National Transit Program One-Way Ticket to Higher Spending

Commentary, Role of Government, Uncategorized, Wendell Cox (historic)

For some time, there has been pressure from the nation’s largest cities to establish a federal transit program. Last month’s Big City Mayors Caucus report “Our Cities, Our Future,” claims that Canada is the only G8 country without a national transit program.

Before Canada jumps on this bandwagon, it would do well to examine just what has happened to national transit programs elsewhere. It is true Germany, France and the United Kingdom have had national transit programs. However, there is more to the story.

Much of the national program was cancelled in the U.K. during the 1980s, as all bus service was either privatized or competitively tendered and most transit subsidies eliminated, both national and local. National programs in both Germany and France are in a process of decentralization, as their governments withdraw their support. Moreover, in both countries, considerable amounts of service are being competitively tendered.

Japan is an even more unusual story. The transit systems of Tokyo and Osaka, the two largest in the high-income world – carrying 10 and four times respectively as many riders as all Canadian systems – are largely private. There is little subsidy, even to the publicly owned subway systems.

That leaves three others in the G8: Russia, Italy and the United States. Russia hardly seems a model for Canada, while Italy is seeking to undertake decentralizing reforms similar to France and Germany, albeit more slowly. The Europeans have learned the expensive lesson that when funding is raised at a different level than it is expended, it is spent less carefully (read much of it will be wasted). This is especially true when public monopoly service mechanisms are employed, as in Canada and most large European urban areas. The high costs of monopoly are the principal reason parliamentarians have forced transit systems in London, Stockholm, Copenhagen, Germany and elsewhere to competitively tender their services.

That leaves the United States as the only high-income G8 nation where there is a national transit program that seems unlikely to go away or be diminished. And yet the U.S. is the poster child for why a national program is likely to lead to financial disaster.

The U.S. program was established in the 1960s and expanded in the 1970s. Since 1970, annual transit expenditures have increased 375 per cent (inflation adjusted), while ridership has risen only 15 per cent. Expenditures per passenger kilometre have increased more than 325 per cent, after adjusting for inflation. Not even the obscenely increasing U.S. health care costs have risen that quickly. As much has been wasted on transit – where waste is defined as spending above inflation – as the United States has spent on its 70,000-kilometre interstate highway system. Today, the U.S. spends 4.5 times as much on transit per passenger kilometre as on all automobile expenditures – road-building, buying cars and operating them.

The Big City Mayors Caucus report was surrounded by the usual claims that more transit would reduce traffic congestion. While this appears to be believed by many, there is not a shred of evidence that it is true. Planners cannot even torture their computer models to predict such a thing. In the U.S., billions have been spent to build new rail systems in at least 15 urban areas. Yet, in every single one of the urban areas, traffic congestion has continued to get worse. In some places, transit ridership has continued to drop. In others, there have been gains, but they have been small compared to the continuing increase in automobile use. The new rail urban areas have seen traffic congestion rise just like those not building.

The story is the same in Western Europe – new transit systems do not reduce traffic congestion. The reason is simple. Transit can compete with the automobile only to the largest downtown areas, which are the only places to which high levels of transit service can be provided at a price that can be afforded.

However, downtown areas typically account for only 10 to 20 per cent of metropolitan area employment. Thus, for 80 to 90 per cent of workers, transit is not an option and no society can afford to provide it. Finally, a significant portion of the traffic increase is large trucks – which take up more than three times the space of a car – and commercial trips. Truck trailers are not going to take the bus, nor are plumbers or cable-television service people.

Unless the purpose of a national transit program is to spend a lot of money, then the proposal should be indefinitely tabled. A national transit program will not change the way people travel in the nation’s urban areas.

This appeared on the Globe and Mail website, July 7, 2006