ONTC Transformation - Real or political spin?

As the ONTC transformation starts to drag on, reminiscent of the Ring of Fire, or Northern Growth Plan, one begins to wonder if there will be anything left to transform.  Sales revenue for ONTC has been decimated from $114M as of Mar 2011 to  $63M as of Mar 2014, and if MNDM had the courage to post the Mar 2015 numbers, I'm sure that would have fallen further still.

Regardless of how efficient the organization becomes, if a company cannot bring sufficient revenue in the door to justify their capital cost, it will fail.  ONTC has been a political football for MNDM for over 20 years and the constant political interference has eroded the foundation built up over a century.

The current situation of a mishandled lockout, is indicative of how the constant attacks have worn away at the labour/management relationship.  Instead of trying to repair that relationship, MNDM has addressed ONTC like a political exercise designed to "spin" Northern Ontario into believing they are supporting the region.

If we look back at recent history to gain understanding of how that relationship came to be, one becomes skeptical of the MNDM commitment to Northern Ontario.  In 2003, the Liberals got elected along with a promise to develop ONTC and for a short time they did make an effort.  That effort did not include much to bolster ridership on the Northlander though, and by 2012 MNDM did away with any pretense of development and announced they were going to liquidate the company and discontinue Northlander service. (The actual announcement appears to have been deleted from the ON Newsroom website, but there are enough references available that we are certain it still happened)

This abrupt change in direction was done without consultation, without prior notification to the union and not even much warning to then CEO Paul Goulet.  Some of the claims made to justify the divestment decision were later proven to be false, and were partly why the government had to later back down on parts of the decision.

• ONTC Subsidy $100M and expected to rise 

      (Actual numbers fm ONTC Annual Reports)

          2010 - 28.0M

          2011 - 43.6M

          2012 - 75.7M

          2013 - 48.7M  (Psgr funding down 6M due to Northlander cut)

          2014 - 29.9M

• This is not a firesale

         Ontera had $41M in assets and was sold for $6M incurring a $61M loss for          ONTC

• Ridership is stagnant

            (Numbers from FOI request)

                2009 - 31,494

                2010 - 33,741

                2011 - 39,579

                2012 - 29,751 (Cut off in Sept)

          Very different government position re Union Pearson Express

• Northlander will be replaced with enhanced bus service

             The only enhancement to bus service in the North was as a result of a                improvement ordered by the Ontario Human Rights Commission.                      MNDM response was to insist ONTC operate buses on a break-even                    basis, forcing ONTC to close stations and reduce runs in the North.

        No transit system in North America operates on a break-even basis....not           even GO Transit  

Now....with this history of deception and political spin, unions at ONTC are asked to accept concessions beyond industry norms to support MNDM before they will expand and develop ONTC.

I would think MNDM would need to demonstrate good faith in a tangible way, before workers could believe them.  The current lockout only makes the prospect of co-operation more difficult and further jeopardizes the very existence of the business.  

MNDM should sign an agreement that matches the pattern already set by other unions and get on with the business of building up ONTC.  The North cannot withstand much more MNDM "development".

Canada Transportation Act Review - A Map to the Future

The Canada Transportation Act Review that was initiated last June by then Minister of Transport, Lisa Raitt, is coming up to the deadline. The 18 month period for Chair David Emerson to release his report expires at the end of Dec 2015.

The review, initiated a year early, was to demonstrate government reaction to a couple of very well publicized failures in rail service. The tragedy of Lac Megantic, of course, captured everyone's attention in July 2013, but a much smaller group was disappointed in the failure of Canada's Class 1 railways to move all the 2013 grain crop.

Together it was enough impetus to launch the review, but many are hoping it can affect much more than rail safety and peak capacity. One of the specific issues the panel was asked to review is

whether adjustments to the current transportation legislative and policy framework are required to support Canada’s international competitiveness, trade interests, and economic growth and prosperity;

For Northern Ontario, and other remote regions, the legislative and policy framework has negatively affected, rather than supported, economic growth and prosperity. The National Transportation Policy states quite clearly that competition and market forces are to be the prime agents in providing transportation services, but is less clear on when and how those goals are to be achieved when the market cannot provide.


The Canada Transportation Act defines the National Transportation Policy in Section 5

NATIONAL TRANSPORTATION POLICY

5. It is declared that a competitive, economic and efficient national transportation system that meets the highest practicable safety and security standards and contributes to a sustainable environment and makes the best use of all modes of transportation at the lowest total cost is essential to serve the needs of its users, advance the well-being of Canadians and enable competitiveness and economic growth in both urban and rural areas throughout Canada. Those objectives are most likely to be achieved when
(a) competition and market forces, both within and among the various modes of transportation, are the prime agents in providing viable and effective transportation services;
(b) regulation and strategic public intervention are used to achieve economic, safety, security, environmental or social outcomes that cannot be achieved satisfactorily by competition and market forces and do not unduly favour, or reduce the inherent advantages of, any particular mode of transportation;
(c) rates and conditions do not constitute an undue obstacle to the movement of traffic within Canada or to the export of goods from Canada;(d) the transportation system is accessible without undue obstacle to the mobility of persons, including persons with disabilities; and
(e) governments and the private sector work together for an integrated transportation system.

As noted in the Govt of Ontario submission to the review, "In reality, these conditions are aspirational". The Ontario submission goes on to touch on one of the main problems with transportation in Canada.

"Ontario’s extensive transportation system encompasses all modes and includes a wide range of services, facilities and infrastructure that are provided and operated by the private sector, as well as provincial and other levels of governments."

It is the diversity of these delivery methods and lack of co-ordination between governments that fragments transportation service in Ontario. If one considers the automobile as the prime competitor to public transportation, then the door to door service provided by that mode is what public transportation should be trying to emulate.  Yet, municipal transit may or may not directly connect to the intercity hub in the community, and the different modes of transport may or may not even be in the same area of the city, if they even exist.  Schedules are not co-ordinated, even within the same mode, if one wants to travel beyond a regional hub.
Another issue, not addressed in the Ontario submission, is whether or not the delivery method for bus transportation should be public or private sector. In Ontario, the authority for intercity bus transportation is the Ontario Highway Transport Board (OHTB). There is absolutely no connection between that entity and those responsible for other modes of transportation, therefore the ability to deliver an integrated system does not exist. 

In addition to the lack of multi-modal co-ordination, the regulation of the bus transportation industry in Ontario has failed the less populated regions of the province.  At one time the regulating of routes in Ontario was supposed to enable higher volume routes to cross-subsidize the lower ones, but as this blog post reveals, there is no mechanism to make that happen.

In fact, the only transportation provider in the province who is not subject to the OHTB regulations is the only integrated bus/rail service provider, GO Transit.  The regional commuter service is recognized as one of the best transit providers on the continent, but only GTA residents see that benefit.  Those of us in lower populated areas are faced with rail service being withdrawn and bus service dwindling.

Rail service in the North is virtually non-existent after the Northlander was cut off by the Provincial government and the Algoma service abandoned by the previous Federal government.

Bus service in the North is provided mainly by Greyhound and Ontario Northland Transportation Commission (ONTC).   Both these companies and GO Transit operate between Barrie and Toronto.  The GO Transit fare is up to 40% cheaper than the other two because they primarily operate in high density areas and are not required to breakeven, let alone turn a profit.  This competition in the lucrative GTA market means there is more pressure on the lower density corridors and for that reason service levels are being reduced.

In terms of freight rail service throughout the province, the fact that railroads are required to provide their own infrastructure means that intermodal facilities are only available in the GTA. The two Class 1 railways in Canada are only interested in the volume of business that is available from the Canadian distribution center of Toronto. This lack of competition means Canadian access to intermodal facilities pales in comparison to the United States. 

The rest of Ontario is so far distant from rail intermodal facilities the economic benefit is eaten up in the initial truck move. Proximity to those facilities also encourages their use.

For a government that is trying to reduce its environmental impact in the future these policy failures are driving us the wrong way.