Tuesday, October 16, 2012

TransLink "audit" is political and worthless

The BC government claims it "found significant savings" following a performance  audit   review of TransLink conducted by the provincial Ministry of Finance. Transportation and Infrastructure Minister Mary Polak says,
"As we conducted the audit, we told TransLink about many of the efficiencies we were finding... a total of $98 million in savings. The completed audit... found a further $41 million, bringing the total potential savings to $139 million per year.
I think internal performance reviews of public services should be stringent, routine and non-political. Based on the minister's statements, this one is not any of those things. Her release demonstrates it is partisan political rubbish.

Polak takes credit for unspecified "savings" already gained and claims to be advising TransLink of another $41 million in savings. Shall we examine the latest items:
  • $6.3m by service reductions;
  • $1.5m by reversing the contracting-out of IT and engineering services;
  • $3.0m by eliminating sinking funds, which are reserves for debt repayment;
  • $30.0m by eliminating surpluses through less conservative approaches to budgeting.
80% of these savings are not savings at all. They are instructing TransLink to employ budget tricks that BC Liberals find convenient but even the unschooled recognize that savings are gained by lowering actual expenditures, not by phoney cuts to projected spending. We should complain about TransLink's extravagance, in procurement policies and in executive compensation for example, but not about conservative budget making.


Sinking funds are merely reserves put aside to ensure that cash is on hand to repay debts when they become due. Sort of like holding next month's mortgage payment in a savings account to ensure its availability when the amount must be paid.

Interesting to see BC Liberals admitting that money can be saved by directly hiring people to provide administrative and technical services. I wonder if the province is prepared to apply that strategy throughout government. BC Liberals spend tens of millions to employ loyal friends as consultants and double dipping contractors. Where are you now Ken Dobell? I suppose it really depends on whose palms are being greased.

The Finance Ministry team states that TransLlink can save a further $6.3 million through service reductions, although they describe the reductions with less plain language: "costs saving opportunities exist in areas such as low performing routes and driver scheduling." So, TransLink users, you get fewer buses or buses without drivers. Take your pick.

An organization serving a large and diverse customer base has unique challenges and this government report actually finds that TransLink is performing quite well. Perhaps the greatest proof is this:
"Throughout the review the Steering Committee observed an overarching emphasis by TransLink in its business decisions and culture to focus on customer service."
Recommend this post

12 comments:

  1. With respect to Exec compensation, the uptick in the average you see in the chart represents what happened when the number of executives were cut back, leaving only the most senior ones in place -- all with pretty hefty portfolios. The audit found that the actual remuneration was pretty much in line with other public orgs...if not a little lighter.

    PS: I'm Ken Hardie, formerly the spokesperson for TransLink but now on the Compass Card / Faregates project.

    ReplyDelete
    Replies
    1. Ken, I gather you are not arguing with any points made here.

      Delete
  2. Ken Hardie defends the salaries paid to senior executives. If in fact the Finance Ministry's hit squad actually found $139 million a year in savings, everyone of those people carrying "hefty portfolios" ought to be carrying them out the door and down the road.

    However, as you say, the whole report is a political fraud anyway.

    ReplyDelete
  3. I'm not in a position to provide a comment from TransLink on your other points, Norm -- just wanted to clarify that chart for you.

    Ken

    ReplyDelete
    Replies
    1. I don't expect you to get involved in this discussion. I'm sure the board at TransLink could defend itself if it chose to but that might have unpleasant political consequences. For at least the next few months, BC Liberals call the shots on how regional transit is organized.

      I think that reasonable people will conclude the "audit" is plain nonsense. Of what Mary Polak's press release calls "$98 million in savings" previously identified, $52 million are revenue increases. Either she is playing games or the minister is as dumb as a fence post. How can revenue increases (i.e. higher fares and taxes) be cost savings?

      Delete
  4. Once again Norm you have given us the facts as opposed to the BS the Liberals are giving the MSM to reprint.

    Guy in Victoria

    ReplyDelete
  5. If people knew the real story about TransLink they would upchuck. If one wanted a real audit, an audit with teeth, they would have BC's Auditor General do an audit. The government is afraid to, so they resort to games.

    TransLink's economic woes can be attributed to SkyTrain and the the light-metro transit philosophy which have been rendered obsolete by the light rail Renaissance, which started in the late 80's. Notice that no one buys or builds with SkyTrain anymore and the reason is simple; SkyTrain offers no benefit over LRT and it costs more to build and operate.

    The three light metro lines are subsidized by the province annually by almost $300 million (in 1993 it was $157 million just for the Expo Line), which is monies taken away from the rest of the transit system.

    Until TransLink deals with the real culprit that is causing financial woes, TransLink will always come begging at the door for more money. SkyTrain is rather like the Edsel and the longer one operates it, the more expensive it becomes.

    ReplyDelete
    Replies
    1. Politicos preferred SkyTrain because of real estate development opportunities afforded along fixed transit routes. Billions of land values were created but almost none of that value accrued to the public. Connected property flippers were real winners and some of those people enjoyed insider knowledge that guaranteed gains even before transit construction began.

      Compare Portland's street car and light rail system to Vancouver's. One allows for a friendly streetscape with activity spread widely along the tracks. People can easily enter and exit the transit cars and many small businesses are well served. The system here focuses development into a few high value areas close by large stations.

      In summary, SkyTrain was not the best transit solution but it served the interests of influential property speculators.

      Delete
    2. Exactly, SkyTrain was never about moving people efficiently and affordably, it was all about land development. The density issue is a SkyTrain issue and not a light rail issue.

      Delete
  6. Oh by the way Ken, the faregates are only going to add to the financial burden as they will cost more to build, operate and maintain than the fares supposedly lost in fare evasion. That they put a slick public relations type on the project indicates that their are major problems.

    ReplyDelete
  7. They aren't cost savings when service is reduced. Reduction in ridership (clients) is no way to run an organization. What company in their right mind would chase away their loyal clients.

    I would take transit more often but the lack of frequent service is why it would take me 3 hours per day. The proposal only makes it worse.

    The only other organization to chase away their base is the BC Conservative Party.

    ReplyDelete
  8. Of course this audit is nothing but a political excercise. So were the ones for BC Hydro, BC Ferries and ICBC. The BC Liberal Party has used these entities as a buffer to deflect from their inept monetary policies.

    Does anyone know which roads and bridges fall under Translinks jurisdiction and their expenditures on them versus the revenue collected from the gas tax levy? I suspect that the driver puts in a hell of a lot more than what comes back as improvements. Also I think that the Golden Ears Bridge should not be counted in the calculations. The honouring of that P3 contract on that facility should be made whole by the provincial government simply because they were the architects of this debacle. The reason I ask is that eventually the driver will get whacked again through some form of road pricing to further subsidize more Skytrain type facilities and other idiotic projects.

    ReplyDelete

COMMENTING

This is an archive only of items published before April 22, 2016. These and newer articles are available at:

https://in-sights.ca/

If you read an article at this blogger site, you can comment on it at the new site.

Note: Only a member of this blog may post a comment.