Federal, provincial and territorial ministers of transport will meet on Thursday in Vancouver, and for the many Canadians who rely on passenger-bus service to travel between communities, the meeting will be of critical importance.
High on the agenda will be the need to overhaul the policy and regulatory framework that governs the bus service. To say such reforms have been a long time coming would be something of an understatement. The existing system was established more than 50 years ago and has remained essentially unaltered since: Profitable bus routes must subsidize unprofitable ones.
This framework is more than outdated. It's broken. And it has been broken for some time.
A maze of regulatory burdens exists among federal and provincial levels of government that often include extremely specific service obligations. In some provinces, the industry is told where to run, how frequently routes must be serviced, what rate is to be charged and sometimes even what kind of equipment must be used. At the same time, the industry must increasingly compete against other modes of transportation, such as rail and regional transit that receive generous government subsidies, while attempting to sustain its own internal cross-subsidies between profitable and unprofitable bus routes.
The result is predictable: chronic and significant financial shortfalls for those bus carriers required to provide service to small-town Canada. Already, the country's largest passenger-bus operator, Greyhound Canada, has indicated that it may be forced to cease service to large parts of its rural network as a consequence of this broken regulatory framework.
Seven years ago, a Senate committee studied this issue in depth, taking more than two years to complete its report after extensive cross-Canada hearings. It recommended that the federal government enact economic deregulation, but in concert with a rural bus subsidy program of $30-million annually. The committee also warned that that deregulated bus markets would lead to the abandonment of large portions of small-town Canada if the existing internal route cross-subsidies were removed.
Inevitably, some form of financial support will be needed if small-town Canada is to remain connected to the public transportation network. Continuing rural depopulation combined with the growing shift of economic activity into large urban centres has caused increasing operating losses on these unprofitable smaller bus routes.
Meanwhile, governments continue to pour billions of dollars into entities that compete directly with the private-sector bus industry. As a consequence, there has been a precipitous drop in profits on bus routes in the heavily populated travel corridors, mostly in Central Canada, that were formerly being used to finance the increasing losses being incurred on smaller unprofitable routes. The situation is no longer sustainable.
The only long-term solution is to deregulate the bus industry and divert a small portion of government financing from the large travel corridors to support the only public connecting-service available to small-town Canada.
To put it into perspective, a $30-million annual federal contribution is only 2.5 per cent of what the government spent last year in direct subsidies to the other passenger modes such as urban transit, air, intercity rail and marine ferry. The provinces spent even more than the federal government on direct modal subsidies last year, largely to urban transit.
A number of provincial governments have expressed a desire to work with the industry and tackle the passenger-bus challenge, but reforms of this significance will not occur overnight. The meeting of ministers on Thursday offers the opportunity to take two important steps.
First, they should establish a working group composed of industry and government policy-makers to recommend lasting reforms that will preserve passenger-bus service in Canada as a sustainable undertaking.
Second, they should set in place interim arrangements that will ensure passenger-bus service is able to continue while this working group completes its task. This would hardly constitute a significant expenditure. For example, Greyhound Canada has indicated that it is willing to continue to bear 50 per cent of the existing financial losses associated with maintaining rural network service for the next year, provided that governments assume the other 50 per cent through some mix of financial and short-term regulatory measures.
In every respect, the fundamental principle going forward must be one of partnership between government and industry. That is the key to securing a solution that serves the public interest and the needs of Canadians in the thousands of communities that will be affected if nothing is done.
Don Haire is president of Proteus Transportation Inc., former president of Voyageur Colonial Bus Lines and an adviser to the Canadian Bus Association.
