The TTC and Toronto City Council want to make public transit more affordable for low-income residents. They should start by scrapping the flat fare model.

The TTC and officials at Toronto City Hall are looking for ways to make public transportation more affordable for the city’s most financially vulnerable residents.

They can start by using the new Presto electronic system – which the TTC says will “revolutionize” how riders pay to use transit – and scrap the current fare model that applies a one-price-fits-all solution to Toronto’s public transit system.

Implementing peak, off-peak fares and distance-based fares would best serve the city’s low-income residents and ensure that those most able to pay their fair share for using the TTC do so. Under a flat fare model, low-income residents end up subsidising more affluent transit riders.

The TTC’s flat fare system hurts low-income residents by failing to fully charge those riders who use its services in the busiest travel periods. During the busy morning and afternoon commute the TTC must dramatically expand the amount of public transit available – either through more buses, more trains or new lines. Much of that expansion could be curtailed if the TTC charged a higher fare during those busy periods and encouraged flexible commuters to change their travel habits. Additionally, the TTC could offer lower fares during off-peak hours to save on capital costs and spread peak demand.

Many critics argue that either raising fares during busy travel periods – or keeping them at their current level and lowering off-peak fares – would hurt poor transit riders more than their more affluent counterparts. But data from transit systems around the world shows otherwise.

Low-income residents are less likely to travel during peak periods, while the opposite is true of their higher-income counterparts. Because low-income residents are made up disproportionately of part-time workers, the self-employed, retirees and single-income households, they are either more flexible in their travel plans or work in jobs that don’t adhere to the typical 9-to-5 regime. Any discount in fares will be a major benefit to these riders.

High-paying, white-collar jobs, on the other hand, largely stick to traditional work hours. Because most of these workers tend to use the transit system at the same time, they cost the TTC and other transit agencies a significant amount of money in having to expand the travel network to meet high demand – when much of that expansion is under-used in off peak hours.

The current flat fare model means high capital and operating costs needed to build new transit to satisfy periods of high demand are met by raising fares for all customers, including lower income customers who aren’t necessitating the expansion.

Take the proposed Downtown Relief Line (DRL) as an example. This line, which is being proposed to deal with high ridership levels and overcrowding on the Yonge subway line during the morning commute, would run significantly under capacity during rush hour and even more so in off peak hours. The billions of dollars (potentially $8 billion and counting) needed to build and operate the line would come from hiking fares across the board – meaning off-peak (and low-income) riders would be paying for a line built to serve white collar (and high-income) workers travelling to the downtown core.

An analysis by Consumer Policy Institute showed that the TTC would save billions of dollars by simply offering free transit rides in the hours prior to the morning commute – a move that would directly benefit the low-income riders using the TTC in off-peak hours, as well as those workers with a flexible schedule who can shift out of the busy morning commute.

The flat fare system also discriminates against low-income users in that it offers a subsidy from short-distance riders – who tend to have lower incomes – to long-distance riders – who tend to have higher incomes. Research from other transit agencies show that low income riders tend to use transit more frequently throughout the day and over shorter distances.

Because low income households are more likely to not own a vehicle, they will use transit for more trips and for shorter distances – to the grocery store, to daycare and other local journeys. A flat fare that charges them the same amount as a high-income transit rider commuting long distances to and from work – and then uses a vehicle for other trips – is a subsidy from those who transit the most to those who use it simply as a means to commute to work.

The TTC used to have a distance-based fare, which was used to fund expansion and ensure that those riders who travelled longer distances – and cost the TTC more money to service – paid their fair share. It was only pressure from politicians – both in Metro Toronto and at Queens Park – who wanted to curry favour with suburban voters that forced the TTC to scrap the scheme. Queens Park, in fact, refused to give the TTC any money for operating subsidies unless it moved to a flat fare model.

While Toronto’s City Hall wants to offer subsidies to low-income residents, it would wiser to change the entire fare model that discriminates against those same residents.

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