Profits and rural bus service don't mix

Saskatchewan’s provincially owned bus line, the Saskatchewan Transportation Corporation, was the centre of attention a few weeks ago because of its multi-million-dollar debt and its most recent seven-figure operating deficit.

More recently, it was in the headlines because of a decision by the government to write off the company’s $24.8 million debt and, in future, fund it by government grants instead of loans.

The debate has centred on its role, whether the STC is a public service and therefore cannot be expected always to make money, or whether it is a commercial enterprise that should be expected to show a profit. The press release announcing the new funding deal was ambiguous.

Read Also

Producers face the reality of shifting grain price expectations

Significant price shifts have occurred in various grains as compared to what was expected at the beginning of the calendar year. Crop insurance prices can be used as a base for the changes.

The minister in charge said “service is its number one priority” but the release also said the minister had committed to “a commercially effective bus service.”

Sounds like the old eat-the-cake-and-have-it-too trick.

The routes the company is losing money on, not surprisingly, are the rural ones which go through sparsely populated areas and have low ridership. There is one school of thought that says the government should give up these rural lines.

This school of thought relates to something that David K. Foot says in his best-seller, Boom, Bust & Echo: “Buses, street cars and subways were invented to serve densely populated inner cities. They were not invented to serve sparsely populated suburbs.

“Public transit makes money in the core; it loses money in the suburbs.” (Read rural areas for suburbs.)

His solution is for transit providers to concentrate on densely populated corridors. “Let private or public enterprises develop new kinds of services suitable to the suburbs.” (Again, read rural areas.)

There are two drawbacks to this school of thought which, for the moment at least, make it a non-starter.

First, you don’t have to be a rocket scientist to know that buyers for money-losing lines will not be plentiful. Second, if the provincial government were to sell or abandon the rural lines, it would be accused (and not for the first time) of aiming to shut down rural Saskatchewan.

For political reasons, the government must continue to operate the provincial bus line, money loser or not. To do anything else would be to commit political suicide. The promise that it has committed itself to a “commercially effective bus service” is either rhetoric or a delusion.

Take your pick.