Regina, 4 June, 2013: The Frontier Centre has released a study today entitled Getting More Value for Money: Restructuring Saskatchewan’s Bus Transportation Subsidy Policy. The authors of the paper are Peter Holle, president, and Steve Lafleur, a policy analyst with the Frontier Centre for Public Policy.
Building off of Frontier’s recent study A New Regulatory Framework for Canada’s Inter-City Bus Industry, the authors make specific recommendations for improving service levels and reducing prices of inter-city busing in Saskatchewan. They argue that the monopoly system currently in place is failing to deliver value for money, and present an alternative model that would inject competition into the industry.
The Saskatchewan Transportation Company (STC) currently has a monopoly on inter-city bus services within Saskatchewan, which provides reasonably high quality service. However, it required $10.5 million in subsidies in 2012. While this does support fairly extensive service, it is a large cost relative to the declining ridership levels.
The current STC model uses the profitable routes between Regina, Saskatoon, and Prince Albert to subsidize unprofitable rural routes. Cross-subsidies mask the true cost of rural service, and keep prices artificially high for the most popular routes. Experience from the rest of the continent tells us that prices would decrease and service levels would increase on the profitable routes if they were open to competition.
The authors argue for eliminating regulations on prices, scheduling, and market entry, to allow any carrier that meets safety standards to operate in Saskatchewan. While some routes may not be economically viable without subsidies, they recommend a system of competitive tendering whereby the government would award contracts for unprofitable routes to the carriers willing to operate for the least-cost subsidy. Variants of this system are in place in several US states.
Rather than operating as a bus provider, STC should be turned into a purchaser of bus services. Liberalizing the market would end the practice of subsidizing low-income rural riders on the backs of low-income urban riders, and would allow low-cost carriers to enter high traffic routes.
For more information, and to arrange an interview with the authors, media (only) should contact:
Tel: 204 957-1567 x102
Tel: (204) 957-1567 ext.104
Cell: (204) 228-5599