Monday, October 28, 2013

Hudak Promises To Incur Massive Project Cancellation Costs As Premier

Update (29 Oct):  A subsequent G&M piece says Hudak would respect signed contracts and would likely leave the Eglinton LRT alone. Also, this site claims Bombardier was paid an extra $68M for the order reduction in cancelling the Scarborough LRT. That brings cancellation costs to $153M.

Yes, a Hudak led Ontario government would cancel LRT projects in the Big Move, causing major project cancellation losses to sunk costs (many projects are in-flight in planning or construction) and contract escape penalties to vendors like Bombardier for cancelling or scaling back orders.
"I think GO and our subways are the strengths in our system, and I do not believe in ripping up existing streets to lay down track.” - Tim Hudak
Toronto's decision to cancel the previously agreed and in-flight Scarborough LRT has cost at least $85M in sunk costs, plus a yet to be determined amount in fees by Bombardier for lowering the LRT car order.  Hudak isn't specific, but reading the Globe's synopsis, it seems pretty clear his intent is to cancel all LRT projects, possibly even including the already under construction Eglinton Crosstown line (Hudak was in Mike Harris' government, which filled in the under construction Eglinton subway line in 1995, so the history repeating here would be simply grotesque). In addition, this would almost certainly include the in-progress but not yet under construction Finch and Sheppard East LRTs, then a raft of other projects in the province such as LRTs for Mississauga and Hamilton.
“You set priorities and you make choices. But I think that every dollar we build underground is there not just for a generation, but for potentially a century. It’s a worthy investment. You’re absolutely right: I’ll lay down less track than I would if I did LRTs, but I think I get bigger bang for the buck in helping beat gridlock.” - Tim Hudak
The cancellation costs for all this would easily run into the hundreds of millions.  For someone hoping to ride the gas plant scandal to power, this is just astounding.

Additionally, Hudak showed he intends to use the proven talking points for subways such as the old "100 year" chestnut above.  Yes Mr. Hudak, subway tunnels last 100 years, but the trains, tracks, platforms & switches do not.  By this argument, we should bury all our roads, because hey, 100 year "investment."

The other favourite line of LRT proponents is the old "we cannot rip up roads" bit.  It is true that some LRT projects entail road disruptions & dedicated lanes, but as Seoul found, that can actually result in faster commutes not just for those taking transit, but car drivers as well, as removing the buses from their lanes (and possibly some amount of traffic as some drivers opt for transit) speeds up their commutes too.

The biggest whoppers come here:
“[The money] comes from the same place where the Spadina line came from, where the Bloor-Danforth line came from, where the Yonge line came from. It comes from the treasury,” he said. “We did that without tax increases in the past … You do it by finding efficiencies within government.”
First off, the province did not fund the majority of the existing subway network.  Of 64 existing stations, the first 38 stations (or 60% of the total) were funded by the city/metro governments without funding from the senior levels of government.  More importantly Hudak is hinging all this on the ever failing strategy of "finding efficiencies" in the existing government.

How often will voters fall for this deeply dishonest tactic?  Try and take seriously the idea that Hudak knows of billions of dollars of true "inefficiencies" in the current government, as I joked on twitter, perhaps there is a Ministry of Burning Cash that can be shut down. If so, wouldn't he be bragging about this specifically?  Embarassing the government day after day over the waste in Question Period?

Even as a matter of good public service, if the leader of Her Majesty's Loyal Opposition knows of significant areas of taxpayer waste, is he going to sit quietly on them waiting for an election which might be years in coming, letting the government keep wasting money which could be saved?

On the other hand, maybe the claim is true that he plans to "find" these efficiencies, but only once in government.  If so, how can he promise they are there?  He can't know this.  It's a hope, maybe an educated one, but still a gamble.  Even if you think say, 5% of all government spending is true waste (like leaving unused buildings lit at night or whatever example of clear out and out waste you can think up, not talking here about spending you just don't like, which still has a purpose) - it will tend to be a thousand or more little spots of waste.  There isn't really going to be a Minister of Burning Cash that accounts for 80% of the waste.  Finding those unnecessarily lit buildings or other duplication, overpayment & such is going to be tough. Maybe the process for getting someone a driver's license take 14 steps and can be shaved to 13 steps with months of work by the Ministry of Transporation and this saves like $5M a year.  I'm sure such inefficiencies exist in government as they do in every large organization, but wringing them out is tough work.  Complex multi-deparment processes have dozens of stakeholders and usually no one person fully undertands the purpose of everything in there, so spotting the "waste" takes weeks of stakeholder interviews to find the steps that no longer serve useful purposes or are duplicated elsewhere.

The obvious place this is going is that Hudak's idea of "efficiencies" is a set of service cuts for programs he doesn't approve of.  Wage cuts for public sector workers.  Layoffs.  Social assitance payment reductions.  Facility closures.  This is what is glibly hidden in the euphemism of "efficiencies."  Hudak doesn't spell these out because naming specific cuts before you're safely in power with a majority government is harmful to your chances of getting there.  This is an "elect me and then I will tell you my agenda" promise.

Yes, some of this is up on the party's website in a set of lengthy "white papers" which are statistically read by no one at all. The reality is that if Hudak had popular cuts to make in the name of efficiency, he would be bragging about them.  In fact, even Hudak's specific paper on the public sector has vague or small bore promises like a "top to bottom program review" and "a smaller cabinet" - about the only headline cost saver is a public sector wage freeze (which is a cowardly way of implementing a wage cut, since inflation will still increase government revenue, while increasing costs for these workers).

All of this makes me extremely dubious of the one good promise in Hudak's talk with the Globe, to build a relief subway line for the overcrowded Yonge line.  Even just the smallest version of the relief line running a backwards L between Pape on the Danforth line and to King station on the Yonge line will run over $3B in current dollars, while the likely needed version which goes up to the Eglinton LRT (assuming Hudak doesn't cancel it) is $5.5B.

When push comes to shove and the magical efficiencies don't appear, will this really get funded by a party whose fortunes rest on 905 belt voters?  How will Mississauga and Hamilton voters feel about their LRT projects being cancelled to fund a DOWNTOWN RELIEF LINE subway?  This would be the first thing cut. 

All of that in exchange for halting a bunch of viable, funded and shovel ready transit projects in exchange for ones that cost much more, serve fewer people and take years longer to complete with much additional risk. It will be the Scarborough subway but at a province-wide scale.

Here's hoping the Premier hangs on another year or two with Horwath's legislative support, and maybe even accelerates the existing projects to make the political costs for Hudak cancelling them too high to countenance. 

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