Delivered to the Toronto Railway Club April 23, 2001 (Thanks to Chadwick Severn for e-mailing us this transcript)
Challenges and Partnership
There is a customer that I know quite well. They pay the railways well over $50 million per year, and they pay their bills on time; actually, they pay them in advance. If they need additional track capacity, they pay for it, and the railway charges them back for using the tracks that they paid for. They pay for their own crewing needs, with healthy overheads attached, and they pay for maintenance on the tracks that they use. There is no worry that this customer will succumb to the allure of "the other railway"... or change their delivery methodology to truck. Actually, as a customer, there is very little marketing or management required, and they are in a business that is constantly growing.
Of course, the customer that I am talking about is GO Transit, and the commuter rail business at large.
Since 1967, GO Transit's business has grown from two million passengers per year to over 40 million in the year 2000. In the past five years, our business has grown by 40%... and it will continue to grow as long as there are people moving into the Greater Toronto Area.
Our growth trends are primarily influenced by Federal immigration policy. As it stands now, the GTA will grow by 100,000 people per year. Now, a lot of those new people will drive their cars for work and pleasure, but GO seems to be able to capture a unique niche of that new market by providing a fast, safe, and reliable service. This quality of service is derived from the basic business principles of the railways; GO has capitalized upon it to attract sophisticated commuters to our service.
But, we are now challenged. For over 30 years, our funding source was the Provincial government. Now, it is the municipal property taxpayer who pays our way. On the operating side, we do not need much assistance, as we recover almost 90% of our direct operating costs from the farebox. When the Provincial government stopped funding GO Transit, we were at the start of a major growth cycle. We have now used up all of our spare capacity in the system and are looking at ways to provide more train services. Where we need help is in the capital costs of growing our business.
While the various levels of government debate who downloaded to whom, and why none of them can go it alone, our customers complain about the crowding on the trains. Over time, they get frustrated and leave - another customer we cannot attract back. Luckily, new customers arrive faster than old ones leave, so we do keep growing, but we have left a lot of customers behind and have lost daily opportunities to capture more.
So, our challenge is to grow our business...and we want to do it by paying the railways for more service. We have a 10 Year Plan that just keeps up with the current congestion of today, by providing a few more trains (16 train runs, to be precise) in the morning (and of course evening) rush hours. We know that this will take more equipment - actually 12 more trainsets, and we have ordered two trainsets already. To carry more passengers, we also know that we will have to build a few more stations (about 16 have been identified; we are building a few each year) and a lot more parking... we figure that we will have to average at least 2,000 new parking spaces each year.
We also know that, to run the trains, we will need more track capacity. Triple-tracking of the Lakeshore corridors; double-tracking of the Georgetown and Milton lines... as well as selective passing tracks on the Bradford and Stouffville lines. Rail-to-rail grade separations are also required along the York subdivision and at the crossing of the North Toronto and Weston subdivisions, and a lot of work will be required at Union Station. The railways did wonders by holding together the basic infrastructure for over 70 years...but, at the same time, they did the public a great disservice for not modernizing any of the facilities when they had various government bodies willing to pay for it. Now, it all has to be done in a compressed time period.
In the late 1950s, the railways turned their backs on passenger rail service. This happened at the same time that the automobile and trucks swept through North America, converting us into suburban, auto-oriented communities. Passenger rail lost business to the cars...and freight rail lost business to trucks. But, commuter rail is making a comeback, and its principal ally is the private automobile. As more and more people live in urban areas and want to drive, congestion grows daily and the option of using rail for transportation becomes more attractive. North America is now having a rail renaissance, as commuter rail operations spring up wherever there is traffic congestion.
Surprisingly, the railways still fight the commuter rail business... looking at it as either a nuisance or an inconvenience; they refuse to look at it as an opportunity.
At the same time, the railways protest that they are over-regulated by government and that they should get government assistance for infrastructure, as truckers do.
It is the two elements of GO's need for infrastructure, and the railways' need for a positive image, that brings together the prime ingredients for partnership.
First, let me discuss how governments work. Who do politicians listen to? They listen to their constituents, who can vote them in or out of power every election period. Now, how does the public view railways? At an annual dinner here a few years back, I listened to an eloquent speaker explain why the railways do not have a good public image. You are viewed as being out of date; you disturb people with your whistles; you cause GO Trains to be delayed - freight is put in front of people. Why would a politician want to favour a railway? Would his constituents think that he or she was paying attention to the right priorities? No!
What the railways need to do is improve their image with the public. You need to show that you do help the environment. You need to show that you do help the economy. You need to show that you do help the commuter, and that you are a solution to gridlock in our urban centres. Get the politicians hearing that the public likes you and wants you, and you will discover that they will not want to over-regulate you. You may even find that the politicians would want to help you.
So, work with commuter rail... it is to your political advantage.
Second, let me talk briefly about P3 - public-private partnerships. It is the mantra of this Conservative government in Ontario, and the Federal government in Ottawa marches to the same drumbeat. Infrastructure projects need to have an element of private involvement. So, where do the railways need to improve their aging infrastructure in the GTA? What about the congestion points on the York subdivision where the Weston subdivision overlaps? What about the single-track crossings of creeks along the Milton line? What about the track around your yard sites? In most cases, these are all locations where GO service runs, and occasionally conflict with your services.
Well, gone are the days of 100% government dollars to fix up the track for GO, but we may be able to get 75% of the dollars. If the railways came in with us as a partnership, we could fix up the aging signal systems, construct double track, and improve crossover operations. If you were willing to bring 25-cents-on-the-dollar funding, we should be able to leverage that into one-dollar funding by tapping into municipal, Provincial, and Federal infrastructure funding sources. These improvements would help GO and the railways. It would show that the railways were willing to work with the public to improve everyone's lives. Not only do the railways get better infrastructure out of the deal, but they also grow their billings to GO Transit. I would welcome those kinds of increased payments.
This is what I am going to be pushing for in the next year or two. Our challenge at GO is to get better service out to the customer. It is crucial that you, the railways, be active partners in how we do it. You run the railways. You know how to provide safe, fast, and reliable service. Instead of moving "frozen chickens," as I have been quoted as saying, we also want you to move more of our customers. In the long run, it will help all of us.
Thank you for listening to my sales pitch.