George Smitherman’s $17.4 billion transportation platform reads like the work of a old parliamentary hand who knows a thing or two about the dark art of cabinet making, and I’m not talking furniture.
If you’re the boss, you understand that you need to dispense the bounty both geographically and demographically, taking care to pay off your base while reaching out to less adoring constituencies.
So by my count, the Smitherman plan offers a little civic something for everyone: subway extensions in Etobicoke, North York and Scarborough; just enough Transit City, pedestrian and bike lane language to make progressives look at him twice; public-private partnerships for Bay Street; free rides for seniors; and about 500 metres of tunnel for some lonely squadron of Liberal foot soldiers manning their redoubt on Mount Dennis, which apparently will become the new western terminus for the Eglinton LRT.
The plan, moreover, is vintage big-tent Liberalism, in that it unapologetically encroaches on the policies of most of Smitherman’s rivals, not to mention Mayor David Miller’s.
Lastly, the two-phase strategy — most of the $7 billion in “incremental” spending is back-loaded onto a second term — doesn’t make his former cabinet colleagues (and future enablers) look like dupes, say provincial sources, who feel his plan won’t force Metrolinx to trash their latest build-out scheme.
But while “Transit Delivered” is a textbook example of constituency appeasement, it is also plausible (except for the free seniors’ passes) from a transit policy perspective. So why, then, did Smitherman not apply a comparable level of attention to the money aspect? The omission seems like a bizarre oversight in a campaign dominated by the same.
It’s difficult to judge whether Smitherman is being sloppy or coy, but the dynamic of this race is that both Rocco Rossi and Sarah Thomson anted up financing strategies — admittedly flawed — to accompany their transit platforms.
The bulk of what Smitherman revealed on Friday (e.g., “Transit Trust,” the reliance on “triple-P” project management) had to do with bookkeeping, and thus doesn’t address basic questions: Where does he find the cash? How do the associated financing costs impact the City’s overall operating budget? And what will he do to ameliorate the increased operating shortfall of an enlarged TTC? (That last one is a question none of the subway enthusiasts have been willing to touch.)
Let’s focus for now on the capital piece.
As my colleague and Spacing columnist Steve Munro notes, the projected capital cost of the additions come to less than $4 billion (2010 dollars), compared to the $7 billion cited in Smitherman’s speech. The padding, his handlers say, is about making conservative projections, and the bulk will be spent between 2015 and 2020.
Smitherman contends that if the City outsources project management to design-build-finance consortia, it may face higher carrying costs over a longer period than would be incurred with traditional debentures. But the extra expense, he claims, will be offset because this approach allows the City to insulate itself against St. Clair West-style overruns (i.e., the design-build groups agree to deliver the project at a fixed price by a given date rather than coming back for top-ups).
Yet besides touting his own adventures with health care triple-Ps, Smitherman failed to properly explain a complicated financing arrangement and provide defensible projections as to the size of net benefit. While such methods may bring down cost, they won’t get him the whole way.
So where does the rest of the capital come from?
He insists there will be more detail later about revenues derived from development spurred by transit construction — a claim Mel Lastman made but neglected to deliver while shilling for the Sheppard line.
When asked about using asset sales to finance transit construction, Smitherman has left the door wide open. But as campaign spokesperson Stefan Baranski told me in an email yesterday, “Generally speaking, no. However, George has indicated a willingness to look at asset sales where it makes sense — for non-essential services like the Toronto Parking Authority. [emphasis added].”
Might such non-essential services include Toronto Hydro? It wouldn’t surprise me. [editor’s note: Smitherman’s campaign says he will keep Toronto Hydro public ]
But the real sleight of hand here has to do with the City’s debt level.
During Friday’s scrum, Smitherman made an oblique reference to an April 6th report from Moody’s Investor Services, which concluded — contrary to what almost everyone thinks — that the City of Toronto has an enviably low debt burden relative to other Canadian and international cities, as well as “manageable” debt-servicing costs (currently about $450 million per year).
Referencing recent council reports [PDF], Moody’s further noted that the City will have more room to borrow after 2016, when its net debt levels begin to fall as the backlog of non-transit infrastructure repair ebbs. By no coincidence, that’s also when Smitherman’s transit project spending scheme ramps up.
So why wasn’t this telling detail part of Friday’s announcement?
That’s an easy one. Smitherman would have to acknowledge that Miller’s financial management hasn’t been nearly as horrific as he’d have voters believe.
photo by Sam Javanrouh