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Canadian transit enters a brand-new world

Kevin Smith

This article was originally posted on www.railjournal.com 

As Canada embarks on an unprecedented public transport infrastructure spending progamme, Kevin Smith asks Canadian Urban Transit Association president and CEO, Patrick Leclerc, how transit agencies can make the most of this new era of investment.

STANDING, smiling, and with ministers, local politicians and employees of Ottawa’s O-Train all assembled behind him, Canadian prime minister Mr Justin Trudeau proudly announced new federal funding for the Ottawa light rail expansion programme on June 16.

The network is receiving $C 1.09bn ($US 870m) for its second phase expansion, which includes the addition of 38km of new lines and 23 stations. The provincial government is also contributing $C 1bn, or a third of the total cost of the programme, with work likely to get underway in 2019.

This was not an isolated announcement by Trudeau. The previous day the prime minister was in Montreal holding a similar press conference to publicise a $C 1.28bn federal commitment to support the city’s new light metro project. It followed similar pronouncements in Ontario and Vancouver in recent months as the government’s ambitious investment agenda swings into action.

The $C 28.7bn, 12-year Public Transit Infrastructure Fund, which is part of the Liberal government’s Investing in Canada initiative, promises to improve commutes, cut air pollution, strengthen communities, and grow Canada’s economy. Indeed, Trudeau highlighted how the Ottawa project will create 1000 full-time jobs and take 14,000 cars off the city’s roads during rush hour cutting greenhouse gas emissions by at least 99,700 tonnes.

The investment programme was initiated in the 2016 federal budget through an initial $C 3.4bn allocation over three years. Supplemented by provincial and local governments, and transit agency contributions, this funding targeted immediate upgrades and improvements to existing public transit systems across Canada. It is already helping to purchase new vehicles and return existing infrastructure to a good state of repair as well as support planning for future big-ticket infrastructure projects.

Many of these will be funded through the next stage of the programme announced in the 2017 federal budget. The government plans to allocate $C 20.1bn towards public transport infrastructure investments over the next 11 years with more than 400 projects of all shapes and sizes already announced. This figure will again be supplemented by provincial and local government funding along with at least $C 5bn of investments from the new Canada Infrastructure Bank. Established as part of the Investing in Canada plan, the bank aims to attract private sector and institutional investors to support Canadian infrastructure projects. It is expected to become operational by the end of the year.

Addressing the International Association of Public Transport (UITP) Global Public Transport Summit in Montreal in May, Canadian infrastructure and communities minister Mr Amarjeet Sohi said the government’s agenda aims to end the “fits and starts” approach to investment in Canadian public transport infrastructure, which resulted in ad-hoc and inconsistent planning over recent decades. Instead the government is aiming to provide long-term and predictable funding to support sustainable urban development.

“Local governments know what is best for their communities and we want this funding to act as a catalyst for improvements in public transit and as a means to make sure that local needs are met,” Sohi said.

“What we are seeing in Canada in transit is nothing short of a transformation. Cities and transit systems are thinking and acting boldly, and we will be there to support these ambitions as we know the huge value that these investments have on communities, Canadians, and the health of our country.” In a vast country of just 36 million people, the population density is such that outside of the major cities many communities do not suffer from traffic congestion. Parking in city centres is also generally free meaning the inclination to develop public transport as an alternative to private road transport has not always been there.

But with the federal government favouring public transport as a means of promoting sustainable development in cities - it is not advocating a single road investment policy in Investing in Canada - it is forcing a step-change in how local governments and transit authorities act.

For Canadian Urban Transit Association (Cuta) president and CEO Mr Patrick Leclerc, the challenge for transit authorities is no longer securing funding for their projects, but delivering them in an industry unsure of the technological direction in which it is heading.

In particular, he says it is unclear what the objectives are of new players entering the market such as transportation network companies (TNCs) like Uber, and given the ongoing development of autonomous vehicles, the long-term ambitions of car manufacturers like Ford, GM, and Volkswagen. Equally uncertain is what their relationship with public transit agencies will be.

“It is a brand-new world,” Leclerc says. “10 years ago, there was no Uber, there was no Lyft, but now they are here and we are supposed to know the kind of partnership we should have. Transit agencies are not used to negotiating or dealing with big companies like Uber, which have had these negotiations with many transit agencies around the world and know the regulatory environment they want to have. For Canadian transit agencies, it is all new.”

Of particular concern, according to Leclerc, is how agencies might establish partnerships with TNCs to facilitate a multi-modal and seamless transit system. For example, he says having easy access to TNC user data in order to inform the urban planning process is a major concern. He also points to a recent study of subway use in Manhattan, which was found to have fallen as Uber and Lyft have become more prominent and resulted in an increase in traffic congestion, a situation that Canadian authorities want to avoid.

However, to overcome these challenges, Leclerc argues that agencies will have to do more than simply recognise them, but alter their organisational structure and business model in order to compete more effectively.

“If they want to lead the transition, transit agencies have to be bolder, they have to take risks,” he says. “I think they need to change the culture as well to have an innovative mindset, they need to experiment more, to learn what works and what doesn’t work, and apply it. Unfortunately, here in North America the transit industry is very conservative and traditional, but if we want to be the leaders we need to be much faster and become far more agile.”

Of course, changing the culture of large public organisations is no mean task. Public agencies funded by taxpayers and under the scrutiny of the local press are naturally less inclined to take risks. “The general managers have to deal with councils, have to deal with politicians, and if you know if you make a mistake, your head will roll, then you won’t take any risks,” Leclerc says.

Organisational structure

Yet Leclerc believes they can and must find a way to work in a way that suits the new market in which they generally find themselves. He compares the organisational structure of public transport agencies, which have not changed in the last 15 years despite the huge changes that have and are taking place in the industry, with a similar situation at a private company, which by not adapting would in the medium-term in all likelihood cease to exist.

One way he suggests that agencies might facilitate this alteration is by employing a chief strategy officer. This individual would be solely responsible for developing, executing, communicating and sustaining corporate strategic initiatives and would set the agency on the path to adapt to the changing market.

Improving an agency’s capability to collect and aggregate data is a further area that requires development and better understanding. Employing data scientists is a new area for transit agencies, and one which Leclerc believes they should embrace wholeheartedly.

However, securing people with the right skills to deliver this is easier said than done. There is strong competition in the market for the best and the brightest and public agencies often cannot compete with the salaries and working conditions on offer in the private sector. For example, Google is famous for offering its employees the option to spend 20% of their time on something that they choose, but at a government agency working in a traditional structure this may be viewed as a waste of time.

Nevertheless, Leclerc says agencies must become open to changing this approach by offering their employees the space to innovate and embrace new ideas, or to partner with outside companies who can use data to deliver innovation. Employing a start-up mentality, whereby employees are able to trial new ideas quickly, learn from mistakes, and apply new processes to achieve their objective, is the preferred approach. After all, being risk averse, and taking two to three years to pilot a project, or six to seven years to approve a certain technology is no longer acceptable in a climate where public transport’s competitors are moving so fast.

“If you want to experiment, you have to accept that failure is not in the F category, the failure category. It is in the L category, it is learning, and whatever you apply from it, you go at it again,” Leclerc says.

Greater cause

Nevertheless, Leclerc feels that public transport has a major selling point to prospective employees in that the people in this area generally see themselves as working for a greater cause. He says this is especially pertinent at the present time with urban transport going through a period of major transformation and it should be sold as an exciting place to work. Selling these benefits can also extend to the customer as a whole.

“We approach communications with the public pretty much the same way as we always have,” Leclerc says. “But in PR, marketing and communications, we have a lot of ground to cover. We don’t sell the benefits of public transport very well.”

While it is outside of their control, Leclerc also highlights the Buy America act as a piece of political legislation which is stifling North American public transit agencies’ ability to access the latest innovative technologies from suppliers from around the world.

Despite being US legislation, Leclerc says it impacts Canadian transit agencies greatly due to the existence of an integrated market between the two countries. Canada imports goods for public transport worth up to $C 1.9bn annually from the US, compared with exports of $C 750m across its southern border. And in such a small market - he says current demand in North America is comparable to the city of Moscow - it is not that attractive for global suppliers to set up plants, comply with regulations requiring 60-70% locally-sourced content, and in some cases, alter their offerings. It is also hindering North American suppliers’ ability to compete internationally.

As the Canadian government considers adopting similar legislation relating to its infrastructure investment plan - mooted at 60-70% domestic content - amid concerns over the results of the renegotiation of the Nafta agreement, Leclerc says that Cuta is pushing for the adoption of a “Canam” approach with regards to the transit supply market.

“If the deal is to protect ourselves if there are no fair-trade policies, and very low wages and cheap steel, why don’t we have a Canam approach which recognises the integration of the North American market when it comes to urban transport?” he says. “Everything that is Canadian is American, and vice-versa. This way you can have a slightly bigger market and something more attractive that harmonises across the border.”

Cuta is also working to help its members to come through the transition by providing forums for sharing best practice both with fellow agencies and with organisations outside of the transport sphere.

Leclerc says his experience of these forums, and the approach of Cuta’s members, gives him cause for optimism. Despite the obvious challenges they face, he says agencies are looking to change their approach and are open to the new ideas presented.

In a political climate offering a once-in-a-lifetime opportunity to invest, getting their approach right is essential for Canadian transit agencies, and cities, to realise the opportunities available. If they don’t, the government’s ambitious infrastructure investment programme might just pass them by.

“The agencies are really open to change, they want to move forward, and it is interesting to see that they are not trying to resist,” Leclerc says. “It is an exciting time.”

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