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Wednesday 7 March 2007

407 expansion: more public money to private profit?

The Harper government yesterday announced $1.5 billion in spending to improve transit in the GTA. An unspecified amount of that package will be to extend the Highway 407 tollroad 67 kilometres eastward into finance minister Jim Flaherty's riding. Judging by the cost of the 404 extension, also announced yesterday, the toll road will cost hundreds of millions of dollars to extend.

Now hold on a second. The 407 ETR (Electronic Toll Road) is operated and, for all intents and purposes, owned via a 99-year lease by a private consortium comprised of Cintra Concesiones de Infraestructuras de Transporte (major shareholder) from Spain, Macquarie Infrastructure Group, and SNC-Lavalin that generated revenues of $118 million in 2006. 407 ETR, which charges its users the highest toll in North America (17.6 cents/km for a small vehicle in peak hours)

Now I thought the logic behind so-called "Public-Private Partnerships" was that the private sector would take on the cost and risk of a public project. Of course, the reality is quite different - the public ends up paying more and getting less so that private shareholders can profit from the public purse.

If the 407 is to be expanded shouldn't the private consortium be footing the bill, particularly if they're going to profit from the longer road for the remaining 91 years of the lease? If not, then shouldn't the new 67 kilometres being built at public expense be entirely toll-free? Why should we be paying hundreds of millions of dollars to enhance a private asset?
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