.

Transit expansion in the region is not at a standstill. There is $16 billion worth of transit construction now in progress throughout the GTHA (versus public perception of nothing happening).

We can’t pay for the region-wide transit we need by cutting waste in government alone. New dedicated revenue sources are required.

There is no evidence that the magnitude of funds needed to build, operate, and maintain a transit network capable of serving a future region of more than 10 million people can be found by simply cutting waste. The “gravy train” myth perpetuated by our mayor is often repeated, but these are the facts:

• Ontario has the lowest spending per capita of all provincial governments.
• Spending has already been reined in significantly. Growth in program spending has been held to less than one per cent over the last two years.
• Ontario is committed to eliminating the deficit by 2017-18.
• Even if the Government chose to sell off land or cut a program, this would not create the ongoing revenue stream required to permit additional borrowing.

Premier Dalton McGuinty had asked Don Drummond, the TD Bank’s former chief economist, to find ways to cut spending and improve government efficiency. Even Don could not find, after almost a full year, efficiency measures sufficient to both reduce the deficit and fund transit expansion. Indeed, the Drummond Commission report actually called for “new revenue sources for future transportation capital needs.”[i]

Following publication of the Hard Truths paper, the Panel began to gain some traction, with the tone of the media coverage becoming somewhat more respectful.

The Panel found that we could not separate the matter of how to pay for new transit from the process and criteria for selecting the projects themselves. The challenge was how to take account of new research –for instance on employment patterns and the critical importance of linking public transit to jobs, current and future – without undermining confidence in The Big Move.

We resolved this challenge with seven criteria to prioritize Next Wave projects, which had not yet been done.  These criteria may affect the order of what gets built, and the nature of the project analysis by Metrolinx on forthcoming initiatives.

Among these criteria are: that transit investments must help ease congestion (this would affect the Yonge Street extension timing and prioritizes the relief line); they must add up to a region-wide network (affecting relief line planning, now underway); they must align with major employment centres, current and future; they must be built on a practical time-line and account for all costs. The last point led to our decision to recommend two or more phases for the Next Wave.

A New Revenue Stream for the Next Wave

How to pay for the transit we need was, of course, the crux of our mandate. Because new transit infrastructure benefits all of society, costs should be shared – by business, drivers, and transit users. But in tough times, no group should have to pay too much. Transit riders, for example, already contribute through fares that rise regularly with inflation, so the Panel chose not to ask more of them.

Our report offers one innovative revenue model, with two variations. Both involve a mix of corporate income tax, gas and fuel taxes, and HST

• Option A – calls for: a phased increase of gasoline and fuel taxes, starting with 3 cents per litre in year one and rising by one cent per litre to a maximum of 10 cents in year eight; as well, a modest increase of 0.5 per cent to the general Corporate Income Tax rate; and finally, a re-deployment of the GTHA portion of the provincial HST charged on gasoline and fuel taxes.
  Option B proposes less from gas and fuel, more from HST.

The combined revenue of $1.7 to $1.8 billion would then lever the additional borrowing to both build Next Wave projects (three-quarters of them in the first swath) and retire the resulting debt.

The revenue stream also provides for investments in local transportation improvements: $400 million annually ($440 million in Option B), when fully implemented; it even includes a two-year Kick-start Program for local transit improvements to coincide with the introduction of new taxes.

We did extensive research and analysis to select these tools, and the rationale is detailed in our report. I will go into a bit of detail here because I know that creating a sustainable revenue stream is a front-burner issue for you.

We favour the gas and fuel taxes because they match usage, affect travel behavior, are simple to administer, raise a lot of money, and, unlike in BC, haven’t been raised in more than 20 years.

Even with Option A, they will still be below other jurisdictions like Montreal or consistent with Vancouver. And the impact on households is very tolerable – about $80 per household in year one, just $260 per household after eight years. Compare that to the cost of the gasoline wasted due to stop-and-start commuting for 32 minutes on a daily roundtrip if we don’t remedy the situation.  This amounts to $16 every week or $800 per year. Amazing how most of the media focused on one side of the equation. The choice is obvious: We can all pay a little now, or a whole lot later. Ironically, few have noticed that the cost of gas in Ontario has gone up 5 cents since we released our report!

It’s a fair solution for business, too, as employers will benefit from employees who are more productive because they can get to work faster. Business benefits too from a bigger job pool that transit access provides. While the Corporate Income Tax does not influence travel behaviour, a viable strategy must demonstrate a direct business contribution, and CIT has less
negative impact than employer-paid payroll taxes that could hurt job creation. Even with a 0.5 per cent increase, Ontario’s general CIT rate would still remain in the bottom half of the provinces.

We also think highway tolls have a place – but not right now, due to the high cost and long lead time to implement. Road pricing will undoubtedly be needed down the road. It’s the norm in major global city-regions today, and we live in one of those.

Both recommended options share the burden among the beneficiaries, and for each we have included a proof of concept  – we stress-tested it -showing how the dedicated revenue stream plus the required amount of borrowed funds align with implementation of the proposed Next Wave project portfolio.

The borrowing ratio (amount borrowed relative to amount raised) used Because the tax sources are provincial and would have to be raised across the province, we state clearly that funds from outside the GTHA must not be used to support GTHA transit projects, a commitment already made by the Province – and studiously ignore by journalists outside Toronto.

Building Public Trust

The most common and forceful message that emerged from all of our public meetings and consultations is that the public has very little trust in how transit decisions are made, in how money is managed, and in how projects are delivered. When it comes to funding transit, the public told us: “Dedicate it or forget it.”

We address this concern head-on and our recommendations, when enacted, would:

• Ensure that new revenue is held in a stand-alone Fund, within Metrolinx, to be spent solely on funding transit expansion and renewal in our city-region;
• Guarantee accountability and transparency for how the funds are collected, spent, and reported on; and
• Encourage the de-politicizing of decision-making by insisting that elected officials do not approve projects until and unless they are validated through solid, thorough business case analyses.

Some politicians may not like this point, but we must all learn lessons from experience (with Toronto’s existing Sheppard and proposed Scarborough lines). We cannot afford to waste billions of dollars on projects that use inappropriate types of transit for the situation, generate insufficient ridership, fail to address congestion, or don’t contribute to an integrated network. This is a big part of building trust.

We wrestled with governance questions. Some say that one way to de-politicize decision-making would be to expand the authority and mandate of Metrolinx to give it “the teeth” to have the final say over project decisions. We need to proceed with caution here, and not be simplistic.

Metrolinx, our regional transit authority, is not an elected body, nor does it have the power to tax. Moreover, we count on local municipalities to represent the local community perspective. This is an important principle in our system of governance. The challenge in metropolitan regions is to strike a reasonable and workable balance between local responsiveness and regional coordination.

That’s why we supported the Metrolinx recommendation to add six municipally appointed board members, but chose not to recommend the TransLink model of a Mayors’ Advisory Council.

Capturing Land Value Created by New Transit

We also looked at the potential of land value capture – recouping from developers part of the value uplift created by new investment. While we can’t count on it for reliable revenue, it can contribute to reducing the capital costs of building transit.

Properly planned, transit investments can encourage development around transit stations and transit routes. The existing 118 km London Crossrail project in the UK is an excellent example of applying Land Value Capture. Almost one-third of all costs for this £14.8 billion project was contributed by business.

Metrolinx has started to work on this concept. Our recommendations support Metrolinx in asking that the agency adopt a proactive and collaborative approach in working with the private sector to take advantage of the increase in land value created by the Next Wave of rapid transit projects.

All Governments Have a Role to Play

A common theme at all our public meetings was that all orders of government have essential roles to play in funding transit. The federal government, in particular, is seen as “missing in action”. Federal funding today is ad hoc and does not support long-term planning, which is key to quality investment decisions.

The famous urbanist Jane Jacobs observed that “…the large cities… are Canada’s major economic assets. Without Vancouver, Calgary, Toronto, Montreal, and Winnipeg…Canada would be so poor that it would qualify as a third world country.”[i]

Cities such as Toronto and Vancouver don’t need to apologize for asking the federal government to participate. The Toronto city-region contributes about 20% of Canada’s GDP, and Vancouver’s share is 6.5%. For Canada to achieve its potential, the Government of Canada must become a full partner with a fair and reliable contribution to the funding of transit expansion where it’s needed.

Municipalities should also play a stronger role by ensuring that planning policies encourage new development that supports transit ridership through appropriate intensification. They can also make greater use of their borrowing capacity to finance local transit improvements.

Communicating and Engaging With the Public

For me, the most rewarding part of the Panel’s work has been showing it’s possible to have a mature conversation about transit.

I have been saying publicly that transit should not be about ideology. It shouldn’t be about drivers versus riders, subways versus light rail, or city versus suburb. This is an issue where we can all be on the same side.

Now that the Panel has fulfilled its mandate, we need new champions who will continue to communicate the importance of investing in transit, and sustain an ongoing, long-term program of public education; champions from governments, business and civil society.

We thought about the title of our report. Making the Move: Choices and Consequences is both a call to action and a warning that failing to act has consequences, too.

In our report we focused on the benefits – the countless personal, micro- and macro-economic, and quality of life benefits of building the region-wide network we need.

We argued that our strategy is not just about transit; it’s about transportation, and it’s about economics. It’s pro-driver, pro-rider, pro-business, pro-economy, and pro-region.

Conclusion: Lessons Learned

Let me close with some thoughts on what I learned from the Transit Panel process.

First, the messaging of public policy proposals is never easy, and it is more difficult than ever in our new world of communication. With 24/7 digital distribution of news, there is no white space for thinking and analysis. Everything is real-time and sound-bites. I noticed that when we called the lock-up, so that we could explain the intricacies of our recommendations, the reporters wanted to tweet and file their stories before reading the report. Moreover, now that social media makes instant experts of everybody (i.e. everybody’s opinion matters), there are no filters. Sometimes that’s okay. But not when you want to have an adult conversation on a complex matter.

Layer on to this the pre-election political atmosphere in Ontario’s minority government situation. I felt I was watching an SCTV skit with John Candy playing Johnny LaRue – some of you here may remember this. Johnny would push his buzzer before the quiz show host had asked the question! Repeatedly!

The broadcast media – all of them – showed a brief clip of our report, focusing on just one aspect, the gas tax, then went on to interview some guy at the gas pump who had never heard about the report and asked him how he felt about new taxes on gas. Somewhat stunned, he could be counted on as saying “not good”. Then the reporter, seeking confrontation in the story, went to the Ford brothers to obtain the predictable, colourful, uninformed “no way” response. Time, space, and cost factors have combined to ‘dumb-down’ the broadcast media.

On the other hand, reading the commentaries of those who have been engaged on the transit file for some time has been totally gratifying. But in the current Toronto culture, our most thoughtful city-builders and advocates of rational planning are being dismissed as elites.

How do you have mature conversations on complex matters with the general public? This is a challenge for modern democracies, and for those who lead our journalistic institutions.

It is a challenge you are facing here in Vancouver with the upcoming referendum on transit financing. In one of life’s many coincidences, I picked up this morning’s newspapers to read that your Premier has agreed to postpone the referendum, given the opposition of area mayors to the idea.

I am not a fan of democracy by plebiscites. Democratic theory is founded on representative democracy (indirect democracy) with elected officials representing a group of people; their role was not just to communicate the public’s wishes, but to use their own judgement, even when their views don’t align with the majority. Democracy works best when the process includes filters. In today’s world, intermediaries are gone. The line between democracy by plebiscites and mob rule is very thin.

Judging from my own experience, I can tell you that developing a viable sustainable funding strategy for a multi-billion dollar region-wide transit plan cannot be easily translated into a single, simple referendum question.

Ongoing communication and engagement with the public will be critical to building the political support needed to persuade people of the value of investing in transit.  In today’s world, this means engaging people continuously using all of the available channels and with support from all sectors, including business. There is no short-cut.

The second lesson is about trust. As I mentioned, the public has very little trust in how transit decisions are made, how the money is managed, and how projects are delivered. Once trust is broken, it is extremely hard to rebuild. All of our proposals – for a new dedicated stand-alone fund, for requirements on how the use of the funds are to be reported on, and for the insistence on up-to-date, publicly available business case analyses before decisions are made – don’t really solve the problem. They are necessary building blocks. But the reservoir of trust has been all but depleted by the ongoing betrayals and scandals at all levels of government.

Moreover, the cynicism is widespread, throughout all institutions: from our churches to the world of business to governments. Why are people so prepared to believe the worst? Because in so many cases – and this is a global issue – these institutions have been untrustworthy and proven unable to solve problems.

Structural changes are only part of the answer; in the end, it is about leadership and values. Because leadership is largely situational, there is no single formula for effective leadership (despite the many books that offer one). Context, culture, and character are the key determinants.

The third and final lesson won’t surprise you: it’s about governance. My experience with the Panel confirmed how challenging it is to find an ideal model for governing a city-region. After pondering this question for more than two decades, I still don’t have an easy answer.

As you know, my Task Force attempted to provide the solution   for the Greater Toronto Area. We grounded our report on key principles of governance[1]:

1. Coordination:  to foster a common regional identity and purpose and promote strategic coordination of key services and decision-making
2. Fairness: to ensure that costs and benefits are shared fairly
3. Efficiency: to deliver maximum value with available resources
4. Accountability and Responsiveness: to be as transparent as possible and responsive to the needs of local communities.