Why we should bury the Scarborough subway idea

The proposed subway to Scarborough will create another white elephant project that will only deliver higher taxes and less reliable service.

A decision by Toronto’s City Council to move forward with building a subway to Scarborough will create another white elephant project that will deliver higher taxes and less reliable service to the residents of Toronto for decades to come. The decision highlights, once again, the political nature of the TTC and should act as a lesson to all Torontonians of the perils of top-down management to the city’s transit future.

First, let’s start with the cost of the proposed subway line.

The City estimates that the final price tag for the project will be $3.28 billion when adjusted for inflation and assuming that it is completed by 2024. That’s equivalent to $2.3 billion in 2010$ (the number most often quoted by politicians). On top of that, the city will be on the hook for an additional $250 million related to keeping the current Scarborough Rapid Transit (SRT) line in operation until 2023 and eventually tearing down the SRT. Adding those figures together brings the total up to $3.5 billion.

So how does City Hall intend to pay for this new fantasy subway?

Queens Park has already said it will hand over $1.9 billion to help build it and warned that more will not be forthcoming, a move that led to public bickering between councillor Karen Stintz, the current Chair of the TTC and Ontario Transportation Minister Glen Murray. That leaves the City with a $1.3 billion hole to fill.

So, City Hall has decided to do what it does best: promise to raise taxes. A report to councillors called for a potential 2.4% property tax hike on homeowners in the city, matched by an increase on property taxes for businesses equivalent to one-third of that rate, to help pay for the new project. Officials estimate that property taxes will amount to half of the additional $1.3 billion needed to move ahead with the new subway. Their estimates also depend on another estimate — an additional $165 million in development charges. If the development charges don’t materialize, taxes could rise even further.

City Hall will also go begging to officials in Ottawa in the hope that it can be convinced to throw in an additional $660 million.

But the very public secret to all of these numbers is that they could be dramatically off base. TTC officials admit that costs could be as much as 30% higher than originally estimated. Taking the current figures and applying a worst-case scenario – never a bad idea when dealing with massive public works projects – the total figure for the Scarborough’s new subway line could be more than $4.5 billion. Even if the TTC is only undershooting the cost of the project by 15%, that would still add an additional $500 million to the final price tag.

And what will the residents of Toronto get for that money?

In a report to City Hall, the TTC said the proposed Scarborough subway would move as many as 9,500 passengers per hour per direction, yet would have the capacity to more than 30,000 – meaning that more than two-thirds of the subway’s capacity would be wasted. And that’s only considering times of peak operation. If we consider that the number of riders will fall dramatically in off-peak hours, but capacity will remain the same (a problem that plagues most transit systems), the inefficiency worsens.

Officials at City Hall admit that the project will “result in a surplus capacity that may not be required within a reasonable long term planning horizon.” Worse still, they say the new subway line would impact the City’s ability to fund other important transit projects. It might also add to Toronto’s outstanding debt, the report adds.

Furthermore, one of the arguments often made for subways – that it will increase development – is unlikely to occur in this case since the line will pass through largely residential neighbourhoods that offer “limited opportunity for development or intensification.”

In the end, the residents of Toronto are getting a subway that politicians admit will be overbuilt and underused – with the whole affair highlighting the dangers politicians can inflict on a transit system.

Brady Yauch is an economist and Executive Director of the Consumer Policy Institute (CPI). You can reach Brady by email at: bradyyauch (at) consumerpolicyinstitute.org 


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