Tuesday, March 30, 2004

More on the Anniversary

No, I didn't make it down to the Ceremonial Anniversary Train Ride. I had been considering it, and was ready to go down wearing my ceremonial fedora (gotta keep with the nostalgia after all), which, according to Andrew Spicer's report, would have gone well with the historic advertising (damn! missed it). In the end, I decided I couldn't justify missing that much work.

I did, however, play hooky (well, "play flex-time") long enough to catch the pre-ride announcements and speeches. There were a lot of good political words about the TTC and what it means to Toronto. For their part, the TTC held it in their Hillcrest garage, where they could take Martin and McGuinty on a tour of where the TTC reconstructs buses to extend their lives well beyond what is generally considered the maximum age for a bus (about 18 years). Both Martin and McGuinty marvelled at this feat in their speeches, which is notable as it's one of the best examples of how the TTC has managed to do more with less (or, how little fat there is left to cut) — the other example is the 80% (81%?) fare recovery, meaning that 80% of operating expenses are paid for through fares. Most transit systems in North America are closer to 50 to 60%, if even that.

There were two disappointments in terms of the funding. One that has been discussed at large already is the amount of funding. One billion dollars is a nice, even, impressive-sounding number. But really, it's spread across five years (so say $200 million per year), and of that, one third is coming from the city who, theoretically, would already be spending the money. The consensus seems to be that, yes, the money's nice, but it's still not enough. A few typical capital costs (most taken from the TTC's Ridership Growth Summary (PDF; 2003)):

  • Typical cost for one standard low-floor bus: $500,000

  • Estimated cost of a streetcar (going by memory, and ignoring the fact that the TTC would need a new custom design): $2 million

  • Implementing smart card fare collection technology system-wide: $140 to $160 million

  • Extension of Spadina subway to York University/Steeles Avenue: $1.1 billion

  • Extension of Sheppard subway to Scarborough Town Centre: $1.7 billion

  • Mike Myers in a TTC uniform: priceless

(Sorry, couldn't resist.)
Also, the funding is for capital costs, not operating costs (staff and drivers, fuel, electricity, vehicle insurance, etc.). These are the costs of which 80% is covered through the farebox; the rest is covered by municipal subsidy. When you hear transit folk advocating for money from the gas tax, that's what it would go towards.

The other hidden controversy may or may not be significant. As noted in the Globe and Mail, the federal money may not be evenly distributed — it may start out this year at only $20 million, for example, with subsequent levels increasing. This would mean less help this year, when the City is in budget crisis mode. (The silver lining may be that, if it's at, say, $100 million by the end of year 5 and the agreement is renewed, it'd be harder to revert back to that $70 million five-year average.) The money may also come with strings attached; while the TTC's most urgent capital need is maintaining a state of good repair for its vehicles and infrastructure, the Feds may not find that need sexy enough, and may direct it to be spent on projects such as the above-noted smart card technology, which the TTC doesn't feel benefits them significantly enough (see discussion in the Ridership Growth Study, link above). CityTV's Adam Vaughan angrily tried to make a lot out of this during the post-announcement media question period, to which Miller and TTC Chair Howard Moscoe (surprise!) tried to calm him down and reassure him that the disagreements had been worked out. (Moscoe was surprisingly non-confrontational, although he did repeatedly stress the "this is only a down payment" issue.)

In all, the theme that was repeatedly pushed was, "This may not be perfect, but the money is still nothing to be sneezed at, and it is an historic arrangement in that all three levels of government are finally at the table." Variants of that line were repeated often as answers to media questions. I'd generally concur; it's certainly a nice change from the late 1990's, where there was a provincial government that was arguably hostile to Toronto and its transit issues, and a federal government that was hostile to the provincial government (and likely vice versa).

My major beef with the news conference? The CBC used their question to dog Martin on the sponsorship scandal. Regardless of your opinion on the issue, I don't think this was an appropriate time or place to bring that up.

Monday, March 29, 2004

TTC fares and inflation

The 50th anniversary of the opening of the Yonge Street subway being tomorrow, the local print media have been reflecting on what the subway, and the TTC, have meant to Toronto over the past half-century. The Toronto Star devoted their Greater Toronto section on Saturday to subway coverage, for example. Eye features a discussion between Mayor Miller and local transit advocates Gord Perks and Steve Munro on where the TTC should be going, and at the end there's a table showing how the price of a cash fare and a Metropass have increased over the past 25 years. Shock of shocks, in 1979 a cash fare cost all of 60 cents; in 1985, five years after the Metropass was introduced, it cost $38.50. Oh, to return to those glory years. Transit fares are out of control — we need a fare freeze to restore some sanity.

Enter a nifty little tool I've discovered lately: the Bank of Canada's inflation calculator. You enter in a dollar value of a good or service in a certain year, and it'll tell you what the equivalent dollar value would be today (or, for that matter, in any other year going back to 1914). Turns out that 60-cent 1979 fare is worth $2.04 today. The best days for the cash fare were 1985 to 1992, when it hovered between $1.50 and $1.60 in 2004 dollars — then the jump to $2 resulted in an equivalent 2004 fare of nearly $2.50. The Metropass has been increasing since 1985 (the first year listed in the eye table), but when you switch to constant 2004 dollars, the increase isn't quite so frightening — from $65.18 in 1985 to a high of $99.99 in 2001, as opposed to the actual listed prices of $38.50 to $98.75.

(The calculator also would have come in handy when musing about gas prices. Andrew Spicer gently reminded me in his blog that I had grossly underestimated the effects of inflation (or, perhaps it just didn't strike me how long ago 1997 actually is!). The inflation calculator would have been a help there. I got my driver's licence in 1994, and I seem to recall 50 cents a litre or so being pretty much the lowest price you'd see. Punching those numbers into the inflation calculator, I get a 2004 price of 60.6 cents per litre, which is a few cents lower than I remember seeing for quite a while, but it's not too far off.)

Those calculations don't make it any easier for Metropass users to shell out $100 a month (or for token users to get only a dollar back from their twenty), but they do add a bit of perspective.

(By the way, if you haven't already, I suggest you download the TTC Subway Song (614k MP3 file), composed and recorded during construction. Very cool, in an ultra-cheesy sort of way...)

Sunday, March 21, 2004

Policy Campaign vs. Leadership Campaign

I didn't really have a preferred candidate either way in the recently-completed Conservative leadership race; I didn't feel I identified with any of the candidates at all. (I suppose it doesn't matter, since I'm not terribly likely to vote for the party in the upcoming election.) However, I did tune in to the candidates' final speeches at the leadership convention on Friday night (which is more than I can say for the Liberal leadership convention — at least the Conservative vote had some suspense, if only it was whether Harper had enough support to win on the first ballot).

If you go by speech alone, I'd probably have picked Tony Clement. He lost a lot of points for his cheesy opening video, and I was a little bit uncomfortable with how he referenced SARS, but I was impressed with his enthusiasm, and with his method of delivery. He spoke on a small platform amongst his supporters, as was generally described by commentators, who seemed to interpret this as a move of desparation, and maybe felt smacked of a political stunt. I disagree; I felt it added to his presence; it made the speech more personal, and seemed resonant of the stump or soap box speech.

The biggest thing that struck me about the speeches, however, was a line used by Belinda Stronach. She said something to the effect of, "This isn't a policy convention; it's a leadership convention." The implication was that Conservatives shouldn't be voting on the basis of policy, but on the basis of who is the face that can dethrone Paul Martin and the Liberal machine. To me, that doesn't sound right. Yes, voters should be considering the actual candidate and their leadership abilities, but to me a leadership contest has a lot more to do with a referendum on what direction the party should be taking. Aside from The Coronation, the Liberal leadership "race" (such as it was) was distinguished by its divide between two political schools of thought. The new Conservative Party is faced with the task of uniting two different political parties and at least two or three different conservative factions, and so that policy debate should have been even more crucial in this case. Instead, the race turned into a question on the candidates' popularity and electability. Experience and perception is important, but a party leader isn't just a figurehead: (s)he's the one who leads the party from a policy perspective. Otherwise, the leader is just a puppet.

On the other hand, my first reaction to Belinda's statement: Perhaps it's fitting, coming from the candidate that's been criticized as being a puppet with no real policy platform...

Friday, March 19, 2004

MP3s and the White Album

If you've seen the movie Men in Black, you'll probably remember the scene where Tommy Lee Jones leads Will Smith into a lab where MIB have consolidated a number of various technologies from alien planets. Jones picks up a small item, tells Smith that it'll one day replace CD's, and adds the punch line, "Guess I'll have to buy the White Album again." As a Beatles fan, I got a kick out of that line. And after all, back then in 1997, I'd say the CD was still at its peak of popularity — what a laugh, the ultra-modern compact disc: obsolete.

Six and a half years later, of course, and the prevalence of MP3s is threatening (or, promising — depends on your viewpoint, I suppose) to fulfill that prediction. Although I don't think it applies for a specific album, there are quite a few songs that I now have in four formats: vinyl album, tape cassette, compact disc, and now MP3. (Actually, five formats, if you include vinyl 45's. Sorry, no eight-tracks, although I have a friend whose dad had an eight-track of Abbey Road.) It actually caught me by surprise the other day — and probably dated me — when I realized that the Beatles CDs have now been on the market for 17 years. I still remember when they came out in those black cardboard containers; the sound of the first one sounded great after hearing them on a bad turntable for years (although today the CDs even reveal limitations — compare the original CDs with the 1999 remastered Yellow Submarine Songtrack). It doesn't seem that long ago, yet when they came out, the 17 years since their last release seemed like an eternity.

In some ways, MP3s are great — not only are they generally convenient for listeners, but they also make it easier for bands to get their work out in the public. That doesn't make it any easier to look at your CD collection and see it as yesterday's technology, though. (Now all you young'uns know how those of us born prior to 1980 felt about our record collections!)

Anyhow, that's a long way of saying that James Bow has an interesting post this week on technology and its obsolescence. James speaks specifically about the device used to play the media (in his case, a DVD player), rather than the media itself (the DVD), which takes Men in Black and presents the other angle: that every music lover will have to buy a new player to listen to their new copy of the White Album.

Incidentally, as I started to write this blog, I did a quick Google search for "Men in Black" "White Album", to see if I could find the exact line from the movie. Turns out I'm not the only one who noticed that line and reflected on music reproduction technology's perpetual obsolescence.

Thursday, March 18, 2004

Business Taxes and Revenue Generation

(Slow blogging of late, as work has picked up a couple notches again.)

So the provincial government has partially repealed a law, introduced under the Tories, that prohibited some municipal governments (including Toronto's) from raising commercial property taxes, meaning that any tax increases had to be borne by residential property taxpayers only. Now, commercial tax hikes can be implemented, up to 50% of the residential tax hike. Toronto has proposed to implement a 3% residential tax hike, so now they are legally permitted to raise commercial taxes by 1.5%. (Andrew Spicer, who participated in the Listening To Toronto budget consultations, has a brief take on what this means for Toronto.)

I had assumed that this would be a good thing, but (if you go by the Toronto Star, at least) it looks like there's no pleasing anyone:

  • Editorially, Finance Minister Greg Sorbara is seen as actually cheating the city out of $27-million, because the city had been banking on the $54-million that would have been the result of a full 3% commercial tax hike. Not only does that sound to me like calling the glass half empty, and counting your chickens before they hatch [insert your own further clichés here], but it shows inconsistency. The Star would have likely argued that Dalton McGuinty's campaign pledge to roll back the tax cuts brought in by the Eves government in their pre-election Magna-"budget" didn't constitute a tax increase, because taxpayers hadn't seen the cuts yet. Now that the shoe's on the other foot, the Star is editorially trying to have their cake and eat it too. (I knew there were a couple more good clichés in there somewhere!)

  • Columnist Royson James complains that Mayor David Miller is breaking a campaign pledge to help out small businesses. (Again, James likely would have argued that the city needs new revenue sources and that the province had hamstrung the city by limiting its ability to increase taxes to residential taxpayers only.) He closes his article with the ominous implication that businesses will be leaving 416 as a result.

  • Finally, guest columnist Satinder Chera writes an opinion piece on behalf of the Canadian Federation of Independent Business, and (perhaps not surprisingly) picks up where James left off. The measure, in solving one problem, creates several more; the corner store, the local dry-cleaner, the restauranteur will be pushed out of business, your neighbourhood will decline, your kids won't be able to work there, etc.

I'd be interested to see what such an increase would actually mean to businesses. Chera notes that "on a $200,000 property in Toronto, the homeowner pays $1,313, the convenience store pays $4,623, and the small manufacturer pays $10,416 in municipal property taxes." By my math, that means a 3% increase means about $40 to the homeowner, and a 1.5% increase means about $70 to the convenience store owner and $156 to the manufacturer. The question is, what does a $200,000 commercial property represent?

An alternative approach might be to charge fees for certain items. I commented earlier on the concept of a coffee tax, which I estimate to be a similar order of magnitude to what a 1.5% commercial tax hike would represent.

An alternate way of taxing commercial properties could be a parking tax. A user fee, but applied to businesses, it would be a method of generating revenue from businesses without technically raising taxes, and it would fit in one of the Liberal government's potential budget approaches of "fostering conservation and sustainability of resources":

"The fourth approach is to ensure conservation of scarce resources. Users would pay more of the full cost for these resources in order to encourage conservation and appropriate use. This approach also calls for action to ensure that basic needs are met for all. It would free up money to be used to achieve priorities."

As an example, there's probably around 400-500 parking spaces at my workplace (a 12-storey office tower in North York); let's say they're taxed at $1 per space per year. That's only $500 generated from that building, which, when further subdivided across the tenants, is diluted even further. Or, let's say a fast-food restaurant has 50 locations in the city, with an average of 30 parking spaces each. The additional hit is only $30 per average location, but nets $1500 in revenue.

A parking tax would hit small- and medium-sized business less than it would bigger businesses that can better afford it. My local ValuMart has a small 30-space parking lot; that's $30. (The IGA down the street has none, for that matter.) Meanwhile, let's say the average big Loblaw's superstore has 300 spaces, and there's about 20 of them in the 416. There's $6000. Apply this across the entire city, and you're likely to get at least a decent figure. Better yet, it's a disincentive to new businesses planning on building monster parking lots — maybe you'll be more likely to think twice about exactly how many spaces you need, if you realize there's an annual fee for each space — and, if the fee is passed on to consumers through parking fees, it's an incentive to choose alternate modes of travel other than driving. More urban-minded (as opposed to suburban-minded) planners have lamented the prevalance of free parking in North American society for decades; here's one small step towards addressing that.

Add to this the observation that $1 per year — two cents per week — seems like a pretty low fee for a parking space. If workers in my building had to pay even a quarter as a daily parking fee, and let's say the parking lot is, on average, about half full (250 per day), that's over $15,000 over a 250-day year (compared to $500 at $1 per space per year).

On the other hand... a 1.5% business tax hike is probably far more politically saleable...

Thursday, March 04, 2004

Fuel costs and Kyoto

Leafing through a few things at work, I came across a copy of the Sustainable Transportation Monitor, a small periodical published by the Centre for Sustainable Transportation. (The issue in question, No. 1, March 1998, is available here as a PDF.)

In a section on how Canada can reach its Kyoto targets, the Centre suggests that vehicle usage reduction can be stimulated by increasing fuel taxes (page 12):

"How much would fuel taxes have to be raised to secure the required 15-percent reduction in automobile use? Deciding this depends on knowing the price elasticity of travel demand, i.e., the percentage reduction in vehicle-kilometres that results from a given increase in price. The best estimates of elasticity with respect to motor vehicle fuel are that the short-term elasticity (i.e., within five years) is in the order of 0.3 and the medium-term elasticity (5-15 years) is about 0.7. Thus the average elasticity for the Kyoto commitment period may be about 0.5. This means that a fuel price increase of 30 per cent would be required to achieve a travel reduction of 15 per cent. The Canadian average 1997 gasoline price of close to 60¢/litre (before GST) would have to be increased to about 78¢ (in 1997 dollars). This increase could be achieved by raising the current federal gasoline tax of 10¢/litre to 28¢, or by raising the federal and provincial taxes, now totalling an average of about 27¢/litre, to 45¢." [emphasis in original]

An average gas price of 78 cents per litre? Well, we're not too far off that. Here in the GTA I'd estimate average gas prices in the area of 70 cents, after taking fluctuations into account (even in the past couple of days it's gone from around 63 cents to around 78). That would be a price increase of about 15%, which, according to the elasticity estimates above, would result in a vehicle travel reduction of 7.5%. I'd be surprised if that effect actually has taken place, though; evidence on the roads, in the news, and in my work all indicate otherwise. Arguably that has just as much to do with out-of-control urban expansion, at least in the GTA, but I still think it would be interesting to update the elasticity estimates, since gas prices don't generally seem to be having as much affect on people's travel patterns as previously expected.

The advocacy for raising gas taxes by as much as 18 cents per litre (as a deterrent, rather than as a revenue generator) is also interesting in light of recent discussions on usage of the gas tax. Transit agencies and the Canadian Urban Transit Association, for example, are requesting a portion of the gas tax to be devoted to helping local transit (generally the figure is 2 cents per litre from both the federal and provincial gas taxes), yet progress is slow as governments deal with how they can afford to divert existing tax revenues. I don't think I've heard any politicians discuss raising the combined 4 cents per litre by actually increasing gas taxes by that much, rather than diverting existing tax revenues — I suspect it would probably be political suicide — and so it was a shock to see advocacy for an increase as high as 18 cents. If 4 cents is a problem, how much more so would 18?

Monday, March 01, 2004


Added a few. More to come in the future, but this is a start.