Look at options for STC, Frontier Centre says

Frontier Centre, Media Appearances, Saskatchewan, Transportation, Uncategorized

Joe Couture, The StarPhoenix, December 12, 2013

The latest transfer of cash from provincial coffers to the Saskatchewan Transportation Company is for a needed capital project, not increasing operating costs, according to the minister responsible, Don McMorris.

Regardless, it’s time for the province to consider how best to run the bus service in the future, according to the Frontier Centre for Public Policy.

McMorris said more than $3.8 million allocated last month to the STC is for a new steel skeleton for the existing maintenance facility in Regina. The work is needed to ensure effective and safe operations, he said.

It’s been an expensive year for the province and the STC. The government added an extra $500,000 earlier this year to an already-record $10-million STC operating grant. That subsidy totalled only $1.6 million in 2003. Mc-Morris acknowledged such ongoing increases aren’t sustainable.

“We realize it’s a public policy of our government to subsidize the bus company, but we have to make sure that we have that subsidy under control,” he said.

He said decisions to cut three routes and to increase fares twice this year resulted from trying to keep the subsidy flat.

McMorris said his mandate doesn’t yet include discussing options for changing the STC in the future. But that’s exactly what the government should be doing, said Steve Lafleur, public policy analyst for the Frontier Centre.

His organization is encouraging both Saskatchewan and Manitoba to consider a model that has seen success in the state of Washington.

“The model STC has – the state monopoly model – isn’t as economical as the model that Washington state has, where they actually tender it out on a competitive basis,” Lafleur said. He said public subsidization is still required, but in Washington, bids are requested for each of four lines, with companies asked what they require as a subsidy to provide the desired service. Any problems can be addressed with the contractors instead of spending more money, which is currently STC’s only recourse, he said.

Between 2007 and 2012, the subsidies in Washington state totalled slightly more than $4 million – and service was actually expanded, Lafleur said.

Manitoba, which used to contract to Greyhound, paid, in 2010, a fraction of what STC cost, but still far more than Washington’s bill. With Greyhound pulling out of some Manitoba routes, the Frontier Centre recommends that province also look at Washington’s model, which has favoured smaller regional bus companies that are already in operation.

It’s also good advice for Saskatchewan, given the STC is going to keep getting more expensive, Lafleur said.

“That’s the trajectory. There’s no reason to believe that it’s going to abate. And while the argument is that STC maintains rural ridership, the reality is that a lot of these routes just won’t be seen as sustainable and will get cut anyway,” he said.

The STC isn’t “disciplined by any real market forces” and doesn’t make the service as convenient as it could be – or as costeffective for passengers or the province, Lafleur said.

“I don’t think it’s a leftor a right-wing thing to say we want to get a better level of service for less money. That should just be common sense,” he said.