Good afternoon. I’m Doug Switzer, president of Motor Coach Canada, the national association representing the private transit operators of Canada, the motor coach operators supplying scheduled, charter, transit, and tour services.
Joining me today are Réal Boissonneault, the chair of Motor Coach Canada and president of Groupe Tourcar and Autocar Excellence, and Trevor Webb, director of transit operations with Pacific Western Transportation.
We very much appreciate the opportunity to speak with you today regarding the establishment of a national public transit strategy, an idea that we strongly support and feel is long overdue.
While we support the need for a national strategy, I do have one concern with calling it a “national public transit strategy”. I would like to suggest that you may consider renaming it the “national transit strategy”. The name “national public transit strategy” implies a limit to the scope of the strategy, a limit that excludes the private providers of transit services.
The important role that private bus operators play in providing transit services is all too often overlooked when discussing transit policy. Strategies for expanding transportation options for the movement of people and reducing reliance on personal automobiles have traditionally focused exclusively on taxpayer-funded public transit systems, ignoring the private bus operators.
We believe it’s time for a fresh approach, one that recognizes that publicly funded systems are not the only--or even necessarily the best--way to provide transit services. The private bus industry can and should be a full partner in the provision of transit services, working with governments at all levels as well as with the public transit systems themselves. We hope that any national transit strategy will reflect that perspective and include the private transit operators in the new strategy.
A fresh approach to the provision of transit services is desperately needed. If this committee’s deliberations become simply a process for demanding increased government spending to prop up an outdated service delivery model, it will be a wasted opportunity.
Simply throwing more money at the issue is not the solution. Governments at all levels--and indeed, all across the world--are facing severe budget constraints and continuing to spend beyond our means. Running up deficits is not sustainable.
We need to look at how transit services are delivered to see how we can break out of the same old circular arguments about a lack of funding. We hope this committee will do that when it develops a national strategy. Let me be clear. We do understand that more funding may indeed be needed, but if funding is the only issue addressed by the strategy, the committee will have missed an opportunity to articulate the bold new vision that’s needed.
We would like to make three specific recommendations for inclusion in the national strategy.
First, we recommend that transit systems receiving federal funding be encouraged to partner with private operators by competitively tendering for the operation of their bus services.
Second, we recommend that private transit operators be treated the same as public transit operators with respect to tax policies, safety regulations, and other government policies.
Finally, we recommend that publicly funded and operated transportation systems be discouraged from competing directly with private operators, either in scheduled service or chartered services, unless they can demonstrate that the public need and convenience aren't being met by the private operators.
Many municipal transit systems are already successfully partnering with private operators because of the significant savings they can achieve by doing so. One estimate is that nearly a third of the systems in Canada are already contracting out at least part of their services.
Trevor and his firm, Pacific Western, have extensive experience in this area, and I’d like to ask him to take a moment at this point to discuss that experience.
The bottom line is that the savings to taxpayers that can be achieved by partnering with private operators are substantial. A recent study conducted for the Ontario Motor Coach Association compared the operating costs of a group of private carriers with those of large regional public transit operators and concluded that competitive tendering of bus operations could save the public transit systems approximately 21% on their operating costs. We’ve provided a copy of that study to the clerk. I understand that he'll be circulating a copy of it to you shortly.
I want to dispel one myth about contracting out services: the idea that savings are achieved by replacing well-paid union jobs with lower-paid non-union jobs. That’s simply not true. Most private sector operators that would be able to take on significant transit contracts are in fact already unionized and their drivers are paid wages similar to those of public sector drivers.
Private operators are able to achieve lower operating costs through better equipment utilization, more flexible work rules, lower maintenance costs, and lower management overhead costs--in short, through higher productivity and efficiency levels. These savings can be returned to taxpayers through lower transit fares, reinvested by systems by expanding services, or used to reduce municipal, provincial, or federal subsidies in order to reduce budget deficits.
How the savings should be spent is a decision for governments to make. You may wish to make a recommendation about that in the strategy, but what we can tell you is that the savings are there to be had if we have the courage to change our thinking--and they are substantial.
We would therefore recommend that the national transit strategy contain a recommendation that all transit systems should explore possible partnerships with the private sector for the provision of bus operations. In our view, it should be a requirement for receiving federal funding that such a review of the feasibility of tendering services is undertaken.
Our second recommendation is that governments at all levels cease discriminatory practices that unfairly treat public and private transit operators differently. For example, sales tax is charged on tickets sold by private operators of scheduled bus services, but not on transit fares. Public systems are exempt from some of the safety requirements that private bus operators have to meet. Also, in some cities, privately operated buses cannot use high occupancy lanes whereas public transit buses can.
The national transit strategy should place private and public transit operators on an equal footing as equal partners in the transportation system. Private bus operators should be treated the same way that public transit is with respect to certain tax issues. Private buses should have the same access to infrastructure as publicly operated buses. Also, all bus operators, regardless of whether they are public or private, should comply with the same safety standards.
Finally, it is unnecessary and wasteful of taxpayers' dollars for publicly funded transit systems to expand their taxpayer-subsidized service in direct competition with existing scheduled services being offered by private operators. Expanding public transit service into areas already being served by scheduled service from private operators--and requiring additional subsidies to displace existing services that were operating without subsidy--is a waste of taxpayers’ dollars.
It's equally unproductive for government-funded systems to begin aggressively expanding into the provision of charter services--again in direct competition with private operators. This forces the private sector operator to reduce or even abandon their service to that community, which then has to be replaced by more taxpayer-subsidized services. This insourcing by transit systems--displacing viable private services with services requiring taxpayer subsidies--is a trend that should be discouraged as a waste of valuable resources that could be spent better elsewhere.
In the end, the goal of the government-run systems should be to increase services to the public, but not necessarily public services.
With that, I’d like to turn it over to Réal to make a few concluding remarks.
Members of the committee, thank you for allowing me to be here today.
I share your interest in public transit, having used regularly the LRT in Edmonton, the GO Train, the subway, buses in Toronto, buses in Vancouver, and buses in Halifax, and once I'm through my residential renovations, I will be using the LRT in Calgary.
But today I wanted to give you a different perspective on public transportation, and that is about using a different kind of transportation fuel, that is, looking at natural gas. It is being deployed throughout North America by a number of public transit authorities. It is now accounting for 20% of all new bus orders, because natural gas is abundant, affordable, clean, and reliable. I think it's important to understand those concepts.
On the next slide that we have here, which I am sure will challenge your reading ability, suffice it to say that for anything I say that is forward-looking, as an investor in Encana, or as a future investor, please take it with caution. Now we can go on to the next slide.
In terms of looking at Encana, I just want to give you a very quick overview. It is a Canadian company. We have natural gas plays throughout North America. Again, one of the key elements to our portfolio is that, in terms of looking at providing that for different jurisdictions, we're the largest producer of natural gas.
As we start looking at one of the elements in terms of natural gas, as I indicated, it's not only abundant—and I'm going to show you something around that—but affordable, and it's clean. So it may be looked at in terms of deploying that not only for the public sector, but also in terms of end users. Also, it's reliable, and it certainly is a domestic solution, which is an important consideration when you're looking at fuel sources.
One of the elements around natural gas is that, again, it offers a competitive price for vehicles. This is important as you start looking at public transit, where the fuel costs have been increasing. Then there are also the health benefits, and you're certain to see the social benefits being factored into electricity regulations that are coming out of Environment Canada. This is a big component in terms of looking at “why natural gas?”: looking at air quality and, again, important elements to that.
The other aspect to looking at natural gas highways is looking at the creation of jobs and looking at government revenues through the royalties and so forth and also in terms of economic growth. Again, I think it's important to look at how abundant it is. When we get to the next slide, you'll see a map of North America, roughly, and again, I think the important takeaway from this slide is simply that we have a 100-plus years of supply.
In fact, I think what's interesting is that the new United States Energy Information Administration recently indicated that gas production has been increasing. It is now at a new level of 66 billion cubic feet per day, yielding a tremendous surplus supply in the U.S. Again, that's an important element.
In looking at the next slide, you'll see that this is instrumental in terms of pricing. You'll see on the right-hand side of those graphs that the price of oil and the price of natural gas are at a gap. That has occurred since 2008 and that's what is creating the opportunity with natural gas in terms of affordability.
You might ask if it will go back up. No, because again, since 2008 you're getting surplus of supply, and the supply is so abundant compared to estimates from about five or six years ago. So one of the elements to this is that, as you can see on the right-hand side of that graph, there are possible fuel savings of between 20% and 40%, depending on the region and your driving habits.
Again, these are certainly elements to take a look at when you start looking at public transportation.
In the next slide, you'll see simply that natural gas accounts for some really interesting emissions reductions in carbon dioxide, carbon monoxide, sulphur oxides, nitrogen, mercury, and particulate. Again, these are the elements that are driving the cities' clean air initiative in the U.S. A number of the cities, which I'll show you later, have switched to compressed natural gas. Again, I think this is an important element, particularly in large urban areas where you have other fuels that are generating large emissions.
I think one of the other interesting aspects is that when you look at the Senate report, you see that it certainly had some good information on looking at natural gas. The report accounts for 29% of the energy consumption being in the transportation sector, while in fact transportation accounts for only 1% using natural gas.... Again, there's a lot of opportunity to use natural gas for the transportation sector. However, that said, the transportation sector does account for 36% of GHGs. So again, there is a big opportunity for Canada to lower its emissions through the use of natural gas.
One of the elements in terms of how we position natural gas is looking at what the rest of the world is doing. That's an important element to consider. There are 12 million natural gas vehicles in the world, but there are only 140,000 in North America. You have jurisdictions such as Italy, which has over 600,000 natural gas vehicles, and they import 89% of their natural gas, most of which comes from Russia, by the way.
Again, if we're looking at clean air emissions and affordability, in many jurisdictions you have OEMs producing natural gas vehicles. Certainly that's true in terms of what we would call medium-duty and heavy-duty vehicles. When you start looking at what is available on the marketplace in terms of new vehicles, there are roughly 63 passenger vehicles, 28 light commercial vehicles, 42 buses that are manufactured to run on natural gas, 26 medium commercial, and 12 commercial.
One of the most instrumental manufacturers of natural gas engines in North America, and indeed the world, I would say, is Westport Innovations in Vancouver. We have a homegrown innovation manufacturer of natural gas engines, which I think is very important to note.
Encana has been looking at how natural gas can be deployed, particularly in terms of how we might work with cities. That brings in the transit buses, but also the airports and return to base. When you think about all the shuttles that transport people, a very important component would be to look at natural gas. A number of airports throughout North America have embarked upon compressed natural gas as their fuel source for some of their shuttles.
Again, using natural gas in a number of transportation areas, we could look at green corridors, particularly from Quebec to Windsor, and Edmonton to Vancouver, where there is heavy transport, and also in terms of operations, if you will, as well as off-road vehicles that use natural gas.
What we have focused on with respect to cities is looking at transit. We have been working with cities such as Edmonton and Calgary and we're planning to work with other cities in terms of giving them information and looking at what is out there for natural gas transit buses.
But as you start looking at municipal fleets, again, there's a whole host of them, such as garbage trucks. How many of you have been at home when the garbage is picked up? The garbage trucks idle and you get a lot of emissions. If you deploy them with natural gas, they're quiet, and the drivers say they're a pleasure to drive. That goes for transit buses as well.
Certainly, some jurisdictions, as I indicated, are also deploying natural gas for taxis and some consumer vehicles as part of the service component to transit authorities. The incremental cost differential for a transit bus, on average, is roughly $40,000. You get roughly about $11,700 in fuel savings per year, but there are also operational savings in terms of maintenance. You actually have a CO2 emissions reduction of about 25,000 tonnes per year per transit bus. Again, that's an important element.
I think what's important here is that many transit authorities are now starting to look at deploying natural gas for a number of reasons, which I've already alluded to.
In terms of looking at some of the payback, I've provided that in the presentation, but I think it's important to note some of the jurisdictions that have embarked upon natural gas transit buses. L.A., for example, retired their last diesel bus in January 2010. They are now running on natural gas. New York, Washington, Boston, Fort Worth, Dallas, Cleveland, Seattle, Denver--the list goes on and on in terms of the deployment. I think that's important.
There have also been some interesting innovations, if you will, in terms of that deployment. In DeKalb County in Georgia, for example, they've ordered natural gas trucks. They'll use the natural gas from their landfill site as the fuel for those trucks.
Mayor Hayward out of Pensacola said that moving to natural gas vehicles is going to have an huge impact on the overall air quality for the entire region.
Tulsa Transit, for example, is looking at paying $3 per gallon right now, and they're going down to $1 per gallon with natural gas.
A number of jurisdictions, including New York, have gone to that. Currently in North America, between 11,000 and 15,000 natural gas buses are operating.
I don't know whether the committee would consider the school bus as public transit, but it's an important vehicle to all the school divisions that are seeing increased transportation costs based on fuel. A number of OEMs--original equipment manufacturers--manufacture school buses that could be deployed on that side as well. I think it's an important thing to consider as you start to look at a public transport strategy.
We talked a little bit about garbage trucks. The interesting aspect there is certainly on the air quality and the savings and the quietness in neighbourhoods. Many jurisdictions, as I've indicated, have a number of trucks that operate on natural gas. Suffice it to say that I think it's important to look at natural gas as a transportation fuel.
The one recommendation I have--I do know the light's on, Mr. Chair, and I know I'm being drawn to a conclusion—is that municipalities need some support, certainly from the capitalization side. Again, I think the provinces, and maybe the federal government, could look at how that might be deployed. In looking at how it might be deployed, my one recommendation is to undertake a study to really look at how that might happen, at what some of the restrictions are on barriers for OEMs, and at what standards would need to be adopted.
With that, Mr. Chair, I'll bring my presentation to a close.