When politicians sell out citizens...

When politicians sell out citizens, you get Highway 407

An arbitrator says Ontario highway operator can charge any tolls it likes

Toronto - When governments put the welfare of corporate friends ahead of citizens, you get Highway 407, the 108-kilometre toll road operated north of Toronto by a private company called 407 ETR.

In 1999, the former Conservative government of Mike Harris, then serving a five-year term as premier, gave 407 ETR a 99-year lease to run the toll road as a private business, charging motorists whatever it liked.

Recently, the company jacked up tolls by as much as 200% at peak hours. Now, an arbitrator has ruled that the contract signed with 407 ETR by the Harris government was so airtight the company has every right to do so, and the public be damned.

The current Liberal government of Premier Dalton McGuinty plans to appeal the ruling but there is no guarantee it will be any more successful than it was at arbitration.

In other words, Mike Harris and his corporate pals in cabinet did such a first-class job of selling out citizens that 407 ETR may be able to thumb its nose at every elected government in Ontario until the year 2098 - another 94 years.

Company crows

The company was quick to crow over its victory.

"The province (meaning the McGuinty government) had alleged that the company did not have the right to increase tolls without first obtaining the government's approval," 407 ETR said in a weekend news release.

"Specifically, the government suggested that the company had to file a 'Change Request' in order to increase tolls and was in default for not doing so earlier this year. 407 ETR disagreed with the government's position, pointing out that the contract signed between the company and the government in 1999 did not contain such terms and conditions," it added.

"We are pleased with the independent arbitrator's decision," said Enrique Diaz-Rato, president and chief executive officer of 407 ETR. "All along, our position has been that we are acting in compliance with the contract."

Who is 407 ETR?

A company called 407 International Inc. is the sole shareholder, operator and manager of 407 ETR, which runs east-west just north of Toronto. In turn, 407 International Inc. is owned by a consortium comprised of the Canadian subsidiary of a Spanish company called Cintra Concesiones de Infraestructuras de Transporte (which is co-owned by Grupo Ferrovial and Australian-headquartered Macquarie Infrastructure Group) and Canadian-based SNC-Lavalin of Montreal.

Outrage - for what it's worth

The McGuinty government has expressed outrage at the ruling but whether it will ever be able to do anything more than that is not clear.

Transporation Minister Harinder Takhar argues that the 99-year lease is so extreme no one could reasonably expect unfettered rights to last so long.

"It's inconceivable that any government would have given a private consortium the unfettered right to raise tolls for 99 years."

Inconceivable? ETR 407 doesn't think so and neither, apparently, did the Harris government.

The contract does allow the province to "renegotiate" the contract with 407 ETR every five years but there is no obligation on the company to agree to any changes - or to restraint itself from demanding exorbitant compensation if it does.

Welcome to the modern world of privatization, a story almost always ends the same dismal way. Corporations win, people lose.

Web posted by NUPGE: 11 July 2004