Should the Scarborough TTC expansion be approved? That sounds like a political question, but is it really? If you look at the arguments for and against it, they all seem to be based on the economics of such an expansion. If so, shouldn’t the TTC Scarborough expansion be, at least partially, evaluated based on an economical analysis then? If so, the Scarborough TTC expansion decision should then be evaluated in terms of efficiency, equity, and opportunity cost. Other important parts of the analysis would include a comparison of the costs to the benefits, the source for the funding of the TTC expansions, the fairness of implementing or not implementing such a project and the goals of the TTC.
The TTC website says their mission is:
That is a fairly ambiguous definition that leaves many questions to be asked and many potential inferrals to be made. From this statement it is fair to state that the goal of the TTC is essentially to provide transportation to the residents of Toronto. The mention of efficiency is also key.
Let’s look at some background information on the proposed expansion. The Scarborough TTC expansion is a proposed subway stop and LRT network meant to better connect Scarborough to Toronto’s transit network. It is expected to cost $3.35 billion, up 59.7% from the original estimated cost of $2 billion. City estimates are that the extension will save affected commuters up to five minutes per trip despite frequent anecdotal evidence placing estimates much higher. It is possible actual costs may be 50% higher than currently estimated and actually reach $5.02 billion. Meanwhile the estimate for new riders it will attract has fallen to 2300 from an original estimate of 4500. This project is not only highly priced in absolute terms but is also highly priced relative to the benefits it brings. It is expected each new rider attracted will cost an average of $1.45 million. The project will be funded by a combination of the federal government, the provincial government and the municipal government. The federal government has pledged $1.48 billion and the provincial government has pledged $660 million.
It is quite obvious that the planned system is not efficient. The costs are massive compared to the benefits. As stated before, $5 billion will go towards cutting off the commuting time of a Scarborough commuter by a measly five minutes on average and attract an unimpressive amount of 2300 new commuters onto the TTC’s transit network. This is as inefficient as it gets, completely against the TTC’s stated mission of efficiency.
The goal of this addition is to provide equity to the Scarborough commuters compared to their peers in other parts of Toronto. This addition is equitable since it would give Scarborough residents the same transport options as the ones that commuters elsewhere in Toronto have.
An important question is whether the proposed expansion is fair. Is it fair to the people in Scarborough who pay taxes and will now get equal travel opportunities to others in Toronto? Yes. Is it fair to the people in other parts of Toronto who generally pay more in taxes? Maybe not, but it is important to develop Scarborough so that it may catch up in income to the wealthier areas of Toronto. The people from the wealthier areas in Toronto still need to travel to Scarborough and this public transit expansion will either provide them an easier way to travel or will reduce traffic on the roads for them. Is it fair to the provincial and federal tax payers not affected by this program? It is more than fair. Toronto pays much more than its share of the burden. The Globe and Mail, based on research by Ronald Kneebone, Professor of Economics at the University of Calgary, reported:
Obviously it is mostly fair to almost all residents of Toronto and taxpayers across the country that Toronto receives municipal, provincial and federal funding for this project. Overall this is fair to most groups. Although it is slightly unfair to higher income taxpayers more concentrated in other parts of Toronto, they still directly benefit.
One of the most important factors to consider for an economic issue is the opportunity cost. Considering the massive inefficiency established earlier, the opportunity cost will likely be huge. This is summed up nicely by Steve Munroe:
“This outlook still appears in some Metrolinx analyses where the economic spin-off value of spending on construction is treated as a “good”, and therefore more expensive options score more highly because they generate secondary and tertiary economic benefits. That the same money could be spent more productively (“bigger bang for the buck”) or split with other projects or portfolios is not part of the equation. In the case of the new station analyses, this element is not present, and the skew it brings is refreshingly absent.“
The idea to spend massive amounts of money inefficiently for the secondary and tertiary economic gains shows that the planners have no idea about the concept of opportunity cost. The money invested in the over-expensive TTC Scarborough Expansion could much better go towards other projects or investments that would bring more benefits to the city.
So the question comes down to whether it is worth it to invest such an exorbitant sum into the expansion. Although it is fair and equitable, I believe it should not be done due to the enormous inefficiency and opportunity costs. I agree with Councillor Josh Matlow’s proposal to build only an LRT instead of an LRT and subway station which would cost only $1.6 billion. This would provide sufficient transit for Scarborough residents and allow investment of the rest of the money into programs that give bigger benefits, not just in Scarborough but across all of Toronto, making it more fair towards the citizens that pay more taxes in other areas of Toronto. The TTC expressly states one of its top priorities is efficiency and the current plan for public transportation is anything but that.