The Tories want to deregulate intercity bus service. What comes next?

ANALYSIS: Bill 213 would dissolve the Ontario Highway Transport Board and end a century-old system of regulation. Here’s what that could mean for travel in and around the province
By John Michael McGrath - Published on Oct 23, 2020
Greyhound Canada suspended its Canadian services in May. (iStock/tirc83)

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It’s almost a philosophical question: Can you deregulate an industry that’s currently in a kind of suspended animation? The Tory government at Queen’s Park will get an answer soon, as it seeks to end decades of regulation of intercity bus service in Ontario with one part of Bill 213, the Better for People, Smarter for Business Act. Schedule 16 of the bill will dissolve the Ontario Highway Transport Board and end the system of regulation that has governed bus travel in the province since the 1920s.

The measure has been discussed and debated for years at Queen’s Park, including under the previous Liberal government. But it’s happening now in the context of the COVID-19 pandemic, which, in May, caused Greyhound Canada to shut down all its Canadian services. That was originally billed as a “temporary measure,” but if it turns out to be permanent, Ontario would simply be the latest market that the country’s largest carrier has abandoned, having cancelled most of its western Canadian routes in 2018.

Until Bill 213 receives royal assent, the status quo in Ontario is that the government grants legal monopolies to certain bus routes. Greyhound has had the extremely profitable Toronto-Ottawa route for many years, meaning it’s illegal for a competitor, such as Megabus, to compete for customers there. When this system of regulation was introduced before World War II, the intention was straightforward: companies were granted monopolies on profitable routes with the expectation that those profits would subsidize less profitable services to rural and remote areas.

As the long list of bus-service cancellations across rural Ontario demonstrates, that fundamental bargain broke down decades ago: bus companies were allowed to exit from costly, low-performing routes while maintaining their monopolies on more lucrative routes. Numerous smaller municipalities have raised concerns for years about the increasingly frayed system of bus routes in the province, but Queen’s Park had been in a state of paralysis, caught between a status quo that wasn’t working and fears that any change to the system could make things worse.

While the government faces criticism for using the pandemic to force through measures that are only tenuously related to containing COVID-19, it might be the case that Greyhound’s withdrawal of service has finally compelled the province to move forward with abolishing a system that had few defenders left.

Minister of Transportation Caroline Mulroney says that, as the abolition of the Ontario Highway Transport Board will make it easier for bus carriers to enter the market, the government wants to see some rural services come back. “By reducing red tape and regulatory burdens through deregulation of the intercommunity bus sector, we will support economic recovery and improve transportation options for the people of Ontario,” Mulroney said in a statement emailed to TVO.org. “Deregulating the sector will make it easier for new carriers to step in and address service gaps for passengers and lead to more and better transportation options for the people of Ontario.”

She added that the government will also look at new safety rules for vehicles that carry fewer than 10 people, potentially allowing companies to operate smaller and cheaper vehicles on routes where that would be more appropriate for the ridership.

Ontario isn’t breaking bold new ground here: other provinces have deregulated their bus industries, and the results are debatable. A 2010 report for the provincial ministers of transportation across Canada concluded that deregulation did not cause large-scale route abandonment. Nevertheless, numerous advocate groups have warned that deregulation alone could leave rural communities with fewer options than the status quo. In 2018, Alberta introduced subsidies to guarantee rural service after Greyhound cut services.

Abolishing the board will have no impact on either GO Transit or Ontario Northland’s bus services, as both of the Crown-operated transit agencies were always exempt from the board’s regulation. This year, in fact, the government introduced new routes, including one that connects Thunder Bay to Winnipeg.

But those expansions have been controversial, too. When Ontario Northland expanded its Thunder Bay-Winnipeg service earlier this fall, private bus operators in the northwest accused the province of poaching their customers.

What’s not clear right now is whether the government has any overarching vision for what the intercity bus system in Ontario should look like after reform — and after the pandemic. How, for example, will the government balance the role of publicly owned bus operators, such as GO and Ontario Northland, against private actors moving forward? Should the public agencies focus on low-ridership routes and leave the most profitable ones to private operators? Should the government guarantee rural service through the subsidization of private operators? The government has periodically considered the role of ride-sharing companies in providing inter-city transportation — what would that look like, and how would those companies be subsidized?

It wasn’t necessary for the government to answer those questions as long as it preserved the status quo. Once Bill 213 passes, it won’t be possible to avoid them for very long.

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