Transport state enterprises: the Canadian experience

Abstract

In most economies, the ownership and control of state enterprises has been an important government policy instrument. This has been particularly true in the transportation sector in which governments have intervened extensively through the acquisition and creation of state enterprises. While the genesis of and rationale for transportation state enterprises have varied from country to country and even from time to time within each country, at present, most governments do exercise a significant degree of ownership and control in transportation. Some of these enterprises enjoy monopoly status and others are in competition with and behave similarly to their private sector counterparts.

Consequently, and in recent years, questions have been raised about government intervention in the market‐place as it relates to effective management control and accountability of state enterprises. Questions have also been raised about the continuing need for transportation state enterprises and some governments have promoted some form of divestiture (privatization).

This paper addresses the accountability and control of transportation state enterprises based on the Canadian experience. It discusses their role and policies related to diversification, financing and divestiture, and the need for development of a performance framework.     

Canadian transportation regulation: Trends and issues

Transportation - In Canada, transportation regulation has evolved in response to the country's unique economic and demographic conditions—a land mass larger than that of the U.S.A. with...     

Public transport enterprises in transition

Since the mid-1970s many western governments have felt that liberalization of market forces through deregulation and better control or privatization of public enterprises would raise productivity and reduce inflation and government deficits. This paper reviews the recent literature on public enterprise and draws on the Canadian experience. It discusses the rationale for and concept of public enterprise and focuses on two reform proposals, accountability and privatization. To increase the degree of accountability would require, on the one hand, that the government establish a formal mandate and role for the enterprise and periodically provide formal government directives, and on the other hand, provide an appropriate evaluation framework. Government compensation for imposed public duties is addressed. Full or partial privatization should be pursued when the rationale for a public enterprise has been significantly altered. This applies particularly to public transport enterprises which are in competition with the private sector.An earlier version of this paper was presented at the Fourth World Conference on Transport Research, Vancouver, Canada, 1986. The author wishes to acknowledge the financial support of the Research Branch of the Canadian Transport Commission, and the valuable input provided by Dr Gennady Orzornoy.