Seeking truth on the 407

The politics of Global warming
Muslims are not the problem. We are.

2015-05-19-407 ETR

I received an interesting propaganda piece in my mail about the “History of HWY. 407.”  Looking into the matter reminded me of my motto: Truth is in the mind of the beholder. Reality, in this case the facts, are just an excuse for everybody to advance their own political agenda.
The facts are available for anybody to see, with a little research you can find all the answers. While the facts are clear, the conclusions drawn from them are fascinatingly divergent.

Wikipedia provides a fairly balanced description of the facts; PrudentPress sees it as a failure of politics, while the “The Cord”, the house paper of the Wilfrid Laurier University, sees it as capitalism gone wrong.

The 407 is not popular, there is even a website with a rather telling domain name:

The details don’t matter as much as the interpretations. In this case, as in many others, we use such information to confirm our existing believes. The left will keep blaming capitalism and the free market, the right will keep blaming the corrupt politicians of the left..

The problem is the state.

The power we give to it every time we vote. The problem is the system we created through the trust we placed in politics as the way to solve our problems.

The 407 deal was a lousy one but what can we expect? We gave politicians the power to make these deals. How can we fault them for it when they do? We know that a politician is someone who would sell his mother, wife and daughter into sexual slavery if that would get him re-elected. What is selling a highway, that wasn’t even his to begin with, compared to that? Dalton McGuinty wasted a few hundred millions of taxpayer dollars on two seats, Mike Harris squandered a few billions just so that he can pretend that he kept his election promise.

Most articles bashing capitalism and the free market name the owners, conveniently forgetting to mention one: CPP. The Canada Pension Plan owns 40% of 407 ETR.
Is it wonder that the enterprise will get special privileges from the state which has a vested interest in making sure that it has a competition free, profitable operation?
When you are driving on the 407, you can feel good knowing that you are paying into your own retirement fund.

The issue is quite relevant these days as Hydro one is up for sale. Everybody swears that it “won’t be like highway 407

Just look at the numbers: the value is an estimated 16 billion (according to the Star article) and the income is 287 million. That is a return of 1.78% on the asset.
The usual suspects, such as the NDP, are naturally opposed to the idea.  According to Andrea Horwath  “The rates will skyrocket”. How can they not? That’s the idea. The rates will be raised because somebody has to pay for the Liberal energy policies, and this way it will be possible to blame the increases on the greedy corporations and their profit motive.
This Star article points out that “Wynne’s play is more fiscal than political. It’s not that she wants to get government out of electricity, she just wants to squeeze more money out of it — to pay for other public works.” For Wynne this will be a double whammy: she will get cash infusion to waste somewhere else and she will get another chance to badmouth the free market for the inevitable increases. Ontarians are already quite worked up about the rising Hydro rates, so when they will go up again under private management, it will be easy to advance the anti-capitalist, the anti-free market narrative.

Labor unions are already out with the message:
“We can’t trust private, for-profit owners to deliver reliable affordable electricity. They answer to their shareholders, not you and me,”
….. but they are considering supporting the privatization as long as they can get a piece of the company.(~5%)

It is all politics and when it comes to that we can be sure to get screwed in the end. The color of politics does not matter. All parties will do it the same way; selling out our interest for short term gains and selling it cheap.

Here is a trick question for the libertarian readers:
If as an elected representative of the Libertarian party, the question would be put in front of you, how would you vote? For, or against privatization?

The correct answer is, of course: IT DEPENDS.
The people, the electorate, the taxpayers can get screwed either way. The cause of freedom can be screwed in either way. Only through careful, minute examinations of the details can it be determined which option will screws us less. Corrupt crony capitalism is just as bad as labor union pampering socialism.
The only thing that would solve the problem is complete deregulation, complete privatization without monopoly privileges, a complete disassociation of the state from the entire sector, be it transportation or energy distribution.
Nobody talks about that and until we do, anything that is done will be just an excuse for all parties in the debate to advance their own well-rehearsed policy positions as the TRUTH.

Truth is in the mind of the beholder
Reality is just an excuse
Only integrity matters

…….. and that is in short supply in the world of politics.

The subjects discussed above – both 407 ETR and the Hydro One privatisation – have dozens if not hundreds of articles published about them. If you want to get depressed, just search for them. I will only include here two more, this presentation with some good information and the content of the mail that prompted this post. I am including the full text as I was not able to find the original on-line.

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You can drive the 400 mile length of the New York Thruway (I-90), from Buffalo to New York City , a toll road with fully staffed toll booths, for peanuts. Actually 2.1 cents per km. No accounting fee and no video fees.

Then there is the cost of driving across the top of Toronto on Hwy 407……..everything is electronic and automated, drivers pay for the camera operations and the billing costs in addition to the exorbitant toll rates… and the Ontario Gov. acts as ‘enforcer‘ in collecting the unpaid tolls!!

Even Al Capone and his crew never had it as good as this during the bootleg liquor days of the 1920’s and 1930’s!!…..It is very expensive to travel this road!

I thought you might like to read this, it’s a real eye opener, what a rip-off!!

In the early 1990’s Ontario was almost bankrupt under Bob Rae’s NDP government. But it desperately needed new roads, as it still does today. So the Rae government built a toll road around Toronto and it was a great success. It was a cash cow called the 407 ETR.

 The Conservative government of Mike Harris then later foolishly leased this road for 99 years to a Quebec-based company for a substantial amount of money. This was in May 1999, and was done to reduce the deficit and look good.

 Before the Harris government could lease the road, however, they had to pass new legislation to allow this, because never before had a ‘public road’ been sold to a private company. This very flawed legislation was passed in November 1998. The new Quebec owners then closed the deal and Ontario had ‘sold’ it’s first highway.

 This Quebec company then sold the road at a profit to Spanish owners, thus assuring that profits from the road would never be taxed in Canada

As part of this deal, the Ontario government agreed that individual license plate renewal would be denied if there were any outstanding tolls against that plate and its owner.
So this arrangement, in practice, made our government a collection agency for a privately held, for-profit foreign consortium.

In addition, the terms of the deal stated that there would be no statute of limitations on these bills and that they would never go away even if the citizen went bankrupt.

Even your income tax has a statute of limitations.

The 407 ETR refuses now, as then, to produce any photographic or other evidence, that what they bill is an accurate reflection of the offending vehicles presence on their roadway. So there is no accountability and OUR Government still collects the SPANISH bills for them. Oh, I forgot to mention that the Spanish company decides on the interest rate on these forever bills and currently it is 26.82 per cent compounded monthly but it varies based on the whims of the Spanish owners.

And there is a definite problem with who gets billed. In very short order after the sale of the highway, according to the media of that time, 100,000 citizens who had never been on the road had been incorrectly billed. The MPP’s were deluged with complaints and so the Conservatives under then transportation minister David Turnbull told the private Spanish company to clean up their act. Until there was evidence of that happening their collection deal was cancelled. This was in 2000. But in 2005 the 407 ETR went to court to reinstate its original sweetheart deal. The judge ruled in its favor even though this company still showed no accountability and still did not produce evidence of the legitimacy of its charges.

The government of Premier Dalton McGuinty should have appealed this decision but did not.   Now the government is the collection agency for the Spanish consortium. Now the agreement covers any vehicle that is owned by the person who has an offending license plate. So if you own six vehicles and one of them is alleged to have been on their road, your government will not issue any license plates for any of your vehicles until you pay the ‘alleged bill’ at your government license office, whether it is correct or not.

 The toll in 1999 was seven cents a kilometre, and now it is 19.85 cents a kilometre!

 There is also a monthly accounting fee of $2.50 and a video charge of $3.25.

 That is far beyond the rate of inflation and there is no control on how much this foreign company can charge.

 The tolls here are higher than anywhere that I travel. This road is simply built through corn fields, whereas in Mexico or Italy there are mountains, tunnels, bridges, etc.,  and still those countries have tolls that are substantially lower.

 You can travel from here to Los Angeles for less toll than it costs to cross Toronto .

I believe the current toll in Mexico is 13 cents per kilometer, but that includes automatic medical coverage for everyone in the vehicle.

 With all the road tax that we Ontarian’s pay, the last thing we ever expected was a toll road.

We need to buy back this road and break the deal with this consortium.

If any Canadian government is going to collect for any privately held company, change the rules on the statute of limitations, etc.. then it had better collect for all private companies on the same terms. This current arrangement discriminates against all other private companies.



7 replies on “Seeking truth on the 407”

  1. EimaiSkorpios says:
    Hello Zork—good article. I decided to share it on Facebook. I remember trying to get in touch with the government agency at the time, to add my voice to those of the objectors. The lines were jammed as was the voice mail box, when I finally got through. Harris did a lot of good for this Province after the Rae balls-up, but this decision was made without much thought or consideration for the people who payed for the construction of the 407. That being said, although the private companies absolutely screwed up the administration of the toll road, they did—and do— manage the infrastructure very well. If the 407 was still under the management of the government, it would look exactly as it was in 1998. I am still and advocate for boycotting the 407 until the prices fall in line with other, North American toll roads. I expect the 407 will be added to the agenda of the PC Party under the new leader, Patrick Brown. I would be interested to know if the holding company that owns the 407 has to pay for policing and fee collection services—or are taxpayers footing the bill for that too.
    • zorkthehun says:
      Hi David – I agree with you on Harris, he was better than any of the possible alternatives, which OTOH does not excuse this screw up, but the point I was trying to make is that the whole system is rotten. It does not really matter who is in power.A labor union in a monopoly will behave just as it did under government ownership.
      • EimaiSkorpios says:
        OK, when you use the 407 as your subject—one is thinking you are talking about the 407. Allow me to digress briefly. It’s not easy to determine just how much was spent on the 407 from it’s inception in the early ’70’s to the final sale in ’99. A figure of $1.6 Billion was put forth by some economic pundits. However, other estimates are as much as $104 Billion, if we look at land acquisitions over the decades. How much of that had already been written off—I have no idea. But I agree that $3.1 Billion was a slap in the face for Ontario taxpayers. However, what was the market value? BTW, McGuinty and Wynne squandered well over a billion dollars to save those two seats in Oakville.

        Now, all that aside, I agree that the entire system is rotten to the core, but unless we hold a revolution and overthrow them all, it is what we’re stuck with. The combination of giant government and perennial bureaucrats is the problem. Politicians may come and go, but the bureaucrats are ever there—breeding themselves like rats—perpetuating their parasitic species and designing plans to take away more and more of people’s right and freedoms. if a politician looks like he might be a threat, the bureaucrats will destroy him with their administrative poisons. The only politicians who last are those whom the bureaucrats embrace—ergo, we end up with more corruption at all levels. And, I agree that unions are merely a symptom of corruption. The causes of the rot are rooted deep in public apathy and an unwillingness to take care of ourselves on an individual basis—and forcibly reject the lotus-eating effects of overreaching government. Canadians will never rise up to overthrow their governments, so we can only watch as a great society decays into putrid corruption.

  2. Axeff (The Smiling Skeptic) says:
    Hi Zork,

    it is good to hear your voice and see that someone is trying to “light up the fire”.
    My information is more than limited regarding the 407 ETR, and personally I just go around it.
    As far as the politicians and the parties, I could not agree more with your opinion, but sadly I do not have an alternative suggestions.
    (One of my dream is to listen to archive recordings as Bob Ray talking about the Liberals, before he joined the party.)
    For me to become a politician is equivalent or the same as one making a decision to act and behave as a criminal, an immoral, self serving hypocrite swindler, or as you mentioned: “We know that a politician is someone who would sell his mother, wife and daughter into sexual slavery if that would get him re-elected”. Right on!
    The sharing of the facts and information regarding 407 is making me angry, upset and irritated, then frustrated: what, if anything at all, could be done?

    On the other hand, I would find it more interesting, intriguing and practical to talk about:

    I might inspire you, or provoke your fancy to address this in your next blog.
    Here is how I remember:

    Not too long ago the gas price was under 100 cent per liter (even 92?).
    No it is back again over 112 cent per liter.
    How could be a 20% (or close to that figure) price increase in one year?

    I am not sure about the agreements and deals between the different gas stations, but it looks like a closely co-operating mafia, since the prices are almost 100% the same at all pumps at a given time of day.

    Long time ago I got an email from an unknown individual, alerting drivers to start an action:
    rotate on a weekly bases, and all drivers in the city/province should refuse to gas up at a named gas station let’s say for a week. Than change to another gas station an so on.

    It seemed interesting and doable.
    I think the idea was that if any of the gas stations would not have an income/cash flow for a week, they would be on their knees, even after a couple of days.
    I was ready to fully participate in this action.




  3. zorkthehun says:
    Axeff, there are many subject to talk about concerning energy policy (which is another spectacular !@#$ up of the provincial liberals), but the cost of gasoline at the pumps is not one of them. This is a purely economic question and works exactly as it is supposed to. There are no mafias just a fairly straightforward competitive market.
    The most important component of the cost is the price of crude oil, the supply of which is quite inelastic which is why there are such big swings in the price. Research price and supply elasticity for the details.
    The problem is somewhere else and I will, for sure, blog about it. Keep reading. 🙂
  4. zorkthehun says:
    David, we are in complete agreement. This particular subject got to me more than most. I was utterly disgusted as I was looking at the details, but what I found most disturbing was the spin. The realization that we are our worst enemy.
    OTOH, I just got a very nice comment in an e-mail saying that:
    “Things will change inevitably as they have already started to, but we do not always see it. Your action and article is part of this change, recognize it or not.”
    I wish I could believe him……………..
  5. Mike S says:
    disgustingly overpriced…72 km on 407 cost 15.16 plus $4 video toll and $3.55 account fee.Toronto to New York city on toll roads cost me $12.00 (800km)

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