Consider this hypothetical scenario: a very successful company has grown to the point where its consumer base is roughly 100,000, but due to mismanagement, evolving technology, and changes in consumer preferences, that company’s consumer base drops almost 75 per cent to 25,000. As a stakeholder, should you continue to invest in the company to appease a small cohort of loyal consumers, cut your losses, or revamp the business model? Depending on the situation, the latter two options seem to be the most feasible.
In this instance, we are talking Transit Cape Breton.
During its peak, Transit Cape Breton had a ridership of 1.25 million, which has dropped to 320,000 in 2013. Annually, it receives $3 million from the CBRM, however, planned cuts will push that number down to $2.3 million. Predictably, there has been an outcry from the community, mostly from seniors, the unemployed, and the disabled. The largest criticism has come from proposed route reductions and the implementation of a single fare.
Government-funded mass transit is a classic example of the information problem, and to a certain extent the public goods problem. In this case, government is unable to assess accurately the need for transit. Moreover, deciding how, where, and when to provide a service is a political process that results in low-quality, inefficient outcomes. These inefficiencies, however, do not indicate that Cape Breton should not have a transit system–public or otherwise; it indicates the need to revisit the business model and adapt it to the omnipresent “rural disease”–an outflow of young skilled workers, an increase in the amount of seniors, and a deficit of economic development.
There are several ways, however, that the CBRM could develop a profitable transit service.
The addition of smart card passes should be a priority. Reloading them is effortless and they would benefit seniors. Moreover, Transit Cape Breton should engage with the Cape Breton University Student Union and begin negotiating a student transit plan. In Kingston, Ontario, the Alma Mater Society (AMS) at Queen’s University charges students a mandatory $46.50 for an 8-month bus pass. Transit Kingston’s largest source of revenue is the deal they have with the AMS. According to the 2011 Transit System Review Report, a majority of ridership attends the university. The report recommends rearranging routes, zoning, and transit fares to reflect this fact.
Secondly, the municipal government has taken a respectable stance on cutting routes that have low ridership–obviously the government cannot commit limited resources to an area with very low ridership at the expense of high volume zones. However, there are ways in which the government can replicate that service through promoting private enterprise or creative resource allocation. In Richmond County, Nova Scotia, the transit system, albeit a very small one, is a non-profit community based transit line. Facilitating the creation of something similar in communities such as North Sydney, Sydney Mines, Glace Bay, and some areas of Sydney would be beneficial. Additionally, the CBRM could use school busses when they are not in use to serve low volume routes.
Lastly, the CBRM should consider partly- or fully-privatizing transit on Cape Breton Island. The United Kingdom privatized transit in 1985, which resulted in lower costs through increased productivity and employment cuts. York Transit, GO Transit, and Phoenix Arizona have contracted out certain portions of their transit, saving $2 million annually. In Cape Breton, contracting small busses to service low volume routes or amending by-laws to allow independent operators to run certain routes should be an option.
These are only some policy options the CBRM can pursue and most of them have a proven track-record of cost reduction and service improvement. What we can say for sure though is that Transit Cape Breton is in need of a massive overhaul.
Corey Schruder is an AIMS on Campus Student Fellow who is pursuing an undergraduate degree in history at Cape Breton University. The views expressed are the opinion of the author and not necessarily that of the Atlantic Institute for Market Studies