HIGHWAY 407 ACT, 1998 / LOI DE 1998 SUR L'AUTOROUTE 407
STATEMENT BY THE MINISTER AND RESPONSES
REGIONAL MUNICIPALITY OF HALTON
CANADIAN AUTOMOBILE ASSOCIATION ONTARIO
REGIONAL MUNICIPALITY OF DURHAM
GREATER TORONTO HOME BUILDERS' ASSOCIATION
GREATER PETERBOROUGH CHAMBER OF COMMERCE
DURHAM REGION REAL ESTATE BOARD
CANADIAN COUNCIL FOR PUBLIC-PRIVATE PARTNERSHIPS
CONTENTS
Thursday 19 November 1998
Highway 407 Act, 1998, Bill 70, Mr Sampson/ Loi de 1998 sur l'autoroute 407, projet de loi 70, M. Sampson
Statement by the minister and responses
Hon Rob Sampson, minister
Mr Joseph Cordiano, MPP
Mr Gilles Pouliot, MPP
Regional municipality of Halton
Ms Joyce Savoline
Canadian Automobile Association Ontario
Mr David Leonhardt
Town of Markham
Mr Gord Landon
Regional municipality of Durham
Roger Anderson
Town of Oakville
Ms Ann Mulvale
Ontario Trucking Association
Mr Michael Burke
Mr Stephen Laskowski
Greater Toronto Home Builders' Association
Mr Vincent Brescia
Greater Peterborough Chamber of Commerce
Mr Don Frise
Mr John Bowes
Durham Region Real Estate Board
Mr Ted McCracken
Canadian Council for Public-Private Partnerships
Ms Glenna Carr
Mr Rocco Sebastiano
STANDING COMMITTEE ON RESOURCES DEVELOPMENT
Chair / Présidente
Mrs Brenda Elliott (Guelph PC)
Vice-Chair / Vice-Président
Mr Peter L. Preston (Brant-Haldimand PC)
Mr David Christopherson (Hamilton Centre / -Centre ND)
Mr Ted Chudleigh (Halton North / -Nord PC)
Mr Sean G. Conway (Renfrew North / -Nord L)
Mrs Brenda Elliott (Guelph PC)
Mr Doug Galt (Northumberland PC)
Mr John Hastings (Etobicoke-Rexdale PC)
Mr Pat Hoy (Essex-Kent L)
Mr Bart Maves (Niagara Falls PC)
Mr Peter L. Preston (Brant-Haldimand PC)
Substitutions / Membres remplaçants
Mr John R. Baird (Nepean PC)
Mr Joseph Cordiano (Lawrence L)
Mr Gilles Pouliot (Lake Nipigon / Lac-Nipigon ND)
Mr Mario Sergio (Yorkview L)
Mr Joseph Spina (Brampton North / -Nord PC)
Clerk / Greffier
Mr Viktor Kaczkowski
Staff / Personnel
Mr Lewis Yeager, research officer, Legislative Research Service
The committee met at 0905 in committee room 1.
HIGHWAY 407 ACT, 1998 / LOI DE 1998 SUR L'AUTOROUTE 407
Consideration of Bill 70, An Act to engage the private sector in improving transportation infrastructure, reducing traffic congestion, creating jobs, and stimulating economic activity through the sale of Highway 407 / Projet de loi 70, Loi visant à intéresser le secteur privé à améliorer l'infrastructure des transports, réduire la circulation engorgée, créer des emplois et stimuler l'activité économique par la vente de l'autoroute 407.
SUBCOMMITTEE REPORT
The Chair (Mrs Brenda Elliott): Good morning, everyone. Welcome to the standing committee on resources development. We're gathered together this morning for the purposes of hearing presentations on Bill 70, the Highway 407 Act.
Our first order of business this morning is to deal with the subcommittee report. You have that before you. Do I have a mover for this report?
Mr John R. Baird (Nepean): So moved.
The Chair: Mr Baird, thank you. Any comments or questions?
Mr Baird: Do you require an amendment?
The Chair: I don't think so.
Mr Baird: With the Wednesday, September 30?
The Chair: No, that was already done.
Mr Baird: OK, sorry. I've got the old one.
The Chair: Further questions or comments? Shall this report be adopted, then?
All those in favour? Opposed? It is adopted.
STATEMENT BY THE MINISTER AND RESPONSES
The Chair: We now come to the interesting part of the day. Minister, welcome. We're very pleased that you have the time to come before us this morning to begin our presentations. On behalf of all the committee members, I thank you. You may begin. You have 20 minutes for presentation time, and that will be followed by 10 minutes for each of the opposition parties.
Hon Rob Sampson (Minister without Portfolio [Privatization]): Thank you very much, Madam Chair. I'm used to being set up by the opposition, not by the Chair of subcommittees, but I'll do my best to keep this an interesting day.
I have with me the CEO of the Office of Privatization, Scott Carson, and the vice-president of corporate development, Office of Privatization, handling the 407 file, Jodie Parmar. If there are some technical questions, I may refer them to these gentlemen.
I'm pleased to be here today to lead off the public hearings on Bill 70, An Act to engage the private sector in improving transportation infrastructure, reducing traffic congestion, creating jobs, and stimulating economic activity through the sale of Highway 407. I'd like to focus my presentation this morning, if I could, on why we want to privatize Highway 407 and the process we are following to get there. I'll also address some of the key issues raised by members during the second reading debate on this particular bill, as I was encouraged to do so and I frankly want to.
I'd like to begin my remarks by recognizing and thanking many people in successive governments, believe it or not, for pioneering and building the 407. It has indeed been a long journey.
Planning for the 407 and other 400-series highways began in the 1950s. It's hard to believe, but that's the case. At that time, the 407 was planned to stretch from Milton to Markham. In the 1970s, the Davis government created the Parkway Belt, which included plans for the 407. Construction of the first section, from Highway 410 to the 400, was started in the 1980s under the Peterson government, and in 1993 the Rae government accelerated construction, from the 403 in the west to Markham in the east. So all parties have had a say in this particular infrastructure.
Many notable changes happened over this 40-year period, including the shift from public-sector ownership to private-sector involvement and the use of leading-edge technology in the collection of tolls. As you know, the 407 is an electronic tolled highway.
Tolls are routinely accepted today in many places around the world as a means of financing construction and maintaining the infrastructure. It's worth noting that in 1956, John Robarts chaired a select committee of the Legislature which recommended the use of tolls as a means for governments to build highways. So the discussion on tolls has been around this province for a number of years. However, the concept of privatization in the construction of Ontario's roadways was first introduced by the NDP government in 1993. However, their highly touted public-private partnership simply didn't work. "Significant financial, ownership and operational risks remained with the province," according to the Provincial Auditor.
Taxpayers financed the project then and taxpayers continue to own and finance the highway today. While I give credit to the NDP government for fast-tracking the construction of the 407 and making congestion relief a priority, I must say that the decision to build the middle section only diminished its value as a true bypass route through the GTA. Joyce Savoline, the chair of the region of Halton, who I understand will be addressing the committee later on today, perhaps this morning, has referred to the absence of the western extension of Highway 407 as "the missing link."
In its present form, Highway 407 is a 69-kilometre roadway through the heart of the GTA, extending from Highway 403 in Oakville to Highway 48 in Markham. As envisaged, the completed highway will be extended another 85 kilometres, 24 kilometres west to Highway 403 and the QEW in the Burlington area and 61 kilometres east to the junction of Highways 35 and 115 in Clarington. As well, two proposed connecting links between the 401 and 407 have been planned in the Durham region.
As a vital link in Ontario's transportation network, the completed highway will play an increasingly important role in continuing the economic prosperity of the GTA and of the province as a whole. The extensions to Highway 407 will give a much-needed boost to our transportation infrastructure by further reducing congestion on the 401 and the QEW, providing a competitive advantage to Ontario's industries and creating over 6,000 new jobs. More importantly, the proposed expansions will stimulate new investment and activity in the 407 corridor, in communities such as Burlington, Brampton, Markham, Oshawa, and the regions of Halton, Peel, York and Durham. I should say to the member from Mississauga, in the community of Mississauga as well.
There is little doubt that Highway 407, even though it's only partially completed, has been well received. The facts speak for themselves. Weekday traffic has virtually doubled this year, from about 107,000 daily toll trips in January to more than 214,000 trips a day in October. Clearly Highway 407 is meeting a real need.
If Highway 407 is such an integral part of the provincial transportation network and is exceeding its traffic and revenue forecasts, then why does the government want to sell it? After all, the government owns and operates every other highway in the province.
Mr Gilles Pouliot (Lake Nipigon): Good question.
Hon Mr Sampson: I intend to answer that question.
Interjection.
Hon Mr Sampson: You should stop prompting me.
While it's true that Highway 407 does generate significant toll revenues, it's important to remember that taxpayers are also still financing the very substantial debt associated with the construction of Highway 407 central. In addition, being the owner of the highway requires that taxpayers' dollars be spent on maintenance, expansion and ultimately upgrades to this very highway. Our goal in selling the highway is quite simply to ensure that the extensions to Highway 407 are built in a timely manner by the private sector, at no cost to Ontario taxpayers, and to relieve taxpayers of the construction and the financial risks associated with operating a toll highway.
Private sector ownership of the highway will remove the burden of construction debt and financing charges from the backs of taxpayers of this province, allowing the money to be used to reduce provincial debt, just as we promised to do in the Common Sense Revolution. This will free up resources which can be reinvested in priority areas such as health care, classroom education and community safety.
However, as we have said all along, we will proceed with the sale only if certain conditions are met. For example, the purchaser must agree to build, finance and operate the two extensions and finance the central section. The new owner will be required to start construction of the west and east partial extensions in the spring of 1999.
I want to assure the members of the committee and the public that we will be looking for fair value for this highway, along with a commitment to extend, expand and maintain the highway to the appropriate standards. We are not selling the land beneath the highway; we are only selling the right to run a business of a highway. We will grant a long-term lease so that the new owner can recoup his capital investment in the expansion of the road and its ongoing maintenance.
During second reading debate of the bill, many members asked if the highway would eventually be returned to the crown. The answer is yes.
The process to select a new owner will be conducted in a fair, open and competitive manner. A call for expressions of interest was issued in late October in order to identify and begin communicating with potential bidders. Once expressions of interest are received on November 23, the evaluation teams will conduct a bidder qualification process to assess the financial and technical ability of the bidders to undertake the project. Qualified bidders will be identified and a confidential information memorandum issued to them in early December.
Indicative bids are due in January and final bids are due at the end of February. The province will conditionally select the final bidder and complete negotiations in March 1999, with closing shortly thereafter.
We are committed to ensuring that the entire process to select a buyer is straightforward, fair and free of any conflicts of interest. We want to be 100% sure that all participants are treated equally throughout the process. That is why, through a formal RFP process, we have assembled a team of highly qualified financial, legal and transportation advisers. In addition, we have engaged process consultants who have helped us to establish a rigorous bidding process. Finally, we have put in place an independent process auditor to ensure that everything is done properly and according to prescribed practices we have established. Let me also emphasize that all those participating in the 407 privatization -- advisers, bidders, staff, consultants, and indeed elected officials -- are subject to a number of provisions designed to deal with any conflicts of interest.
Let me talk about the bill before you. Bill 70, if passed, would enable the province to sell Highway 407 to a private buyer and would guarantee that construction of the west and east partial extensions can begin next spring. The bill outlines the maintenance and safety obligations for the new owner. All safety and transportation standards which apply to other 400-series highways in Ontario will be applied to the design and construction of the extensions. The new owner must also adhere to Ontario's environmental laws and regulations, obtaining whatever approvals are legally required.
To enable the new owner to bill those drivers who choose not to use transponders, the names and addresses of the users will have to be known. This is no different than your utility company having your name and address in order to bill you for using their services. Access to this information will be subject to the provisions of the Freedom of Information and Protection of Privacy Act. An agreement will be developed between the Ministry of Transportation and the new owner regarding the information necessary to allow the owner to establish customer accounts. We will be introducing an amendment to the bill which will provide that the information being supplied by MTO will be limited to the vehicle owner's name and address.
Finally, I would like to address a few of the issues raised by members during second reading debate on Bill 70.
As the operator of the highway, the new owner will be responsible for establishing toll rates. Obviously it would be in the operator's best interests to keep toll rates low, since drivers will always have the option of driving a free alternate route. Any business person will tell you that if you set your price too high, customers won't use your product. Both the province and the new owner will have an interest in ensuring that Highway 407 is well used, though, and draws traffic from other roadways as it was intended to do. The 407, after all, was designed as a bypass route to alleviate traffic congestion on other routes in the GTA.
Our sale agreement with the new owner will ensure that the 407 carries a minimum level of traffic. Such a traffic threshold will result in congestion relief in the GTA corridor and will be responsive to changes in traffic volumes in the GTA over time. There will also be a direct relationship between this congestion relief measure and the ability of the owner to establish toll levels. This will ensure that the highway remains accessible to everyone.
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Members also spoke about the need for a fair, open and transparent process. Let me assure the members again that we recognize our responsibility to balance the public's right to know with the need to protect the integrity of the process and the value of the asset.
As the member for Ottawa Centre, Mr Patten, pointed out during second reading debate on the bill: "We know that these negotiations can't be done in public and I certainly can appreciate that it will be done in private. But there are things that can be shared with the public, such as the criteria by which the RFPs are put out."
I agree with Mr Patten. That is why I would now like to table a summary of the request for expressions of interest that was recently made available to potential bidders. This report provides an overview of the project scope, the bidding process, and the evaluation criteria that will be used to select a buyer.
In closing, let me stress three important features of this undertaking: We want to ensure a timely completion of Highway 407, since it is a significant contributor to Ontario's economic success story; we want to ensure fair value is obtained for Ontario taxpayers; and finally, we have designed a process which is straightforward, fair, open and competitive.
Quite simply, passage of Bill 70 will be good news for Ontario taxpayers, good news for business and industry and good news for GTA motorists.
The Chair: There are a few remaining moments for questions. Were there any questions to be directed to the minister?
Mr Joseph Cordiano (Lawrence): Are we not going to opposition statements and then questions?
The Chair: We'll go straight to opposition statements? All right. Thank you, then, Minister.
Mr Pouliot: On a point of order, Madame -- Minister, you will bear with me: I was under the impression that the minister would have an approximate time of 20 minutes and then the official opposition and the third party would therefore have an approximate 10 minutes to respond. But if the minister wishes to entertain a question period of sorts, certainly the third party would have some questions, providing it doesn't deter from our response to the minister's statement. What is your ruling?
Mr Cordiano: We would still want to be assured 10 minutes each.
Mr Baird: I think the subcommittee report gave an opportunity for the minister to make a presentation and for each of the opposition parties to. That was certainly my understanding of the subcommittee report that we adopted unanimously.
The Chair: I only ask because Minister Sampson, when he sat down, indicated that he had staff with him and assistance if there were questions that he couldn't answer. So I assumed from that, rightly or wrongly, that you may have the thought in your mind to entertain questions.
Hon Mr Sampson: Madam Chair, I don't have any difficulties with a brief question period if that's what the member is looking for. I've got nothing to hide here, so I'd be prepared to entertain questions, but I think you have a time limit. I'm in your hands as it relates to your time limit.
The Chair: If we do that, we have time for one very brief question from each opposition party.
Mr Cordiano: That's fine.
The Chair: We'll begin with Mr Cordiano, very briefly.
Mr Cordiano: This is a very important question which I've discovered after careful scrutiny of the bill, and I'm going to be raising this time and again. I'd like to know why it is that the eventual purchaser of Highway 407 will be given an exclusive exemption from paying property taxes when every other business in this province is undergoing the difficulty of the new assessment regime. I cannot understand why you would exempt Highway 407. They're a legitimate business; they'll be operating as a business. Therefore, it makes no sense in the world to me why you would do that.
Hon Mr Sampson: I'd be happy to answer that question. The answer lies, if you look carefully, in the deal structure we're proposing. What we're proposing here is a long-term lease, and the ownership of the land remains with the crown. That's point number one.
Point number two is that we're trying to make sure, as I think is fairer, that the business of running a toll highway competes fairly with its natural competitive business, which is a public highway. As you know, public highways don't pay provincial property tax.
Mr Cordiano: That's absolutely ludicrous.
The Chair: Mr Pouliot, briefly, please.
Mr Pouliot: I have one brief question regarding financing. Some of us are very much aware that in its intent, in its spirit, originally Highway 407 was to be financed by the private sector. They would go to money-lenders, to a financial institution, to get the money. It became apparent in rather short order -- in fact, it was what everybody knows -- that the cost of borrowing, that is, the private sector going to money-lenders, would be 50 to 75 basis points more than the government borrowing, and in terms of the consequences, the toll-payers, the users, would be picking up the difference. There are no secrets, no magic formula. You can check the ROB this morning and you will see the cost of issues under the bond section of sovereign -- Canada, provincial -- vis-à-vis the private sector, and you will acquiesce that it's 50 to 75 points for quality issues.
The Chair: Question, please.
Mr Pouliot: The question is, under your proposal you wish to have the private sector do the borrowing. Who's going to pick up the difference? You're looking at anywhere from $1.5 billion to $2 billion for the proposed project. That's one heck of a lot of money. Who's going to pick up the difference in borrowing costs?
Hon Mr Sampson: I remember the member raising this in the debate in the Legislature on second reading. His premise is a shade flawed. There's no doubt that the private sector pays a premium for the cost of its capital. The private sector is also, we believe, as it relates to the operation of this highway, a more efficient operator than we could be as a government, and will achieve savings that it will be able to relay and parlay into its toll structure. But if you really believe that the cheapest source of funds is always government, then of course -- and maybe this is the member's party's principle; I don't know -- you would believe that one should make every private business in this province publicly owned.
I don't carry that particular belief; I think the private sector properly prices the risk associated with construction of the highway. The private sector also benefits from being able to apply certain charges that relate to capital cost allowance against taxes, which can't be done in the public sector. If you take a look at the true risk transfers that we're proposing -- what we're proposing is that the private sector build this highway, manage this highway, complete its extensions at no cost to the taxpayer. I understand how your government didn't particularly enjoy passing costs other than to the taxpayer, but we see it differently.
Mr Doug Galt (Northumberland): Minister, this seems to be a rather unique project that you're taking on. It's rather large -- we're talking many millions of dollars -- and dear knows how many are out there showing an interest to compete. I can see that if the government doesn't do this just right, it could be very awkward for us down the road. It's unique in that it's government property, a crown corporation, being turned over. What steps are you taking to ensure that there will be a level playing field, that all the bidders will be on an equal footing?
Hon Mr Sampson: We're taking numerous steps to make sure that every individual bidder, when they finally get into the bidding stages, has access to the exact same information. It's what I would say is a fundamental principle of the process we've designed. An example would be that to the extent that there are questions asked by bidders, the answers to those questions and the questions will have to be exchanged with all bidders. We'll have a process that will allow us to deal with that. Information will be available in a very secure room, in a very secure environment, as it relates to the highway and its current operation, to every bidder equally. As I said, a very fundamental concept here is to make sure we do our best to have that happen, so there is no one bidder who is preferenced over another.
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Supervising that, as I said in my delivery, will be effectively two layers -- three, actually, because we've hired I believe very professional advisers to begin with, who will be handling that process for us -- but two additional layers of advice, one in the form of a process adviser and a process auditor who will help us make sure that the system we've got in place, to make sure it's fair, is being adhered to and is indeed working out that way.
The Chair: Thank you very much, Minister, for coming before us this morning with your presentation and for graciously allowing members to ask you questions as well.
We now move to statements from the official opposition, and we'll begin with Mr Cordiano.
Mr Cordiano: I'm very happy to be involved with this process and to make some comments on behalf of my party with respect to the privatization of Highway 407. Let me state from the outset, we are not opposed to having the private and public sectors work together; in fact, we're not opposed to the privatization of Highway 407 in principle. However, what I have seen come before us in the form of Bill 70 is not an ideal piece of legislation for this process to be undertaken. There are many gaps and many unanswered questions.
First of all, the idea of transferring this over to the private sector in total can be accomplished. However -- and you have not made any reference to the details of this -- for what time limit? We are absolutely opposed to a sale in perpetuity, which it appears, from the silence in Bill 70, is the case. You have not made that clear. In addition to that, these kinds of projects, if they're built, operated and transferred back to the public domain, can be fully supported.
We have a number of concerns that go well beyond who you are hiring as consultants, and I hope you're not asking the Minister of Community and Social Services for her advice in terms of Andersen Consulting. We saw what resulted from that. I presume you're going to take much more caution with respect to those fees and how much you're going to pay out in consulting fees. That having been said, I also have a concern that, yes, you are hiring an independent process auditor, as you pointed out, but the public will have no say in this. It is my view that we should have third-party oversight and it is therefore my view that we should have the auditor of Ontario examine this deal, examine the structure of it, the details of it. Therefore, I will be proposing an amendment to allow the auditor to examine this deal to ensure that the public interest test is met.
During second reading debate, Minister, you argued that there would be further details and that Bill 70 is only a framework. I understand that, and yes, I do understand the need to have a deal consummated within the confines of some privacy. I can appreciate that. But at the end of the day, Bill 70 is too silent on too many fronts. Let me point out what some of those concerns are.
I said from the outset in the second reading debate that when the previous government built this highway, the public assumed most of the risk. This was an innovation -- electronic tolling had not been demonstrated to work; there were some glitches at the very beginning -- so therefore there were greater risks associated with commencing with this project. It was a start-up, for all intents and purposes. So the public undertook to finance this, which I thought was a mistake, in the sense that if you're going to build something like this, then have the private sector build it, operate it and then transfer it back into the public domain. That's murky to me in terms of what you've suggested. I'd like to see further details of at what point the highway would transfer back into the public domain. That's point number one, as I said earlier.
As you know, when the private sector goes out to secure financing, capital markets are pretty strict in their requirements, so there is a great deal of scrutiny that takes place. That is not the case with public projects, not to the same degree. I know the private sector here will probably have to get financing for this. There will be some assurance of strict guidelines being met, and certainly any lenders would want to look at this very carefully.
The other major concerns I have are with regard to tolling. Obviously, you've created a monopoly situation for the eventual owners. They get to set the toll rates at whatever level they want. The public has no say, the consumer has no say. There isn't an independent body that would examine the increase in tolling as it pertains to the economy, how that impacts on people, on the drivers, ultimately; how that impacts on our trucking industry; how that impacts on the economy in general, because it does have an impact. This highway, as you know, is a winner. It will be utilized to higher and higher capacity rates. There is no doubt about that, so therefore this is a virtual monopoly, if you will.
I've also raised questions with respect to how you will evaluate this deal. What are the terms with respect to that? I understand you are making some details available in the RFP. You'll be setting out criteria. But I really don't understand how you put a price tag on this, so I'd like to see greater details with respect to that. I think everyone assumes that the highway is an eventual big winner in terms of its usage, but you're obviously trying to estimate potential here. You want, as you say, to get fair value for the taxpayers. Well, we want to make sure that the criteria you're putting forward allow you to do that. That's why I have suggested that we allow the auditor to look at this deal; and once you present the RFP, that the auditor have an opportunity to examine it.
I've also raised concerns with respect to whether this would be an asset sale or a share sale. I really don't understand how that would come about, so I'd like to understand that better. You have not made details available. The crown now owns the assets, so I would imagine it would be a straight deal, but there are complications involved with some of these transactions that I'd like to have further details about.
Ultimately, the other concerns I have are with respect to what happens in the event that the eventual owner of the highway should go bankrupt. Does the highway revert back to the crown? Bill 70 is silent on this. It allows for ownership transference, if I understood it correctly. Therefore, under a difficult situation like a bankruptcy, what would happen to the highway's operation? Would it be disrupted?
In going ahead with this, the biggest concern I have is the question I asked you at the very beginning: Why is it that the operator of Highway 407 is granted an exemption from paying property taxes? Every single business in Ontario has been reassessed, whether they are tenants -- and that's one way to look at this. Highway 407 owners do not own the land underneath the highway, so therefore they're leaseholders. Every business tenant has been assessed for the paying of property or business tax. You have not made a convincing argument, in your answer to me on that question, that they should be exempt.
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I have a report from Wisconsin on the privatizing of Wisconsin's interstate highway. This is a policy paper. It was done by the privatization council in Washington, DC. They are supportive of privatization. Because privatization will allow privatized projects, the state will derive local property taxes, state taxes and all kinds of other taxes. One of the key reasons for privatization that they put forward is that in fact the owners would pay property taxes.
I can't understand why this exemption is being granted -- it is a huge windfall for the owners -- when in other jurisdictions they are paying property taxes. You have not made any kind of convincing case for that. That's a huge concern I have, and I'm sure that every property taxpayer in this province would have the same concern. They're a going concern. Highway 407 is a going concern. It is a business. They should pay property taxes, and I'll be making an amendment to void that section of the act, to annul it.
I would thank you for this opportunity and look forward to further debate.
The Chair: We now move to Mr Pouliot from the NDP caucus.
Mr Pouliot: Bonjour. Let me depart from form, if I may, with respect, Madam Chair, and thank Viktor for his diligence in preparing the dossier, the background on Highway 407. Without intent, and respecting true professionalism, it does reflect indeed the contribution to the province, the newly found partnership between public and private, that the previous government endeavoured to put forth. Twenty thousand jobs, sir, do not go unnoticed in a period of recession, and the infrastructure that they provided still provides an alternative from the congested 401, the innovation of a partnership with the private sector.
Minister, I, for one, with some sincerity at my command, have a great deal of empathy and perhaps sympathy for your position. You must deliver. You are, as a minister, a facilitator. The government needs money because in its mantra, its manifesto, the Common Sense Revolution, it pledged to reconcile the budget, to achieve a zero deficit in the first term of office.
It's a bit panicky because you have chosen to extend the credit card by way of a tax break in lieu of paying your debts. You want to party all the time, you see, so now you're named the minister of convenience. You have a lifestyle to protect. You get used to being referred to as "Excellency," as "Mr Minister, this way, please." So I don't envy your task. But your record is immaculate, because up to this day you've done nothing. Now the Premier's office comes to you and says, "Sell whatever you can at whatever price and we'll put it against the deficit."
There will very likely be a federal budget in February. Then there will be a good-news budget where all those accounts will be coming back, taken off and put against the deficit. Then you will debate it and then you will drop the writ. It's hardly a secret to anyone. One is not to be blamed. But, please, your scheme would be cynical if it wasn't so thinly veiled. Minister, I've read your spin and actually it was not the very best. In fact, I resent the time that I spent reading the spin. It wasn't of the highest order.
Let me deal with financing. I did appreciate your note. You don't mind if I convey that? It says, "Giles" -- two lls to Gilles -- "do you need any help finding the financial section? Rob." I'm not used, being referred to as a socialist, but I did find it. I responded to the challenge. It's the Globe and Mail. What does it say? "Report on Business," in today's paper. Sometimes, Minister, I wish I would have a lot of trouble finding the business section. It's not the most lucrative part of the paper. This is not easy. I believed that it was in the cards, that it was OK for ordinary people to become wealthy, but after 30 years of this it's not that easy.
This is a long-term investment: government of Canada 9% coupon maturing June 1, 2025, 5.54%. Let's go to the corporate sector: Loblaws, 6.82%, a lot more than 1%. That's every year, you see; that's the yield. Union Gas, who are sure to be around, 6.42%. So that's 5.54%, 6.42%; 5.54% vis-à-vis 6.82% at Loblaws. Let's square it off here and call it 1%.
On your proposed project, on your extension, because the 69 kilometres at 1993 prices, 1994-95 -- I signed the contract, $928 million, aside from the tolls, so we're looking at more than $1 billion; let's say in your case $1.5 billion. At a 1% difference per year, the toll payers, who are also taxpayers, on financing a loan, building the same highway under the same standards -- because you're not to compromise them, are you? -- you're looking at anywhere between $15 million and $20 million a year.
You're behind the eight ball right at the beginning. How do you make it up? You make it up by charging the users. Then you go longer term. You establish a provision, as you float, and you feel the issues and then you go longer term. In other words, the tolls never come out.
We built the 407. We too wanted private financing. It was not possible. So what we said was: "The government will borrow because it's cheaper. The users will save. Eventually, after 30 years, it will revert back to the crown, its proper owner." That's not what you are doing here, sir. You might come next week into the House and tell us that you've hired a consulting firm -- Andersen, for instance; it can be anyone -- to guarantee the integrity of the project. Billy Joe, chair and CEO of ABC from Alabama, will be the owner of our flagship.
You call your process, your exercise, transparent. Will you please table the privatization review. The taxpayers paid for it. Surely they have an entitlement to see what they paid for. You came calling and they were there and they trusted you. Now they come calling again to see what their money bought. You claim that commercial privatization will not allow you to release the report. We have some difficulties with this.
But above all, the difficulty is we have a good thing with the 407. You have ample opportunity to follow the model that the previous administration set. Sometimes it's better to do little or to do nothing. What you have here is a blatant, obvious exercise. If you say so, OK, Monsieur, you're going to take the money. You'll sell a piece of concrete that can't talk back, a public utility, to the highest bidder. You'll take that $1 billion, which is really manna from heaven, and you'll put it against the deficit and you'll say, "We've done well." If you get the favour of the electorate you will say, "The future can last a long, long time," in case it does.
But, you see, you've got to cross that hurdle. That's it now. This issue won't be around maybe after if you don't balance the books. So what you've got to do is make an impression on the electorate, jump through every hoop, cross every hurdle and get $1 billion.
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To do that, you have the convenience of Highway 407. You're selling our infrastructure to the private sector. You don't have a partnership. You have little recourse. You're putting the users on the hook forever, in perpetuity, right off the bat, to the tune of $15 million to $20 million per annum. That need not be, because the marketplace offers you an alternative here, the alternative that we choose.
I don't envy your position in terms of conscience. It's not something you park at the door, Minister; I've been watching you closely. You have your whole life ahead of you. Why don't you call it what it is? This is an adult audience. We can take the hit, Minister.
I've had four ministries under the previous administration. With the favour of the electorate, I now find myself, after 14 years, as a member of the third party. But surely you're not trying to convince the people here, whose time is so valuable, who pay you the courtesy of their presence, and your friends at the table, when you talk about financing -- I once had a broker like you.
Minister, I want to wish you well, but this is open for debate. It's not easy. I thank you very much.
The Chair: Minister, that concludes our opening presentation of statements. Thank you very much for coming to the committee this morning, and your colleagues. We appreciate it.
REGIONAL MUNICIPALITY OF HALTON
The Chair: I'd like to now call upon representatives from the regional municipality of Halton. Good morning, Ms Savoline. Welcome to the committee. When you're settled, begin, please, by introducing yourself and your colleagues formally for the Hansard record, and you have 30 minutes for presentation.
Ms Joyce Savoline: My name is Joyce Savoline. I am chairman of Halton region. We're really pleased to be here with you today.
I'd like to introduce the three gentlemen who are with me today: our chief administrative officer for the region of Halton, Brent Marshall; Dave McCleary, a senior policy adviser in the planning department at the region of Halton; and Tom Eichenbaum, the director of engineering for the city of Burlington. We are here today on behalf of the regional municipality of Halton and also Mayor Rob MacIsaac of the city of Burlington. I am really pleased to appear before you today to communicate our support for the very quick passage of Bill 70 and the earliest possible construction of Highway 407 across our region, which is more commonly known in our municipality as "the missing link."
This submission is a co-operative effort between Halton and our municipal partners. Our partners are the city of Burlington and the towns of Oakville, Milton and Halton Hills. I understand that Mayor Mulvale from the town of Oakville will appear before you this afternoon to address a number of issues that are unique to the town of Oakville. We are in total support of her submission as well.
This is not the first time that Halton and its municipal partners have acted in unison on the issue of Highway 407. In fact, we remember when it was called Highway 403. Way back in 1983 we collectively endorsed resolutions identifying the construction of the former 403 as the number one provincial road priority in our region. Since that time, our councils have reaffirmed this position many times with each new provincial government. We have met with each Minister of Transportation and our MPPs to ensure that there was full understanding of the importance and urgency of the construction of Highway 407. This importance is to the economy of not only our region but also those in the surrounding area, including the greater Toronto area, Hamilton-Wentworth and Niagara region.
The title of Bill 70 is very appropriate, and there are a few key words within that title which I believe best describe the critical importance of this highway to the region of Halton.
The QEW is a critical transportation and economic link between the GTA, Hamilton-Wentworth, the Niagara region and the United States. However, the past 15 years have seen the rapid deterioration of the QEW's ability to efficiently move raw materials, finished goods, commuters and tourists through what we can best describe as a freeway hourglass.
Because a picture is worth a thousand words, you will see a small hourglass on the next page. It describes to you how 12 lanes on one side and 10 lanes on another all form into a very congested six lanes of QEW highway through Halton. I can't describe to you the nightmare of traffic through that area. It exists almost all day.
Halton has monitored the growth of traffic congestion on the major road system, including the QEW, for about 25 years now. Congestion occurs on the QEW when the volumes in one direction reach 80% of capacity. At these volumes, merging and exiting from the road becomes very difficult. Further, the weather conditions and lane restrictions when there is road work being done make it even more disabled. A car on the shoulder is a disaster. Even though it doesn't affect the lane, just the slowing of traffic is a distraction. When the QEW reaches 90%-plus of capacity, it becomes unstable, with any minor disruption resulting in a total breakdown of operation.
When we look at this hourglass, we judge it in the time period of 7 am to 7 pm, and I think we're being generous, because I think we could even expand those time periods. As you can see, in 1991, five hours were defined as being congested. When you move to the present day, 10 out of 12 hours are congested. There's another graph on the next page that will help you see that.
Under these circumstances, all major roadways come to a complete standstill, with trucks diverting to minor collectors and also neighbourhood streets. Access into and out of the major GO stations adjacent to the QEW becomes impossible, and in many cases what is normally a 15-to-20-minute trip can easily take three hours. I can speak to you about that from personal experience, believe me.
Most serious, however, is the impact of a road system breakdown on the ability of the police, fire and ambulance services to respond to emergencies under these conditions.
Commuters and truck traffic are also using arterial roads through residential areas as a means of avoiding the congestion on both the QEW and what is now known as Regional Road 5, which used to be known as Highway 5 or Dundas Street. This unintended diversion of traffic disrupts neighbourhoods, creates unnecessary safety problems and higher noise levels, increases the wear and tear on our local roads, and prematurely triggers expensive local road improvements.
The construction of Highway 407 across Halton will increase the road system capacity by as much as 50% at the Bronte Creek and approximately 30% at the Oakville Creek. It is, however, important to understand that this congestion relief will only last five to 10 years before transportation demands create the need for additional capacity improvements, such as the widening of the QEW and Regional Road 5, the expansion of GO Transit services and additional transit initiatives. While the construction of Highway 407 provides a 5-to-10-year window of congestion relief and management, the province must continue with its commitment to the widening of the QEW through Halton to eight lanes by the year 2011. I can't stress that enough.
The Oakville, Burlington and Milton chambers of commerce support the construction of Highway 407 and have expressed concerns that the serious congestion problems and unreliability of the Queen Elizabeth Way for goods movement is becoming a major liability in the attraction of new businesses and industries. It is also impacting the economic viability of existing businesses. Businesses which rely upon just-in-time delivery are particularly impacted by these delays, while others experience productivity losses.
We have a plan in Halton called the Halton urban structure plan. It is a plan for growth management. I'm very proud of it. It has taken us 14 years to develop. It is a plan that allows our community to grow, respecting the character, values, standards and the environment of Halton region and its four area municipalities.
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The Halton urban structure plan will create a sustained economic return through private and public sector investment. This highway is an integral part of that plan. There will be up to 200,000 people, and 3,000 to 4,000 acres of new freeway-corridor-based employment land will be created when this plan becomes real, as soon as we pass our official plan amendment early in the spring. I think we were all young when this process started, but we are really eager to see it conclude this spring.
Early in 1999 we will deal with the amendment to the official plan, which will designate the lands in the town of Oakville between Regional Road 5 and the future Highway 407 for urban development. This area will house approximately 50,000 people and contain about 1,000 acres of land for future economic development.
The implementation of the Halton urban structure plan, which includes the north Oakville area abutting Highway 407, will create a sustained economic return through private and public sector investment in infrastructure, housing construction and the jobs brought to this area from new industries which will locate in the business parks that will be part of our area.
The province of Ontario has the potential to be a huge beneficiary of the proposed urban designation in north Oakville. You currently own 1,000 acres of land abutting Highway 407 and Regional Road 25. That interchange can reap lots of financial benefit for this government. The value of these lands could range from $50 million to $200 million depending upon future land use designations and conditions when the province sells the land for development.
Highway 407, in combination with local road and transit improvements and the expansion of GO Transit, are the key elements of the transportation infrastructure necessary to support this growth. Because of the high levels of congestion that persist throughout all of Halton in the south, it may be necessary for our council to make development of this area contingent upon the commitment to the completion of Highway 407.
We have had extensive experience in public-private partnerships in Halton region and I compliment you on taking that initiative. In fact, we have had many discussions at the staff level, your staff calling our staff trying to learn more about our experiences and our successes. We were very pleased to have that dialogue. While it is recognized that there must be a strong business case for private sector involvement in Highway 407 or any other public-private partnership, the nature of the partnership should not result in a toll or any other user pricing structure that is punitive or is a disincentive for use by commuters and the trucking industry.
Halton has done a survey of the users of Highway 5, or now the Regional Road 5, and we have some, I think, very valuable statistics. We are from the government and we are here to help you, so we would be more than willing to share this survey with you so that you can see the results of what the people said along Highway 5. I think you will be pleasantly surprised to know that there are a lot of people who would divert and use Highway 407 in that instance.
If I could explain a little bit about why I feel that is, at this point in time we have tremendous congestion at the QEW and 403 interchange in the west part of Burlington near the Hamilton border. When people are committed to that roadway, they stay on the QEW. By the time they get to where they can access the 407, way up in north Oakville, they've already committed. They've already gone through the worst congestion, so why now jump on the 407? However, if they have the opportunity to get on the 407 much earlier, where that congestion exists, you will see a higher use of 407 through the area that we call "the missing link" now.
Another area of concern is the potential for the private sector partner/owner to delay or not build a couple of critical interchanges across this new Highway 407, and I'd like to flag those for you now. It would be devastating for our region -- devastating -- if the Appleby Line interchange and the Neyagawa interchange were not built immediately as the highway were being built. These are two interchanges that cannot wait to see what will happen in the future, and I can't stress that more strongly.
It is imperative that this transit corridor continue to be protected and that the design and operation of Highway 407 through Halton accommodate transit vehicles and supporting infrastructure such as commuter or ride-sharing parking lots at major interchanges. Further, access and pricing policies should not prohibit or discourage the use of Highway 407 as a major commuter transit facility.
While Halton and its municipal partners and our chambers of commerce are committed in our support for Highway 407, the construction and operation of this facility will have impacts upon adjacent communities as well. There is a need for a high level of communication and co-operation between regional and local governments in Halton, the Ontario Transportation Capital Corp, the Privatization Secretariat and the eventual private sector partner or owner. The communication will contribute to less crisis-type situations.
Therefore, we are requesting that the government give consideration to a rewording of section 18. It's on page 10 of our brief, and the underlined portions are the portions which we would like to see included. They deal with part of the management of the highway, because it's critical that there be a high level of co-operation among everyone who will be affected by the highway to make sure this highway is of the utmost success so that we can look back and be proud of how we deal with it. In Halton we call it "the bible of the relationship," and this part will be a very important part in that bible.
We are pleased to note that section 44 of this act includes a provision where the minister may require the owner to prepare an emergency plan. However, Halton believes that this section should be improved to require the preparation of such a plan and, further, that this plan be prepared in co-operation with local emergency services personnel and emergency planning coordinators. "Optional" is not something we should be considering when we're talking about emergency planning; we all have plans and this will be a very important part of any plan in our region.
This document addresses a large number of responsibilities related to the design and the construction of Highway 407. Halton, Burlington and Oakville have been directly involved with the Ministry of Transportation for the past 20 years in the planning of this highway. Through the strong working relationship there were a number of key, important design features that were identified and, I stress, agreed to by the ministry and the municipalities as being essential to minimizing the impact of this facility on existing adjacent neighbourhoods through the city of Burlington.
These features include:
Deferral of the possible interchanges at Upper Middle Road and Guelph Line; we're not closing the door, but the crack is very tiny at this point in time and we would like to keep it that way;
Enhanced or extended noise abatement features including the depression of the road allowance and noise barriers through certain sections of this highway;
Linear public open space areas; we have a great opportunity to create these if we continue to keep the trees as a buffer and create passive areas through these open spaces;
Bridge widening for pedestrian and bikeway facilities;
Protection of woodlots and vegetation during construction; we're very high on the environment in the region of Halton and we will be watching very closely and would like to work with you on making sure that the parks through Halton are preserved and protected in the standard to which we are used to.
These matters are described in the submission appendix entitled Design and Implementation Issues in the City of Burlington which is included in our submission to you today.
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While we recognize that it is inappropriate for these matters and this level of detail to be incorporated into the legislation, we are requesting these following considerations:
The creation of a ministry/owner/municipal liaison committee to coordinate local interests and ensure a high level of communication between the partners during the design and construction stages. There's nothing more detrimental to the success of any project than miscommunication or no communication at all. We pride ourselves on that in Halton, we would like to continue that, and we will work with you.
An opportunity for Halton and its municipal partners to provide direct input to the preparation and contents of the request for proposals document as a means to ensure these requirements are put forward as minimum standards. It's a very important issue to us.
We are confident that these measures will ensure a strong and positive working relationship between the province, the future owner and local municipalities in such a way as to provide for the earliest possible opening date of this much-needed facility.
In closing, on behalf of Halton council, all our municipal partners and the chambers of commerce, I would like to thank this committee for the opportunity to present our submission this morning. We believe that a commitment to the construction of Highway 407 is a good-news story for the taxpayers of the entire province of Ontario, the commuters through our area and businesses within the GTA, and in particular to Halton region.
While Highway 407 is urgently required, it is also important that the province ensure that the final agreement which is secured with the private sector partner is in the best interests of the citizen, that one taxpayer in Ontario. I urge the provincial government to consider the changes we are recommending to Bill 70, to move it forward expeditiously to royal assent and to proceed with the request for proposals from the private sector. We are your partners and we will work with you in any way we can.
We're pleased to answer any questions, Madam Chair.
The Chair: We have just about three minutes for questions from each caucus. We'll begin with the NDP caucus. Mr Pouliot.
Mr Pouliot: Thank you, Madame. Nothing short of an excellent and, for the members of the committee, I know for myself, enlightening presentation.
In your conclusion, you mention the "minimum standards." I have a bit of difficulty with the language and I need your help. A standard is a standard, maximum or minimum; it's a criterion that one must meet. I take it that it's not catalytic; it's not going to make or break the presentation, certainly not.
On your page 10, I am quoting: "We are pleased to know that section 44 of this act includes a provision where the minister may," and you've underlined "may" in bold lettering, "require the owner to prepare an emergency plan." It's difficult; if you were a member of the government, or the general public, or yourself, would you not like to substitute "may" with "shall require the owner to prepare an emergency plan"?
Ms Savoline: That's my whole point in that paragraph. I continue to say that "Halton believes that this section could be improved to require...." That was my whole point. I'm glad that it was flagged, however we think it could be stronger.
Mr Pouliot: We too are in favour and very much aware, because of your presentation and others as well, that door-to-door delivery is important, the just-in-time concept, that the people working on the line, bringing home a paycheque every second Thursday in Oshawa etc, be given the right to go from point A to point B.
We're seeking the same destination, I think it's safe to say, all of us, but we take a different route to get there. We have some quarrel, not with the concept, but with the privatization, and I'm happy that you raised the accessibility by way of, how much is it going to cost to use the highway?
I have one more question. You've stressed the Environmental Assessment Act, the quality of life. You've mentioned the trees as a buffer zone and I guess the air that we breath, the environment. You've also mentioned, certainly in tone, that you're used to this and you want to preserve this. I must say this: Under the Minister of the Environment the budget has been reduced by 50%. More than 50% of the employees have been given pink slips, told to leave town.
Are you really confident -- you flag it several times -- that we have everything in hand to make sure that the environment will be respected? Because we can achieve both. That's what you're saying.
Ms Savoline: Yes, absolutely. Halton has worked with all governments in the last 20 years to accomplish that. We've had input into all discussions and preparations thus far. I think it's been a good working relationship and we think the standards have been preserved.
Mr John Hastings (Etobicoke-Rexdale): Ms Savoline, thank you for coming in today. I'd like to get your reaction generally, as a background, in the total context of Mr Cordiano's concerns related to the non-taxation of the underlying land on the 407, with your concern about ensuring that the toll rates that would be charged in the future -- particularly the trucking industry, but it could be any of the users that choose to use the expanded 407 -- would be balanced out. Do you believe, with the official opposition's concern here, that it would actually increase the rate of pricing on the tolls for future users if there were taxation included, as seems to be their position?
Ms Savoline: I can't comment on the detail of that, Mr Hastings. However, the municipality would certain benefit if there were property taxes paid on this highway, and I'm sure the railways would be very happy that there would be a more competitive kind of situation for them. However, I don't think that argument ought to be a trade-off for whether this highway is built or not. I think we need this highway and that's a detail you can talk about in other times. My pitch to you here today is that we want this missing link built.
Mr Hastings: What do you figure we're losing in terms of lost production in your area, whether it be the auto sector or food processing?
Ms Savoline: They're severely impacted. I believe there are figures that haven't been released yet, but across the GTA we're probably losing anywhere from $1 billion to $3 billion.
Mr Hastings: Annually?
Ms Savoline: Yes. It's the congestion. The congestion is our biggest enemy here. We need to free up that congestion. Things aren't moving. If I told you that to get here for 9 o'clock this morning I had to leave at 6 o'clock, you might believe me. It really is horrendous.
Mr Baird: Just a brief question following up on that issue. Obviously, the competitor to Highway 407, being the provincial government's 401, doesn't pay taxes either, so there has to be some sort of level playing field. Otherwise, I suppose if the bill passed, whoever the new owners of the road would be would simply have to add the price of any property taxes to the toll, so the toll would be much higher. For every single other competitor of a four-lane highway in the province of Ontario, of course there aren't property taxes and the provincial government still pays.
I share your view that we've got to get this built. Having travelled the road many times, when I see your report and I see the number of lanes before your region and after your region, it's absolutely stunning. The only area where I would disagree with your presentation is the 10 of the 12 hours. I mean, I've been through Burlington at 10 o'clock at night and had traffic jams. It's absolutely extraordinary. It's not just a tremendous inconvenience to folks who live there and have to commute either to Peel or to Toronto, but it's a tremendous inconvenience and hampers economic growth.
I share your conclusion. We want to get this done and we want to get it done as quickly as possible, not just for the economic growth it's holding back but also for the tens of thousands of lives it's inconveniencing every morning and every night.
Ms Savoline: I have my ceremonial spade ready and I'll be glad to welcome you all to Halton.
Mr Baird: We'll call upon you.
Mr Cordiano: Thank you very much for that presentation. The missing link has to be built. There's no question about it. In fact, in 1989, I believe, we had money allocated for the missing link. It was called Highway 403.
Ms Savoline: That's right. I'm old enough to remember.
Mr Cordiano: It was a highway that was to be built. Money was allocated. You remember that.
Ms Savoline: Yes, I do.
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Mr Cordiano: The point I want to make is that I think it's absolutely ludicrous that the government is exempting Highway 407 from paying property taxes. I ask the government members, does that mean Hydro is going to be exempt as well? The same taxpayers, by the way, are paying for that. This makes no sense. You know that. I think the minister has been caught on that. I think he's got to go back and rework that. The municipality needs the revenue. I think that makes no sense whatsoever.
Ms Savoline: I still would like to stress that that is not an issue that ought to stop the immediate construction of this highway.
Mr Cordiano: No, and it shouldn't. No one is suggesting that. No one is suggesting that under any circumstance. The highway should proceed in its construction. That's a different matter altogether, but it does affect municipalities.
Mr Mario Sergio (Yorkview): How much time do we have, Madam Chair? Enough time for a question?
The Chair: You have time for a brief question and a brief answer.
Mr Sergio: Thank you very much. This is not the first that you have appeared down here in Toronto in front of this or other committees. It's always nice to see the local people come and speak in support of their area municipalities.
We agree that something must be done, not only for the Halton region area but all the way to Niagara, so we can get people faster to the casino down there. It's a joke.
I know that your presentation has been based solely on the need for the construction of the 407 extension. But as a local politician there, I'm sure -- and you did mention that, yes, ultimately it must be done in the best interests of the taxpayer. You may not want to get to it in your answer, but as a local politician, wouldn't you be interested in the fact that ultimately the users, the carriers of goods and services and residential people as well, will be paying for that and, contrary to what the minister has been saying, will be paying twice, once with the toll and once with the construction? Wouldn't it make more sense to make it more viable and keep it in the hands of the taxpayers? -- if you wish to answer that.
Ms Savoline: If there isn't an ability for the private sector to build this highway, I think the government ought to consider it a high priority. However, as I said earlier, Halton is a pioneer in public-private partnerships, and we know that the ways are changing, that taxpayers can't continue to pay for everything and that there needs to be some kind of user-pay system and privatization. Providing that all the wrinkles are ironed out, I think it's time to proceed, and we're willing to work with you. We're your partners in this and we want to be part of the solution, so please call on us any time. We do have the expertise.
Mr Sergio: Thanks for coming down.
The Chair: Thank you very much, both you, Ms Savoline, and your colleagues, for coming before the committee this morning. We appreciate your advice and, clearly, your offer of co-operation.
Ms Savoline: Thank you very much.
CANADIAN AUTOMOBILE ASSOCIATION ONTARIO
The Chair: I now call representatives of the Canadian Automobile Association Ontario. Good morning. Welcome to the committee. As I'm sure you know, you have 30 minutes for presentation time, and that will include time for questions. Please begin.
Mr David Leonhardt: I'll take about half of that with my initial remarks.
I know we've already heard from the minister today, but I'd like to start with something he said earlier when he was introducing this bill on second reading:
"We think it rather strange that one would ask motorists, whether they be commercial vehicles or private vehicles, to absorb the cost of travelling on the highway by paying the toll and yet at the same time financing that very same road they're driving on through their tax dollars. That's absolutely ridiculous and it's not an effective use of taxpayers' money."
That was the minister speaking and that will colour some of my comments.
I'd like to thank you for inviting me here to speak today on Bill 70. I realized how precious the speaking time is when committee staff told me that you were holding just one day of hearings. That's one single day to debate essentially the future of transportation in this province. I say the future of transportation because this bill sets some very ominous precedents.
First off, CAA Ontario is a federation of five CAA auto clubs, and I act as their spokesman here in Toronto. Together we represent 1.7 million motorists and their families, and many of these are potential users of Highway 407; in fact, some of them are, but most of them choose not to be.
Highway 407 was built with public acceptance of the tolls. I use the word "acceptance," not "support," because nobody really supported the toll. But the government came to us and they said, "It's tolls or no road," so what choice did we have? Motorists were paying high gas taxes and licence fees for their vehicles. We still are. We were paying for twice the roads we were being given, and we still are. Yet the government came to us and said: "We know how much you're paying. We know you really need this highway" -- we still do -- "and we know it's our responsibility to build it. But you know how it is. We've got expenses. So if you could give us a little more cash in the form of tolls, we'll build this road for you."
So CAA motorists and other road users reluctantly agreed. Again, what choice did we have? But we did extract a commitment from the government that tolls would be temporary, to pay just for the construction. We did get a third of the highway built, and we're paying for it through temporary tolls. When the tolls go in 30 years, we will have paid for the construction, and we will also have paid for the first 30 years of repairs and maintenance.
Now the government's coming back to us. They're saying: "We know you pay $3.5 billion in road-use taxes, we know we only spend $1 billion of that on the roads, and we know we promised to build you a highway if you paid the tolls for 30 years. But you know how it is. We've got expenses. We've built this nice little stretch of road, but it really doesn't go anywhere, so if you want us to make it useful, you'd better just approve tolls forever."
Quite simply, this bill violates the pact between the government and the motorists in this province, and this time we're not saying, "What choice have we got?" This time we're saying, "Enough is enough." Minister Sampson hit the nail on the head when he said motorists should not finance this road through both taxes and tolls. But how does Bill 70 rectify this obvious injustice the minister noted? It in no way addresses gas taxes, it doesn't touch diesel taxes, and it certainly doesn't reduce tolls.
Let's consider what it does to tolls. First, it increases tolls from a 30-year maximum to an infinite period of time. Keep in mind that the current tolls pay for construction, repairs and maintenance, and a reasonable profit. When construction is fully paid, that amount of tolls goes straight into profit, making this a very lucrative scheme. Of course, this assumes that the toll rates will remain the same. If there's anybody who really believes that, I'd like to talk to you outside later; I've got some prime agricultural land in Antarctica I'd love to sell you. We hear there are already plans to increase the tolls on the highway, and eventually, they could be quite extravagant.
But let us recall -- and it's been said already today -- why Highway 407 was first built and why each and every one of us in this room wants the extensions built. Highways 7 and 401 have reached gridlock. Toronto is hostage to gridlock. We need Highway 407 to carry the increased population and traffic flow in and near the greater Toronto area. What I'm about to talk about -- the toll roads -- will have a very profound impact on the very reason we need these extensions built.
The government reminds us that supply and demand rule the private sector, and the minister assured us yet again this morning that in order to draw traffic, the owners must keep toll rates low. It makes sense, unless, of course, what if attracting traffic is not the goal of a private corporation? The laws of supply and demand work very differently, depending on which one is greater. If supply exceeds demand, then competition can indeed push prices down. But if demand exceeds supply, prices are just driven upward.
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Congestion is, by definition, the result of demand exceeding supply. All highways and arterial roads around Toronto right now face almost perpetual congestion. There is great demand but precious little supply. But the worst is yet to come. MTO predicts a 250% increase in traffic within the GTA over the next 25 years, and most of that is coming within that 905 belt, the very region that 407 is going to serve. It really is a lucrative cash cow.
So I ask again, what if attracting traffic is not the goal of the private company? As gridlock engulfs other roads, our threshold for paying tolls is bound to rise. The Highway 407 operator may very well be able to just keep raising those tolls with impunity, knowing it will always be able to attract enough wealthy clients to pay the toll, and after all -- as anyone here who knows anything about business knows -- the fewer vehicles, the less maintenance and the lower the repair costs. If I was a shareholder, I would demand higher tolls. If I was a shareholder, I would demand higher service fees. If I was a shareholder, I would want less traffic and I would want profits maximized. But if I was just your average motorist, some poor sucker stuck in gridlock on another highway, and if I knew that the wealthy had their ticket to ride on the 407, I would be fuming.
We know that Bill 70 allows the government to regulate tolls, but what corporation is going to sign a contract giving the government a blank cheque over its revenue stream? -- unless that company is also interested in buying that prime agricultural land I have in Antarctica. Besides, it could simply raise the service fees, which are already at ludicrous levels.
Where is the master plan for the province? Selling this highway to the private sector clearly would be counterproductive to its very raison d'être to reduce congestion on other roads. In fact, if our goal is to reduce congestion, why are we even thinking about tolls? Why are we even thinking about building a disincentive for 401 users and Highway 7 users to make the switch to Highway 407? It doesn't make sense.
More ominous than what this bill does to Highway 407 is the precedent it sets, the precedent I mentioned in my opening remarks. Bill 70 creates a whole new class of highways: private toll highways. Fine, but if Highway 407 can be sold, what's stopping the government, or future governments, from repeating this? Highway 416 has just been built up in Nepean. Who's to keep it from being sold? What about Highway 401 or the QEW or the much-needed extensions to Highway 410? These could be lucrative. This sure is a greasy slope that we're heading down with this bill, and it's a significant change for mobility in this province.
There have been virtually no consultations on this, any more than there were on the downloading of highways, the very downloading that has changed our once-proud King's Highway system to a dotted line, with motorists left to connect the dots. An advertisement calling for input on how the highway is to be managed? That's all we were offered. Is that a substitute for debate on creating a whole new class of highways? And one day of committee hearings? That is not a substitute for an open, public discussion of the future of mobility in this province, because that's what we're talking about here.
This bill is not about a better transportation system. This bill is not about building the Highway 407 extensions, despite the grand speeches of so many MPPs in the Legislature. The delegation from Halton is misguided on this. Mr Baird, I have to say that you too are misguided on this. The government has the means to build the extensions without Bill 70. Nor is this bill about tax fairness, as the minister stated in the Legislature at second reading. No, no, no. This bill is simply about delegating to the private sector the right to toll motorists forever in order to reduce the debt from other programs with nothing to do about motoring today.
In a letter to CAA, Minister Sampson said it quite well: "We will use the proceeds of the sale to pay down the provincial debt." The proceeds to which he refers are the government's advance payments on the tolls that will be collected later. What an ingenious tactic: Reduce the debt that future generations would owe by creating a charge for future generations to pay, but future generations of motorists only. Again, tolls are the wrong instrument to pay down the debt: past, present or future.
If the government wants tax fairness, we have some recommendations. We hear there may be some sales tax reductions soon. If so, the first reductions should go to those taxes such as the gasoline taxes that are being taken for general revenue, that should not be there in the first place. They should be going to the roads. Second, we understand that the cost of building the 407 may actually be paid off before the 30-year period. In that case, the toll should go off the moment it is paid.
In summary, we have yet to see a single valid reason to sell this highway, nor do we see any transportation planning or public consultations to justify a total reorganization of the way this province's transportation system is organized. CAA Ontario predicts four outcomes from Bill 70:
(1) The government will break the promise to limit tolls to a short time and to lift them when construction has been paid.
(2) Tolls and service charges will likely rise, and if the company running it has any financial savvy whatsoever, quite exorbitantly.
(3) Highway 407 will fail to relieve the growing congestion on Highway 401, Highway 7, Major Mackenzie, the 403 and all the other highways in the region.
(4) Governments desiring extra cash in the future will be sorely tempted to sell other highways for profit.
We see no upside to this bill. We see motorists paying more and more, and we see them getting less and less. This bill will increase their transportation costs without reducing the growing congestion, and it will set a dangerous precedent for other areas of the province where costs could also rise, again without relieving congestion.
CAA Ontario and its 1.7 million members cannot and will not support this bill. We urge this committee to recommend not proceeding with Bill 70.
The Chair: We have five minutes for questioning from each caucus. We'll begin with the government caucus. Mr Baird, Mr Spina and Mr Hastings have all indicated they want to ask questions.
Mr Baird: I'll go quickly then. I certainly agreed with the Premier when he said, "The 407 east is an ideal opportunity to have a new look at what it takes for the private sector to finance a highway," and further, "We'll look to the private sector to come up with creative solutions. We're open to dramatically new ways of doing business that will allow us to keep our network at peak efficiency without burdening taxpayers." I agreed with Premier Rae when he said that.
I also agreed with my colleague Mr Pouliot, the father of toll highways and of private sector involvement in transportation capital, when he said: "We need to build Highway 407 now to relieve the stress on Highway 401. We must also reduce fuel waste and pollution caused by congestion on the 401 and other east-west routes." Then the press release issued by him said, "While tolls are only planned for Highway 407 at this time, the minister said he is willing to explore opportunities to use them in other new transportation corridors." I agree with our colleague.
I did want to say three things very quickly. In terms of the time for consultations, there has been a terrific amount of consultation dating back to last year, when RFPs were issued in June 1997, ads were put in the Globe and Mail, and other news releases and backgrounders issued last October after the public input. We had no objection to three days of public hearings. We had to have a conference call the other day, because we cancelled all the hearings yesterday because no one wanted to come. We put ads in the newspaper and on television and got it widely known that we were prepared to listen to input. We were going to hear every group that wanted to appear, and we even had to cancel time because we had allotted so much time for consultation that we were able to hear everyone in half the amount of time that we were prepared for.
The regional municipality of Halton, the corporation of the town of Markham, Durham, Oakville, the Greater Toronto Home Builders' Association, the Greater Peterborough Chamber of Commerce, the Durham Real Estate Board, the Canadian Council for Public-Private Partnerships, I think they're all going to come and speak to the importance of passing this.
Just one final point. We don't just have to pay for the construction but, as you said, the repair and maintenance of it. After 30 years, most highways need to be substantially rebuilt, and that's a new potential cost in 30 years of $3 billion, plus it could go to six lanes or eight lanes, depending on the traffic volume. It's not just a short-term phenomenon, but indeed it is a long one.
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The Chair: Mr Spina.
Mr Leonhardt: Can I just address this last point? Mr Baird is accurate in that highways in this province very often have to be rebuilt long before they should, because the budget on the transportation ministry is so tight that the repair work along the way is not completed. If the 12-year repair of the pavement is not dealt with on time, very often what happens is the whole road has to be dug up, the expensive part, which is underneath the pavement. However, if it is being maintained along the way -- and with tolls one would assume that it is -- there is no need for that kind of total rebuilding. That's a fallacy. It's based on the fact that the highways in this province are not being given the money that motorists are paying to keep them up to good standard. It's like your roof. If you don't fix it when the first little leak comes in, by God, you've got a big problem later on, but if you had a toll on your roof, you shouldn't have a problem with that.
Mr Joseph Spina (Brampton North): One quick statement with regard to your concern of escalating toll rates. I believe there are provisions within the bill and also within the regulatory environment that would surround the bill that would control that on a usage basis.
My simple question to you is, did you consult with your membership regarding the presentation that you made today?
Mr Leonhardt: We have spoken with our membership.
Mr Spina: How?
Mr Leonhardt: We have done surveys, and particularly our national office has done surveys, on under what conditions they would accept tolls. This highway meets some of those conditions, but very few of them. Those conditions include that there be a free alternate which is well maintained.
Mr Spina: Which is there.
Mr Leonhardt: Can you name me one?
Mr Spina: The 401. Highway 7, four lanes.
Mr Leonhardt: The 401 is congested. There's a big wall in the middle of it. That's not a free alternative.
Mr Spina: Continue.
Mr Leonhardt: Second of all, that the tolls be lifted the moment the construction is paid for. Under the previous administration already that has been violated to some degree, because it's paying for more than just that, the first 30 years of repair and maintenance. This is going well beyond that.
Mr Spina: As a 25-year member of the CAA, I have only seen one consultation document come out of CAA on 407, and that's when it was originally proposed by the previous government. I have not -- I repeat, I have not -- seen anything in recent months or even in the last couple of years regarding the tolling system on 407.
Mr Leonhardt: I'm sorry. I don't know what you're referring to.
Mr Spina: Frankly, I am outraged at the presentation, because I do not think you represent the bulk of the membership in your opinion.
I'm going to move to one other quick point. It's your context that the government should be financing this highway entirely on its own, which I believe is what you indicated, and that if there was to be a reduction --
Mr Leonhardt: No, sir, I did not.
Mr Spina: What constructive alternative do you propose then?
Mr Leonhardt: I indicated that we're paying $3.5 billion in road use fees and the government is only spending $1 billion of that, and I may be being generous on that.
Mr Spina: They're spending a lot more, because there's $545 million being spent in northern Ontario alone.
Sir, you worked in Ottawa for many years. Not one red cent of federal gas taxes came back to support what you indicated was the thin line of highways across Ontario, and it is still the case.
Mr Leonhardt: You're right.
Mr Spina: Talk to your federal counterparts. Why didn't you do something when you were in office?
Mr Cordiano: Chair, that question was totally out of order.
The Chair: Thank you. We're moving to the Liberal caucus.
Mr Cordiano: Maybe Mr Spina consults with his constituents every time he makes a speech. Before you utter a word in this Legislature, you consult with your constituents? Let's have some courtesy around here and not attack witnesses.
I want to thank Mr Leonhardt for his presentation. I think he made an excellent presentation. He made some very important points that obviously are not important to members of the government.
Mr Leonhardt, the ability of this operator, whoever ends up with the 407, the successful bidder, to charge with impunity tolls at whatever rate they feel is appropriate is unacceptable to us. Furthermore, it is unacceptable that this highway will be sold indefinitely, in perpetuity, if you will. There is no time line mentioned in Bill 70. How do you feel about that?
Mr Leonhardt: That's what is going to lead to the tolls going on forever. Again, as I said, this is not a bill about building the extensions. If the government wanted to use the same methodology it did to build the centre as the extensions, I'm not going to say we would support the tolls, because that would be inaccurate, but we would accept them. We would recognize that that's the way things are done these days. We agreed to that when we sat down with the former Minister of Transportation and said, "Fine, put the tolls on for 30 years or until it's paid for." It would be very simple to build the east extension and the west extension along that pattern.
Mr Cordiano: Do you think it's appropriate that the owners of the 407, a business, a going concern as it will be, private sector, be exempt from paying property taxes that will be paid, those same property taxes, business taxes, by Ontario Hydro, CN and CP Rail, other utilities?
Mr Leonhardt: I'm sorry. We can't comment on that.
Mr Cordiano: OK, you haven't thought about that, but that's what's in Bill 70.
Mr Leonhardt: I'm sorry. Unless it has an impact on motorists, and at this point at least we haven't identified one, I'm not in a position to comment on that.
Mr Cordiano: Fair enough. I just think that ultimately it does have an impact, indirectly, in that the taxpayers will have less revenue. So it does have an impact, but we're not going to get into that. I think your point on tolling is really your main point, and the sale of this highway in perpetuity is what you're really after in terms of your concern. Am I correct?
Mr Leonhardt: As well as the overall question of, where's the planning for the future?
Mr Cordiano: Transportation planning, yes. Thank you.
Mr Pouliot: It's a renewed pleasure: no less than the most distinguished, well-researched representative of 1.7 million motorists, be it by way of universal programs that your worthy association provides, ie, off-road assistance.
First let me correct Mr Baird. I would advise in terms of time management that he should, with respect, as a first-time member, have better things to do with his time than to recycle or reel off or peel off old Hansards or recycle old press releases by a now redundant former minister.
More importantly perhaps, you've mentioned that if you set the tone with Highway 407, this government could get perhaps prolific, promiscuous. We could be facing a serial privatizer, that what is good for the 407 will become the norm. Certainly that point was well taken. We shall be on guard.
Another point that was quite well taken is you've mentioned that if you were a shareholder you would perhaps, because it would be profit-motivated -- nothing wrong with that. It's the essence of our system, providing there is competition. They called the 401 competition. It could lead us to, for instance, users being the most fortunate, like people who drive a Mercedes-Benz or a BMW, and the rest of us would be left paralyzed on the 401 as the only alternative.
You've also mentioned perpetuity, that there's really no hope here. When all is said and done, these people with their new-found friends, this arrangement, this ménage, will result in excessive tolls being charged for as far as we can see. There's no way out of this ménage à deux. Is that what your membership fears, that what you have here is this kind of liaison of convenience and that with those people you say little if you're a motorist but la pecunia is that you pay, pay and pay? I fear this. Do you share that sentiment?
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Mr Leonhardt: I think, Mr Pouliot, that would not be a fair characterization of what our members feel. I seem to have walked into what turns out to be a very partisan snakepit here, all in due fun, but our job is neither to prop up nor destroy the government. When there is something we agree with, like some of the truck safety and graduated licensing and drunk driving things, we're the first people to stand up there on the front page of the newspaper and say, "This is great."
When there's something such as the transportation planning that hasn't gone into this and the tolls being sent to perpetuity, we're going to come down very strongly on behalf of our members and say very clearly, "This is not acceptable." If the government wants to build a 407 extension -- everyone in this room wants it, we want it, and the people from the various delegations, municipal delegations affected, want it -- that doesn't mean we need Bill 70 and it doesn't mean we need tolls past the stage of construction.
Again, we were not thrilled with what happened in terms of the original agreement, no, but we accepted it. We recognized that was our option, and if the government wanted to proceed with the extensions along that fashion, and it has that option, we would again not be thrilled about it, but we would accept it.
Mr Pouliot: Mr Leonhardt, I'm not known to overreact or to exaggerate or to "stretch a point" to illustrate. If there is such terminology, I'm not one who catastrophizes. I don't do that. I speak candidly and honestly, and I know you do too. Hence my question: 1.7 million people -- there are many in the same household or more than one, I assume, in the majority of cases. Those people have been surveyed. Are they saying they are proponents, that they would tacitly, if not readily, support the extension of Highway 407 under the present system, which is limited tolls, as you wish, with a commitment that once it is paid for you take it off the table and then there is no longer a fee for usage?
Because here we have a commitment -- I think everyone says, the three parties here, that they realize you need to ease the congestion, you need to extend Highway 407, but the difference is in the financing. I suspect that a cynic would say once they grease the track, la payola, they will have to pay for it and who is going to pay? It's going to be us. We've already established in the financing that it's going to cost them $15 million to $20 million per annum right off the bat because private financing is 75 basis points to 100 basis points higher than government financing, so something is going to have to come out in the wash.
Do you fear the members of your association, your league, those people in their vehicles, going to earn a living, responding to services and emergencies, will be left -- we're going to have a head count here and those people are responsible but they couldn't care less because of ABC partner and friend and acquaintance.
The Chair: Answer, please.
Mr Pouliot: Do you fear that, that there will be a sort of -- not a revolt, but certainly people will say --
Mr Leonhardt: I'm not sure which question.
Mr Pouliot: Any one will do.
Mr Leonhardt: I'm not an economist and we haven't done an economic study of what the trade-offs are between the advantages and the disadvantages of the private sector as far as securing financing.
A revolution: What's a revolution? We're Canadians and the way we revolt usually is to stay away. I think that's what is going to happen to the extent that people feel they can. Again, as the other roads get choked more and more in gridlock, our tolerance for tolls as individuals will go up. We will see: "This is a half hour of my time. No, this becomes an hour of my time. Maybe it's worth it for an hour of my time."
The problem is that, yes, and it has been noted, the government has the right in the legislation to regulate the tolls -- not the service charges, which are what really kill people right now, but again, that is all going to be written into a contract. Some people around this table have been in business. Nobody in business is going to just sign a blank cheque to someone else -- a government, an individual, an association -- to control their revenue stream 100%.
The Chair: Thank you very much, Mr Leonhardt, for coming before us this morning. We appreciate your input into this bill.
Mr Hastings: I would ask for clarification from Mr Pouliot. Perhaps later on he could describe for us what he meant by a "serial privatizer," whether that would be rapacious, criminal or innocent in intent.
Mr Pouliot: No. In Oxford and Webster's, it comes under "habitual." It's a synonym.
TOWN OF MARKHAM
The Chair: I now call representatives from the corporation of the town of Markham. Mr Landon, welcome. Please make yourself comfortable. As I'm sure you know, you have 30 minutes' presentation time. Hopefully, there'll be time for questions.
Mr Gord Landon: Thank you very much for hearing me. I believe I've circulated material to each of the members, a report that was done for the town of Markham.
First of all, I'd like to say that I think the 407 is the best thing that's ever happened. I had to be over at Jane Street this morning by quarter after 8, and it took me exactly 22 minutes from McCowan over to Jane Street. It's really pleasurable. I had a meeting with Alan Tonks there this morning. It's very productive.
We had Minister Rob Sampson and Minister Tsubouchi come up and explain to us a little bit about Bill 70. I apologize if I'm not 100% up on it. But what I'd like to talk about this morning are some of the problems we experienced with the building of the central section, and I hope that in the privatization bill we can address some of these.
One of the problems we experienced was that when the central section was built -- specifically, my comments will be about the region of York and the town of Markham -- there was a deletion of an interchange at Woodbine Avenue. I asked Minister Sampson and Minister Tsubouchi to drive that the other day. There are 40,000 cars that use Woodbine Avenue. I believe the reason the interchange was deleted was a cost consideration.
What it has done -- and it's symptomatic of a problem that this kind of construction can be for a municipality -- is that it has meant that anyone in the 40,000 cars that use Woodbine who wants to go westbound on 407 has to either go to Warden or to Leslie. What happens then, of course, is that the intersection of Woodbine and Highway 7 and the whole traffic pattern in the area of Highway 7 have become very congested. It's made it so we have to do some road improvements. We have a very busy business area in that area.
What concerns me about the privatization is that there's no economic incentive for an individual purchasing the central section to build that interchange. The motorists can still get on to the 407 by going to Leslie or going to Warden. I don't think it's going to bother the purchasers so much that they would want to spend the money that's necessary to build the interchange at Woodbine.
When I met with Minister Sampson he indicated to me that he would try to put some warrant information into the privatization bill so there'd be something other than an economic incentive. I think any private owner would look at it and say, "If I was going to build an interchange there, I probably couldn't justify it economically, because people still have access to the other ones." But what it does is offload a lot of the road costs back to the region or the municipality, which I don't think is what was intended. That's one of the things that has concerned us.
Another is that we have a number of people who are affected by noise attenuation issues. If you drive the 407 in the area, you'll see that what we've had to do in the case of McCowan to Highway 48 right now is build a very substantial berm. It was done in coordination with the Ontario Realty Corp. The berm is on their land. That's the first time that's ever happened. But what concerns us now is that there's going to be an extension.
We want the extension. I want to make that clear. We're not here opposing what you're doing; we think it's excellent. We want the extension eastbound, but we have some built-up residential areas there that are going to suffer from noise again. There seems to be a philosophy that that's not a concern of the province or the people who are building the highway. It wasn't when CHIC built it. It's thrown back on the hands of the region or the municipality again. There are substantial costs. The berm I'm talking about between McCowan and 48 was $1.5 million. Fortunately, a developer in that area was building homes, and we were able to incorporate that into development costs for that area. But the area east of that will not be in the same situation. So the homeowners will experience noise and there'll be no way of attenuating those concerns.
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The third problem we experienced when the central section was built was that there were design changes made without regard for, again, adjacent lands or road systems. I'll give you an example: the interchange that's been done on Kennedy Avenue. It was originally an underpass and it went to an overpass. There was all kinds of land acquisition that had to be done in there, which has still not been resolved. It disrupted a number of businesses there. I think what happened there was that the cheaper way for CHIC to construct that was the way they did it and the way it was designed, and they didn't take into account the concerns of the municipality or the region.
The other thing that happened to us as well is that we tried to be forward-thinking as the 407 was built. We knew we would need some kind of connection with the 407, or an ability to get under it or over it, at Birchmount and Rodick Road and Cedar Avenue. We were forced to have CHIC build those underpasses because they were the only ones with the right to do it. Based on other estimates that we were able to get from private contractors, we think we paid an exorbitant amount of money for them to do that construction. In that case, we're talking about an underpass we had to pay for. It was smart to do it at the time the 407 was built. We don't need it yet, but we will need it in the future, but we had to pay a very exorbitant amount to get that construction done.
Those are the problems we see that occurred with the existing central section.
I mentioned earlier that we're very interested in the extension. We did talk to Minister Sampson about it at the time he was there. We have lands which you people have sold to a developer in our town, the Law Development Group, and we're developing a lovely community called Cornel at the eastern end of Markham. If you've been there recently, it's a great place. It's neo-traditional design. It's something we're proud of, something that's been recognized across North America. But that particular development has a cap on it. It can only go to about 2,000 units out of 11,000 units and then it'll have to stop, because the extension to 407 has not been done and the traffic considerations in the area cannot be addressed.
I don't know the details, but I would assume that the province has some kind of agreement with that developer that he has to pay out based on the development of that community. He won't be able to pay because he won't be able to construct, and you won't get your money. So I think there's a very significant reason the province would want to see that eastern extension done.
The other problem we have in the east end is that we have traffic gridlock. It's not all our own doing. We're getting a lot of traffic from Durham; we're getting a lot of traffic from the northern part of the region. We badly need that eastern extension, and we don't think it's going to be effective until you get it extended back to the 401. We encourage you, in your privatization of this, to make sure there's a priority in extending that eastern section, and quickly. We don't want it given second priority to the western extension, by the way. Minister Sampson indicated to us that under the privatization, if the private contractors bidding on this are willing to accept the extensions, there would be equal consideration given to both the eastern and western extension. We'd also like you come back and consider putting the interchange in it at 407 in that privatization bill, because we think it's so important.
The other thing we think you need to build into it is some kind of public accountability with the private purchaser of Highway 407, because we're running into these kinds of problems which impact on our local roads and local communities and we don't seem to have a mechanism to be able to deal with them. We're not concerned that you're privatizing it; we're concerned that there be some mechanism built in for consultation between the municipalities and the regions, but also that there's a dispute mechanism so that if we get into a real battle there's some way we can resolve these issues.
That's really the extent of my concerns. I'm chairman of the transportation committee for Markham and I'm also vice-chairman of the transportation committee for York region, so I think I reflect both of those. I think you only have correspondence this morning from the town of Markham, which is the committee I chair in Markham. but certainly I'd be happy to address any other questions you might have with regard to privatization that I can answer for you.
The Chair: Thank you very much. We have about six minutes for questions from each caucus. We'll begin with the Liberal caucus, with Mr Sergio.
Mr Sergio: Mr Landon, thank you for coming and making a presentation. It's always nice to see local politicians coming in support of their community and their people.
You have a nice long list here of the conditions you would like to see included in this possible agreement between the provincial government and whoever may be the eventual owner and operator. You raise a number of good points, good questions here. The problem is that the way the legislation is proposed, it is giving practically carte blanche to the new owner, if you will, because I think that's what it becomes: It's not somebody who just has a lease on a piece of land; I think they will do whatever they want.
In the absence of any legislative power within the act, what would happen, supposing your conditions were to be included -- and I have to say that some of them need to be included and some are very onerous -- but supposing they were. Then, as you just mentioned, say the municipality has a discrepancy, with ramp construction or noise attenuation or something. What would happen if this discrepancy became a real problem between the local municipality, feeling very strongly about whatever issue, and a very obstinate owner? Would we see the ramp close, the highway close, at that particular location?
The province now is out; they are not holding any responsibility any longer. They don't reserve any power for themselves within this legislation that they could come one day and say: "Enough is enough. You're going to do that." We don't have any say any more. It's going to be left between you, the municipalities, and the owner-operator. In what position are we going to place your movers of goods and services and your residential people who travel from one area to the other? Do you have a concern with respect to that?
Mr Landon: I thought the purpose of this hearing today is that we're here to try to have some input into what this legislation is going to be. One of the things that Minister Sampson did say he would consider was a warrant in there which would dictate when an interchange had to be built on a certain road. I know you can't specifically put Woodbine in there, but if warrants were met, that would be included in there. I think noise attenuation is something that has to be built in there. That has to be of concern. It's a concern on every other highway we have in this province.
The dispute mechanism may be difficult if it's just actually sold and there's no involvement of the province whatsoever, but I do believe there has to be something there. I don't think it's a function of closing a ramp or something like that; I think it's a business arrangement. If there is a dispute, there has to be some way that can be done. But I don't think it should be up to the municipalities to sue them. There has to be some mechanism or something put in place by the province to be able to mediate those kinds of problems that would come up. A private owner may not disregard us as much as CHIC did, but there have been some real problems. There was a total lack of respect for our own roads and our own regions and our own municipalities when the original 407 was built. That's why we're here this morning. I'm hoping, through the presentations you're receiving over these few days, that these concerns will be built into the privatization. That's why we're here. If they're not, we're wasting our time.
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Mr Sergio: On page 2 of the bill, this is what it says with respect to transfer from the provincial government to the transferee: "'transfer' includes convey, sell, grant, transfer, lease, license, charge, mortgage, encumber, grant an easement, assign and in any other way deal with or dispose of all or part of...the crown's...interest in assets comprising or relating to Highway 407."
That's scary. It means that now the government is willing to sell to ABC Corp out there, and then in turn they can remortgage to the hilt, they can resell, they can re-lease, and the corporation, which is the province of Ontario on behalf of its citizens, doesn't have a say in how this will be conducted in the future. Should we retain ultimately, as the protectors of the people's interest, some say as to how this is going to be done in the future?
Mr Landon: I don't think we've had any say up to this point. I don't think we had any say with CHIC about what happened. What we are asking, and I'll restate it, is that you consider some kind of mechanism where there is some consultation. I don't really care if it's private or CHIC or the province or MTO or who it is, as long as there's some consultation and some way to deal with disputes that come up.
Mr Sergio: You would like to see a mechanism included in the legislation which would permit exactly what you're requesting?
Mr Landon: Right.
Mr Pouliot: Good morning, and welcome. Would you please convey, on behalf of the members present, our regards to Mr Cousens.
Mr Landon: I sure will.
Mr Pouliot: He served in the assembly for a number of years, very close to 15 years, and we grew very fond of him and certainly did appreciate his contributions.
Mr Landon: Don would have been here this morning; he was tied up in another matter.
Mr Pouliot: Indeed.
I did some reminiscing on account of your presentation. No mea culpas, but when you envisage a project of this magnitude, you must commit to a timetable, you must commit to expedience. But by the same token, you have to adhere to very stringent standards. Some things you can't compromise.
You mentioned the local problems, or wishes, if you want. The interchange at Woodbine: It's not very lucrative or encouraging for an entrepreneur to build interchanges; nor is it encouraging for a politician, in her or his riding, to contemplate the transportation contract to fix a bridge. Especially before the writs are issued, some members opposite may not wish to see money allocated to fix bridges. We have 23,000 kilometres of highways in Ontario. We have roughly 3,000 bridges. You must go with blacktop from point A to point B, as thin and as long and as wide as possible. That's where the project takes life. I'm concerned, and I share your concern, in terms of the private entrepreneur meeting standards -- and I'm not imputing motives; they're all good people. They will meet the standards, because there shall be no compromise if people are vigilant.
The thing is, I wonder about a partnership. Where is it written -- because we don't know the request for proposals. This is our dilemma here. We all want to extend Highway 407, in my understanding of it, but we don't know how it's going to be done. They say: "Trust us. Wait and wait." Well, we want to do this, but you're going to have to show me.
They talk about noise barriers, noise attenuation, like you've said. Where are the criteria? They talk about expropriation. The private sector cannot purchase land. It is not their duty under the statute. They don't do those things. So you have a tacit partnership. We would like to see all those defined, and we're asking the same question: When you say by 1999 or by the year 2000, superimpose, on the request for proposal, a timetable. Would you like to see that?
Mr Landon: Of course.
Mr Pouliot: So we're together. That's exactly what we would like to see as well.
I don't wish to be political -- I'll leave that to others -- but it's only commonsensical, it's only doing good business. If you were to conduct your personal affairs or the affairs of your corporation in a fashion, and if you would wish, by that philosophy, to extend that to government, would you not conduct due diligence? We don't even have access, because there's sort of a veil of secrecy: "There's only you and I here, sir, and if you promise not to tell anyone, it will be our affair. Maybe you get a big piece of the pie." I don't know.
Why don't we have the privatization review, which we all paid for as taxpayers, in broad daylight? Why don't we have a copy of it? They have it, but it's kept behind closed doors. Why don't we have a copy of the request for proposals? What are the minute details, so we can read and make recommendations? That's what your brief says, and I'm very pleased that you share that. They're exactly the questions we have. They're straightforward. There's nothing hidden here. It's for the benefit of the taxpayers, who, we suspect, now that they don't want to tell us everything, are about to be soaked. I know you can't say this, sir. You're too much of a gentleman. I used to be like you 15 years ago.
Mr Landon: I don't think there was a specific question there, but I will say that one of the things that encourages me is that I have been talking to one of the bidders for this project and it's his feeling that unless this thing is completed quickly, it won't be a viable bypass to Toronto and it won't be economically feasible. He tells me that the first thing he would do, if he were the successful purchaser, would be to build the east and west segments, because that's the only way that this thing will become a viable operation.
Mr Sergio: Should they be paying taxes?
The Chair: Sorry, no. We're moving to the government caucus for questions.
Mr Galt: Thank you for your presentation and for being here this morning. I'd like to follow up on Mr Sergio's question. He was anxious about taxes, and certainly Mr Cordiano earlier was really pushing the fact, demanding that taxes be paid to municipalities. I'm sure you as a councillor would just love to get those taxes.
Mr Landon: Of course.
Mr Galt: He posed the question to the minister, and the minister explained that the crown still owns the land and therefore, as for any other highway, taxes will not be transferred, and he went on to explain the level playing field with other roads throughout Ontario. I think he has a good question -- I don't quibble with him -- but I'm trying to draw a comparison here as I think about his concern, his questions. Having sat on council in Northumberland -- and I'm thrilled with your push to get it to the east. I'd just love the 407 to have a connection with the 401. It would be very advantageous, not only for me personally, but for people in my riding and industry.
Thinking about the area and serving on council, with the railroads going across the jurisdiction, yes, we get taxes for those railroads, but we also, as a municipality, pay dearly for the costs of the crossing. In the crossing, it would pay for the electronic gizmos, the signals and the flashing lights and all the rest. Drawing that comparison, if you were to get the taxes for the highway going across, would you be happy, then, to pay for all the costs of the bridge and the entry and the exits and everything else to do with those cloverleafs, including installing the one that you're concerned about not having in Markham? It's a direct comparison.
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Mr Landon: It may well be. I have no idea whether taxes would be sufficient to do those kinds of changes. I'm not hung up on whether the province pays us taxes for the roadway. That doesn't matter. We've got cases now where the CRTC has just ruled on Bell telephone and said they don't have to pay us for easements any longer, and we just lost $600,000. Payments in lieu or taxes, are never something that municipalities should consider are going to be there forever, when it's another level of government that controls them. But I have no idea what the taxes that would be generated there would be versus the capital costs of the changes that would be necessary. There's no question that we'd like more money to do more work on our roads, and any way we could get that, we'd appreciate it.
Mr Galt: It may not have been a totally fair question, because you don't have the figures, but with the railroads, I know our municipality would give up those taxes very freely, very quickly. I should point out that as it goes across Markham, you will be getting all the fines incurred for highway traffic violations out on 407, and that will be quite a revenue stream for you.
The other thing that I think is kind of interesting here is that the congestion we're trying to clear up with 407 is a result of the jobs being created by this government. We wouldn't have nearly the congestion if we hadn't created over 430,000 jobs in the last few years.
Mr Landon: Gee, and we thought we did that.
Mr Hastings: Councillor Landon, thanks for coming before us today, and please extend our appreciation to Mayor Cousens for all the hard work he's done. He was an excellent member for Markham when he was down here. He always voiced his concerns very solidly and rigorously.
Since you're head of transportation in the region of York and Markham generally, and you want to get the 407 project completed whichever bidder ends up purchasing the major asset of the infrastructure, is it your estimation that some of that urgency in the completion of both ends would reduce the wear and tear on the local road system in the town of Markham and surrounding areas, as well as increase the potential for getting product delivered from a lot of your high-tech manufacturers to the other parts of the greater Toronto region or into the United States? Do you see these as two primary benefits in terms of some of those local impacts you're having without the completion of the 407?
Mr Landon: Our businesses have told us that they don't use it because of the fact that it won't connect to the 401. It does now pretty well in the west end. In the east end it terminates. If I fly into Toronto I can find where I live now, because I can look down and see where that highway terminates. I don't know who in their right mind would ever build a major highway that terminated in the middle of a community. The obvious thing is that it has to be extended and connected to the 401. Our businesses are telling us that as soon as that happens, they'll use it. There's no question they'll use it. They're not using it today but they'll use it if it's extended. That's why I think it has to become a true bypass.
The other benefit that I see is that we have -- and I guess some of you members wouldn't know it -- gridlock in the east end of Markham. We've done cordon counts, and the amount of traffic coming in from Durham today is just unbelievable. We don't have a road system at that end to handle it. We know, and you can see it today with the entrance at McCowan, that that traffic will get on to the 407 and get off our local roads, which will alleviate some of the gridlock we've got in the east end of the region.
Mr Hastings: Do you have any local engineering studies that show the wear-and-tear impacts on your local system as the current configuration of the 407 is, that you'd link with that gridlock around Woodbine Avenue and farther east? That was a point that Chair Savoline mentioned.
Mr Landon: We do have an engineering study that justifies the interchange and justifies another connection into the 407, and I can get that for you if you like. There's no question. If you drive in there today, you can even see that we're having to resurface Highway 7 because it has been so badly beat up since the 407 actually opened. There's no question. And it's absolutely impossible, at Woodbine and 7 today, to get through that intersection any more. It's just clogged up because of the fact that there's no interchange at Woodbine. There are definitely some studies I could get for you on that.
Mr Hastings: Knowing that Ministers Clement and Tsubouchi have gone and looked at that problem of the gridlock around Woodbine and the adverse impacts it has on the local, adjacent communities there, I'm sure the minister will take a good look at your suggestions, not only in your presentation but also of the regional chair of Halton, as to some mechanism for dealing with some of these impacts on the configuration of 407. Thank you for coming today.
The Chair: On that note, on behalf of all the members of the committee I thank you for coming before us this morning with your views and your suggestions on improving this bill.
REGIONAL MUNICIPALITY OF DURHAM
The Chair: I now call representatives of the regional municipality of Durham, please. Good morning, gentlemen, and welcome. Please introduce yourselves for the Hansard record.
Mr Roger Anderson: Thank you, Chair Elliott. My name is Roger Anderson. I'm the chairman of the region of Durham. To my right is Tony Prevedel, who works in the region's works department. To my left is Gene Chartier, who also works in the region's works department. They answer all when it comes to transportation. If I can't, they will, and if it's not the right answer, you let me know and I'll get you the right answer.
Mr Sergio: He doesn't think so.
Mr Anderson: Well, after hearing the end of Markham's discussion, I think we're all on the same wavelength.
Chair Elliott and members of the standing committee, thank you for the opportunity to address you here today on what I feel is one of Durham region's most important issues: Highway 407. Durham has long supported the extension of Highway 407 through Durham. As a matter of fact, in 1976, Durham region's first official plan, we marked the 407 on our official plan.
Over many years, we've worked with the province of Ontario to bring this important project to fruition. With Bill 70, we now see the light at the end of the tunnel. This morning I wish to lend my support to the proposed bill, as it provides the much-needed mechanism and the approach to proceed with Highway 407 into and through Durham region. My comments will illustrate why Durham region lends its support to the project by demonstrating how this extension will contribute significantly to the growth and economic prosperity of our community.
I will also be noting concerns we have with the proposed legislation as it stands today, primarily as it relates to commitments to the timing and magnitude of the future extension. You've all received copies of my presentation entitled Highway 407: Paving the Way for the Future Growth and Economic Prosperity of Durham Region.
Durham is one of Canada's fastest-growing communities. Our population grew by over 40% in the last 10 years as our local construction trade built more than 45,000 new housing units to accommodate the influx of residential development.
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Durham is also a vibrant commercial and industrial market and home to Canada's largest automobile manufacturer, that being General Motors. As many in this room know, the auto industry is arguably the most important industry sector in Canada, let alone the greater Toronto area, and the source of thousands of jobs that generate a considerable amount of direct and indirect economic activity. In fact, more than 25,000 of Durham's jobs are related in some way to the auto industry, making it by far the single most significant sector in the region's economy. Prospects for future population and employment growth are also bright, with Durham expected to reach nearly one million people and 500,000 jobs by the year 2021. With opportunities for growth in the greater Toronto area diminishing, Durham will accommodate an increasing share of the future growth in the GTA. The region is well positioned to capture this future growth because of its reasonable housing and land prices, its availability of serviced land and its skilled labour force. However, we are concerned that this needed investment may be directed elsewhere in the GTA if our transportation access is not improved.
We know that a positive, and in many cases direct, relationship exists between investments in transportation infrastructure, locational patterns, and hence growth and economic development. This fact was acknowledged by the Honourable Ernie Eves in the 1998 budget speech with his statement, "A vibrant economy depends on high-quality, high-capacity transportation networks." As such, the region's continued growth and economic prosperity will be dependent on having a safe and efficient transportation system for the movement of both passengers and goods.
Major improvements and expansions of the region's transportation system will be needed to accommodate the planned growth contemplated by the region of Durham and approved in our regional official plan. The most important of these improvements, it goes without saying, is the extension of Highway 407 east to Highway 35/115 and the two connections to Highway 401. The freeway is fast becoming the next main element of the GTA urban structure, linking together the rapidly developing regions of Halton, Peel, York and Durham, and linking us all to the city of Toronto and the GTA and, most importantly, our neighbours to the south, the United States. Early construction of the Highway 407 extension into Durham would help the region and the GTA reach their growth objectives and improve connections to the wider markets of both Ontario and the United States.
The construction of Highway 407 and its connections to Highway 401 are needed to structure growth, stimulate development and serve the existing and future travel demands of residents and businesses within Durham, the rest of the GTA and the province of Ontario. Early implementation will help in several ways.
(1) It will address the critical need to provide additional road capacity at the Toronto-York-Durham boundary. Durham -- and, as a result, eastern Ontario -- currently has a total of only 24 lanes of road access across the Toronto boundary, and only four lanes into the region of York. By comparison, the regions of York and Peel have 190 and 104 lanes of access respectively. This is across the Toronto boundary.
(2) It will provide a needed road connection where limited opportunities for their implementation exist. Prospects of future roadway improvements at the region's west boundary, as you all know, are extremely limited, given the province's objective of protecting the Rouge Valley, which we in Durham don't totally disagree with.
(3) It will provide an alternative to Highway 401. While Highway 401 currently plays an extremely important role in the movement of people and goods between the region and other locations within the GTA, you all know how congested it is and how it's subject to considerable delays.
(4) It will also complete the planned freeway network. Construction of this vital link will help facilitate the structured growth in population and employment contemplated in the region's official plan and complete Durham's planned transportation network.
(5) It will provide a more reliable access required for just-in-time operations and improved productivity. Major industries, specifically General Motors, located within Durham need proper and efficient roadway access to carry on business and remain competitive, especially as the proportion of shipments by trucks continues to climb.
(6) It will provide access to the proposed developments at Seaton -- provincially owned land -- the Pickering Airport and north Oshawa. Access to these planned growth areas would be enhanced and may help stimulate early and more intensive development.
(7) It will maximize the return on investment in other infrastructure. Durham region has invested a considerable sum of public funds in the servicing of lands identified for future growth which have yet to develop due to the transportation and access challenges.
We see Bill 70 as an opportunity to address these needs as it realizes the extension of Highway 407 into Durham region. The region of Durham supports the easterly extension of Highway 407 all the way through to 35/115 and two high-speed connectors to the 401, and views the construction of these works as our highest freeway-improvement priority.
We have repeatedly requested the province to proceed expeditiously with this important project, and as recently, again, as November 18, 1998. We recognize that in today's world, public-private partnerships are an innovative and necessary approach to the construction and operation of key infrastructure, including Highway 407. To this end, we concur with the province's initiative to seek an alternative approach to the financing and ownership of this unique toll highway as proposed by Bill 70. This draft legislation provides a mechanism to engage the creativity and resources of the private sector, while maintaining the public's interest in this important capital asset.
Bill 70 in its current form provides two significant benefits to the region of Durham. First, the proposed legislation would provide a mechanism to ensure the private sector owner proceeds with the expansion and/or extension of Highway 407, which we anticipate will include the works in Durham region. Second, it would reactivate the currently suspended environmental assessment study for the easterly extension of Highway 407 beyond Brock Road and Highway 7. The absence of a final decision on the need, justification and location of the facility and its connections to Highway 401 is a cause of concern to a number of parties in Durham region. The environmental assessment study provides the appropriate and ideal venue to address these matters in a comprehensive and consistent manner.
Although we wish to express our support for Bill 70, which will, if enacted, provide an excellent opportunity to realize the extension of Highway 407 into Durham, we do have some concerns with the proposed legislation.
We recognize that the intent of the draft legislation is to provide an opportunity for the private sector to become involved in the delivery of 407 and to preserve the flexibility required to achieve the most mutually beneficial agreement to all parties. We are concerned, however, that Bill 70, as it currently reads, does not provide sufficient guarantees for the partial and full extensions of Highway 407 to east of Brock Road and through to Highway 35/115, respectively.
Specifically, subsection 36(l) states, "The owner shall expand and extend Highway 407 in accordance with the terms and conditions set out in an agreement to be entered into between the owner and the minister for privatization." Until the terms of this agreement are specified, the timing and magnitude of any future extensions into Durham are not known.
This is a major concern to us. Given the tremendous need for the construction of Highway 407 to at least Brock Road and Highway 7 in the near term, we would encourage the provincial government to ensure this partial extension forms part of the aforementioned agreement, and that you consider proceeding with its implementation at the earliest possible date. A commitment on the timing of construction is also very much encouraged.
For the balance of Highway 407 to 35/115 and the connecting links to the 401, we would ask and encourage you to reactivate the environmental assessment study for these works at your earliest opportunity. Completion of the study would help to address several outstanding issues and concerns, and allow the project to proceed to construction.
In conclusion, the region of Durham strongly supports the initiatives aimed at advancing the construction of the 407 farther east. We believe the Highway 407 extension benefits not only Durham region but the entire GTA, given the integrated nature of the urban area and Durham's role as its eastern gateway.
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Bill 70, known as the Highway 407 Act, has the potential to significantly advance the extension of 407 into Durham. However, we would encourage the province to proceed with the construction of Highway 407's partial extension to Brock Road and Highway 7 immediately. We would also recommend that the agreement with the private sector owner articulate a plan to proceed with the full extension of Highway 407 to Highway 35/115 and the connecting links with Highway 401 at its earliest opportunity.
Members of the committee, a commitment by the province of Ontario to the timing and magnitude of these improvements is also requested and vital to the economic benefit of all regions within Durham, the GTA and the city of Toronto.
Thank you very much for the opportunity to address you, Chair Elliott. If we can answer any questions that can convince you to go east -- you know that old saying, "Go west." Well, trust me, east is nice. When you go to work in the morning, you're never driving into the sun; the sun's always at your back. It's sort of nice. You don't need sunglasses. You actually get to see the view and it's very pleasant.
The Chair: Thank you very much. We have time for about five minutes of questions from each caucus, and we'll begin with the NDP caucus.
Mr Pouliot: Roger, if I may, it's always a renewed pleasure. Throughout the years, you have elevated the vulgar trade of lobbying to the most honourable of professions. You also dress very well your presentation -- as exhibit A, this is the nicest we've had -- and what's inside your presentation does it justice indeed.
Mr Anderson: Just so you know, it was all in-house.
Mr Pouliot: I marvel at your ability to want a project so very much and to wrap it up with a most acceptable presentation.
I've known you for years, and you're very consistent and predictable therefore -- all positive. You preach for your parish. You come here and you say, "These are the benefits we wish to have." There's no question that everyone agrees that the 407 should be expanded. But then you tell us: "Start with my parish. Start with my street."
You remind me of when I was the mayor for 10 years of Manitouwadge, "cave of the Great Spirit," way up there in the north. People used to call me, because it snows a lot -- trust me, it does; you know that -- and used to say, "How come, Gilles, my street is always the last one to be done?" Well, there could only be one first one or one last one.
Here's the analogy: We've had several presenters, and we'll have some more, and people say, "This part of the project is unique, and I wish you would start here." I'm sure the engineers will have a field day, and hopefully they'll be able to accommodate each and every one. Some people wish to have the project so badly that they're almost willing to forgo environmental assessment and so forth.
I have a question. With your expertise and your background and your reputation for equilibrium, as being extremely well balanced, if someone would give the specification for 407 for the purpose of environmental assessment studies, would it not be preferable that this be done first? Then the environmental assessment would come back and then you could issue the contract. You could sell it after, if this is the intention. Would you not like to satisfy everyone with a thorough study environmentally?
Mr Anderson: First of all, I don't know if I should thank you for your original comments or hire you as my campaign manager.
Mr Pouliot: You could do worse, Roger.
Mr Anderson: You're right, Gilles.
Mr Pouliot: And better, too.
Mr Anderson: The next time I'm here as vice-president of AMO, I'll remember that conversation.
I say to you, in all due respect, the environmental assessment on the 407 from McCowan Road through to Highway 7 and Brock Road is done, is complete, is finalized, and it's my understanding that Minister Clement has already commenced the design. So that environmental process is complete. We're prepared to follow the process thoroughly and in due course on the extension of the 407 from Brock Road and Highway 7 through to 35 and 115, follow the environmental assessment process completely and thoroughly with a large amount of public consultation.
The fact is, not 12 minutes ago the councillor from Markham was complaining about the congestion at McCowan Road. That's Durham traffic. I was there last night trying to get on it. That's the congestion.
Durham region, the first phase, is complete. They just have to put the shovel in the ground.
Mr Pouliot: Thank you, Roger. Some will say that assessments lately have become so perfunctory as to be rendered almost meaningless. We established beyond doubt this morning that the venue, the style, the approach, the methodology that has been chosen by the government to build the extension of Highway 407, because of the private sector's inability to borrow at the same rate as the public sector -- the Globe and Mail said 75 to 100 basis points. On a project of $1.5 billion, it's $15 to $20 million a year on financing costs alone.
Are you afraid that your constituents will be burdened with an unduly high toll, that they'll pay an awful lot more than they should to use the highway? The sale is only for one thing. We have a letter from the minister that says they're going to sell Highway 407, the existing part, and they're going to take the money to pay against the deficit, so it's pretty well a last resort. Aren't you afraid of the financing part of it?
Mr Anderson: In all due respect, no, not at all. Believe it or not, I have absolute faith in any government that's duly elected to make the right decisions for the people it represents; I don't care what party. To sell something, there's a process, and I would suggest that the process is that you're going to make the best decision that you feel is right, an informed decision. I would hope the operations of this Legislature are no different from the operations of mine. We don't give anything for nothing; we don't get anything for nothing.
Mr Pouliot: The perfect marriage.
Mr Anderson: One would hope. I'm hoping we don't get divorced here.
The Chair: We have three government members who wish to ask questions: Dr Galt, Mr Spina and Mr Hastings.
Mr Galt: Thank you for your presentation. Being from Northumberland, I certainly support your concern for the extension to the east. We would certainly look forward to it. I get caught in the same congestion that you get caught in. We, as a government, fully accept the responsibility of having created that congestion with over 430,000 net new jobs. These are people getting to and from work who are creating that congestion. If those new jobs hadn't been created, we wouldn't have that congestion today, I'm sure.
I think you had an excellent comparison, on page 3, of the numbers of lanes coming into Toronto. We in the east are sort of on the weak end of the number of lanes coming into Toronto, you might say. The east really hasn't been found yet, and the glories of living east of Toronto. Maybe if we get these extra lanes, that would occur.
The question I have for you relates to a concern expressed by one of the members of this House from Durham -- since that person isn't here I won't use the name -- about the environmental assessment aspect of the extension. You've made reference to it on pages 5 and 6. Do you see this going across the Oak Ridges moraine? I'm parliamentary assistant for environment and very concerned that this is followed properly. Do you see this as a big stumbling block or a big barrier to developing those extra lanes in the extension of 407?
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Mr Anderson: Mr Galt, I know the MPP you're speaking of. I have absolutely no concern whatsoever in regard to the extension of the 407 to 115 and 35, as long as the public consultation process and the environmental assessment process are followed to the letter of the law. I've been involved in many environmental assessments, and it's a co-operation of the public, governments and environmental groups getting together and finding solutions. I think through that process they will all be taken care of very well. The Oak Ridges moraine is as important to Durham region as the 407, because it really is the lifeblood of the environment. To damage it and hurt it in such a way that it wouldn't be beneficial to anybody and would hurt everyone else at the same time is not good business.
With all due respect to the MPP you're referring to, there is an environmental process. Your government and Mr Pouliot's government would never cross the line, ever. I've never met an environment minister who would bend the rules to approve a project, and I don't expect to see one in this House ever. I know that our public and the people in the Oak Ridges moraine will fight you tooth and nail if there's something wrong, and I would suggest that whoever the environment minister is should pay attention, because they know what they're talking about. But there are solutions, and that solution can only be done through the process.
Mr Spina: Thank you, gentlemen, for coming. I just wanted to share with you the experiences I have as the member for Brampton North. I can only give you positive testimony, with statistical data as long as my arm, from both Chairman Kolb and Mayor Robertson, whom you both know, as to the economic benefit and spinoff we have experienced as a result of highway infrastructure, Highway 410 specifically and now of course the 407.
By the way, Richard, I just want to say that if you're as diplomatic when you become president of AMO as you are today, I'll look forward to you having a great relationship with the provincial government of whatever stripe. I compliment you on that, sir.
I, like you, have a major automotive assembly plant, Chrysler, highly reliant on JIT. With smaller supplier companies spread all over, whether it's a Magna plant in Milton or Newmarket or Vaughan or wherever, and trying to access either of those major assembly places, there's no question that we value those investments in our community.
I think you were here early enough to hear some of the arguments back and forth regarding the taxation or even a PIL, payment in lieu, with respect to the land, which would continue to be owned by the government. Do you think the economic spinoff and the resultant taxes, development levies and charges that would be of benefit in terms of revenue to the region and the municipalities probably far outweigh any PIL or taxation that you might receive off assessment from the highway once it's constructed?
Mr Anderson: I thought you might ask me that question. In fairness, and again with all due respect to the present government, we don't get any funding for roads any more. We don't get payments in lieu for Highway 7, we don't get payments in lieu for Highway 2, and we certainly don't get payments in lieu for Highway 401. As a matter of fact, we've come forward to the government with a proposal where we'll help pay for the widening and interchanges along the 401 as a joint venture. I never expected any taxes, any PILs. I would assume that if you sell this infrastructure to a private corporation, that corporation will pay business tax.
Mr Sergio: No.
Mr Anderson: Well, if it's a corporation and it makes money, it should pay business tax; that's another issue. But I didn't anticipate any PILs, I didn't anticipate any taxes. I did, in fairness, anticipate an easy flow of traffic from the east to the west of the GTA. That will be accomplished only with the 407.
Mr Cordiano: I think you've answered my question. I wanted to ask you how many businesses in your region are exempt from paying property tax or business tax.
Mr Anderson: Absolutely none. That's why I said that I think any business that makes money pays taxes. I own a business; I pay taxes.
Mr Cordiano: So why do you think it is that the government felt compelled to exempt the eventual purchaser of Highway 407 from paying property taxes? I'm shaking my head and saying, "Why would they do that?"
Mr Pouliot: The rich don't have to pay taxes.
Interjections.
Mr Cordiano: Madam Chair, I have the floor.
The Chair: Order. We're in a question-and-answer period. Please give our witnesses an opportunity to answer.
Mr Anderson: I'm going to plead some ignorance here, sir, because I'm not aware of the bill stipulating specifically that the purchaser of the 407 doesn't pay tax. If it does say that --
Mr Cordiano: Just for your information, it's in the act; it's in section 57.
Mr Anderson: Does it not say "municipal tax"?
Mr Cordiano: There's a compendium that says -- let me just refer to this. "The Assessment Act is amended to provide a specific exemption with respect to real property taxation for Highway 407." That's in the compendium. I asked the minister that question this morning and he acknowledged that they would be exempt, so that's a fact.
Mr Anderson: Well, in fairness, if it's municipal tax for roadways, the government doesn't pay it, so I don't understand why the corporation that buys it would pay municipal property tax.
Mr Cordiano: What I'm looking at here is with respect to municipal property tax in the Assessment Act. It's the Assessment Act that's being referred to. The minister couldn't specifically tell me what that refers to in terms of the new arrangement with property taxation. It's not clear to me, and the minister made it less clear when he answered.
Mr Anderson: I had no anticipation of receiving municipal property tax for the right of way of the road. I do expect a major benefit, though, from the economic development and the development charges that will come as a result of the construction of the road.
Mr Cordiano: I understand that, but Ontario Hydro pays those same taxes.
Mr Anderson: Yes.
Mr Cordiano: You do receive that revenue.
Mr Anderson: Payments in lieu, yes.
Mr Cordiano: And the railways do as well. So I just ask, in the interests of taxpayers and small businessmen, who have to pay their business tax and as a consequence are paying property tax with the new arrangements, why is it good for one and not for the other? That's the point you made. They're a business, they're a going concern, they're a corporation. They should pay the same tax. They should not be exempt.
Mr Anderson: Just so I'm clear, I didn't make that point. In fairness, I didn't. I have no issue with the tax whatsoever. I say that to you with all due respect. The benefit for all regions, the 905 and 416 regions, from the 407 will be enormous when you consider the potential development charges, economic growth, jobs and buildings that will be created in and around the 407. I can point to York region --
Mr Cordiano: No question about that. I don't think anyone would argue with that. The benefits are enormous. In fact, successive governments have planned for the 407 to be built. We built an interchange along the 400. Previous governments had expropriated land and set aside land. Everyone's in agreement with this. The point is, how do we get there? The point around this question is, what's a fair sale?
In addition to that, I personally and our party believe we should have the auditor of Ontario examine this deal after it's done to ensure that the public interest test is met, as a third-party oversight. I think the final successful bidder would want to make sure the public is reassured that this is a fair deal for the taxpayers. This is a complicated deal. It sets a new precedent if it is being sold. Therefore, we want to set the right precedent for future deliberations of any government. I guess you would agree with that.
Mr Anderson: That makes perfect common sense.
Mr Cordiano: Good. Thank you.
The Chair: On that point we will stop. Gentlemen, on behalf of the members of the committee, I thank you for coming before us this morning with your advice on this particular bill. It's greatly appreciated.
Colleagues, that concludes our presentations this morning. We'll recess and reconvene this afternoon at 1:30 in this room. Thank you.
The committee recessed from 1200 to 1338.
TOWN OF OAKVILLE
The Chair: Good afternoon, everyone. This afternoon, we look forward to our first presentation, from the corporation of the town of Oakville. Good afternoon, and welcome to the committee.
Ms Ann Mulvale: Thank you, Madam Chair and members of the committee. We're very pleased to have this opportunity to speak to you on a very important issue for our community. I speak on behalf of the corporation of the town of Oakville, and I thank you again for giving us this opportunity to talk to you about the desire of the town of Oakville to have the timely delivery of Highway 407 west extension through Oakville and Halton region.
It is my understanding that regional chairman Joyce Savoline of Halton appeared before you earlier today, supporting the quick passage of Bill 70 and the earliest possible construction of Highway 407 across the region. We are totally supportive of that initiative.
I also wish to note that I'm appearing before you with the full support of my council. We've been authorized by a resolution of that council passed on November 9 to be here.
There are four specific areas that I would like to address this afternoon relating to Bill 70, and we have supplied copies of this presentation for you: traffic congestion; economic development opportunities; Oakville's commitment to the 407 and our request to assist in the review of the request for proposals documentation preparation; and the establishment of a liaison committee, which we believe would ensure local communication.
First, traffic congestion. The Oakville transportation and transit study adopted by council in April 1996 indicated that the key transportation issue was overall mobility, a polite term for congestion. In surveys conducted for that study, the concerns of the residents related not only to existing problems but to potential future problems resulting from future development. Former Highway 5, now owned and operated by the region of Halton, has since 1993 operated at or beyond theoretical capacities across north Oakville.
Today's commuter faces queues in excess of two kilometres along this route during their morning and afternoon trips to and from home. Currently, two other transportation-related studies are underway: an Oakville study focusing on our midtown core and the need for additional capacity across the Queen Elizabeth; and the other, a regional study examining the corridors of former provincial highways 5 and 25 in Halton. Public meetings on these studies have generated large crowds. Clearly, we have heard the frustration of local residents with respect to traffic congestion and the lack of alternatives to the travelling public through Oakville.
The Queen Elizabeth Way is the sole provincial freeway through the town of Oakville, which exchanges traffic from multiple links, both east and west. From the west, two freeways, Highway 403 and the Queen Elizabeth, merge into a single QEW in Burlington and Oakville. From the east, three GTA freeways -- Highway 403, 407 and the Queen Elizabeth -- accept and deliver traffic. The two largest Halton region municipalities are served solely by the QEW, and we face traffic conditions which may regularly be described as undesirable, overloaded and without alternatives. A single traffic accident on the Queen Elizabeth in Oakville or Burlington causes gridlock and systematic breakdown on both arterial and collector roads within the area of influence.
The addition of Highway 407 in the road network will increase capacities significantly at both Sixteen Mile Creek and Bronte Creek. The benefit in the construction of Highway 407's ability to reduce traffic congestion are obvious to Oakville; however, we also understand that Highway 407 is not a panacea and that the province must continue with its commitment to the widening of the QEW corridor to eight lanes after completion of Highway 407.
Economic development opportunities lost and gained: All of Oakville's industrial districts are focused on either the 403 or QEW corridor. The positioning of these employment lands along major freeways is not a coincidence. Business proponents recognize the value in highway exposure, minimizing trip distances, permitting just-in-time manufacturing opportunities, and also the value of an address within the GTA. Although we have been extremely fortunate to realize significant increases in industrial, office and service development within this corridor, there are red flags being waved by site location specialists, who voice concern over the ability of the QEW to provide the service level needed for their particular use.
Recently, our site plan committee gave approval for the construction of two office buildings central to the corridor. After proceeding through the full planning process, the plug was pulled on this project, with the specific reason being the extent of traffic congestion on the QEW. We are not able to determine the extent to which this type of decision is being made on a daily basis with respect to investing in our community. An opportunity was clearly lost.
Highway 407, planned in 1962, showed remarkable foresight on the part of the province in determining future transportation needs in the Golden Horseshoe area. The term GTA had not yet even been coined. Transportation Minister Tony Clement has indicated that Highway 407 has received tremendous acceptance by the driving public: "The extensions to Highway 407 will be an important boost to transportation infrastructure, will provide a competitive advantage for Ontario industry, and will ensure that GTA residents can get home to their families faster at the end of the day."
For the last decade, the local governments in Halton have addressed growth management and urban structure. Highway 407 in Oakville represents opportunities to be gained in ensuring the continued economic health of our community. A recently completed economic development strategy for Oakville points to Highway 407 as the most advantageous location in positioning the employment districts which will serve not only our residents but all those individuals seeking employment in a growing commuter shed.
We believe that there are opportunities to be gained with the construction of Highway 407, both in the short and long run. It must be stressed that the growth management strategies of the region of Halton and the future decisions of local councils with respect to development are dependent on the commitment to the completion of Highway 407. A commitment made by the province for the timely delivery of this highway should turn opportunities lost into those gained.
Oakville's commitment to Highway 407: All plans and maps of our community show a proposed Highway 407 across our northern boundary. From the designation of this corridor in 1962 through the county of Halton, to the identification of the corridor and intersections in the parkway belt plan in 1978, Oakville has relied on this future highway. In 1993, the government of Ontario committed that Highway 403, now 407, from Burlington to Oakville would be finished in its entirety by the end of 1998.
With that commitment, the town of Oakville initiated an environmental assessment to establish the need and location for the Neyagawa Boulevard extension north of Highway 5 to its intersection with the proposed Highway 407. This major arterial road, together with Trafalgar Road and Bronte Road, represents the three confirmed intersections with 407. In a letter dated August 19, 1993, from the then Minister of Transportation -- I'm delighted to see you here today, sir --
Interjection: Aren't we all?
Ms Mulvale: Madam Chair, I'll try and pick this back up. We received a letter from the then minister that indicated that should Neyagawa Boulevard be in place at the time of Highway 403/407's construction, including connections to the municipal road system, both north and south of Highway 403, the minister would include the construction of the interchange ramps as part of the Highway 403 contract. We've attached the letter that was so signed to your packages today.
Oakville has completed an environmental assessment and subsequently constructed Neyagawa Boulevard north of Highway 5 and determined the final alignment for intersections with the proposed 407 highway. Oakville's cost, which can be directly attributed to our reliance on this commitment from the province of Ontario in 1993, is currently in excess of $13 million. An additional $1.5 million of future work related to this project is planned over the next four years. This is Oakville's commitment to the construction of Highway 407. I also wish to emphasize that we have forgone other capital needs in our community for the express purpose of making this significant investment in our future transportation system linkages with a provincial highway.
Open communication: As previously indicated, Oakville is in complete support of Highway 407 construction. All our plans to date have considered this highway as a part of the ultimate transportation system in and through our community. Development is already mustered along the south side of Dundas Street, and it is anticipated that lands which have been designated rural-agricultural since the creation of Halton region shall be given a new designation of "urban area" in the year coming. As a result, Oakville intends to initiate a strategic options land use study to determine the appropriate employment lands, new planning districts and the systems to support them. There are numerous roads, subwatersheds and ownerships along the corridor. The current practice of the Ministry of Transportation in the case of provincial transportation works are controlled by law and procedure: the Public Service Works on Highways Act, and the Ministry of Transportation Corridor Control and Permit Procedures Manual "Encroachments and Utilities."
I understand that the region of Halton and the city of Burlington have also drawn this to your attention and have requested that the committee give consideration to the rewording of section 18 of Bill 70, which deals with the relationship between the provincial government and the private sector partner. The rewording would ensure that both the Public Service Works on Highways Act and the Ministry of Transportation Corridor Control and Permit Procedures Manual "Encroachments and Utilities" would apply to the management of the highway. Such a change to the bill would ensure a clear understanding of the responsibilities of the private sector partner in delivering this important asset.
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Finally, I would like to request that the committee recommend the creation of a liaison committee with representatives of the ministry, the private sector partner and local municipalities to provide an appropriate vehicle for communication during design and construction. Such a committee would ensure that information is readily available to any person who has an interest in the highway, and that issues which commonly arise may be dealt with expeditiously and with the knowledge of those affected.
In the same spirit of co-operation, we would like the opportunity, as would the city of Burlington and region of Halton, to provide direct input into the preparation of the request for proposal document to ensure a clear understanding of the scope and deliverables of this very important initiative.
On behalf of the council of the corporation of the town of Oakville, I wish to thank the committee for receiving this presentation. The completion of the western extension of Highway 407 is vitally important to residents and businesses in Oakville. While this project has been on the books for a number of years, the uncertainty of a completion time frame has limited our ability to plan for additional employment lands. We do not wish to have opportunities lost, but rather, look forward to the opportunities to be gained through the construction of this highway permitting Oakville, Halton, the GTA and Ontario to move forward with economic growth.
I would ask the government to give favourable consideration to our requests to provide direct input into the preparation of the request for proposals document and our offer of assistance in the establishment of a liaison committee to provide an essential vehicle of communication as a part of the project management.
Madam Chair, that concludes the text of my presentation, but in waiting to be called to present before you, my planning director, Ted Salisbury, reminded me of a commercial he saw as a person growing up, and some of you may remember. He believes it related to hydro; it had a multiplicity of plugs coming into sockets, and eventually the sockets are overloaded and they blow. If you can think of Oakville and our sister community of Burlington in that sense, we are overloaded in terms of vehicular traffic coming into this community. When we leave here, we will run into the beginning of rush hour. The QEW, by 3:45, and Highway 5 will start to be plugged. Because people know that, they get off on to Upper Middle Road and other roads and they filter through the residential areas, and we are in serious risk of major incidents.
On November 11 two years ago, we had an oil tanker overturn on an approach ramp to the QEW. It took more than a day to pump out and replace that vehicle. Oakville was exposed, this community, throughout that night had there been any incident, because our east-west traffic routes were totally plugged until after 10 o'clock that night.
We petition you earnestly to find a means to expeditiously build a highway, long promised, long overdue and desperately needed.
The Chair: Thank you very much. We have five minutes for questions from each caucus. We'll begin with the government caucus.
Mr Ted Chudleigh (Halton North): There's a tremendous amount of support for this highway being built. One of the ministers involved in it is sitting at the table. His questions have been quite mild today, really, given some of the history I've heard him use in the past.
Is there any opposition through that Halton area at all? I personally haven't heard of any. I've heard some references to the loss of farmland. It's been my impression that the soils in that area wouldn't be hotly fought after by the farming community; it's not the most productive area. In fact, the selection committee, way back in 1962 -- is that when this started? -- did a pretty good job of selecting a route through an area that would have a minimal amount of impact on the area. Could you comment on the opposition?
Ms Mulvale: It's my understanding that the lands are all assembled, that most of the land between the present urban envelope and this boundary of this envisaged highway are now, if they're farmed at all, tenant-farmed. Most of the family farms have long gone. It has been an assumption since the route and the announcements in the 1960s that this would happen, so the lands have been assembled.
The people of Oakville would be very interested in the process; they would want to know that we are good stewards of any environmental concerns there. I'm sure they'll pay attention to it, but I believe I am quite safe in saying that overwhelmingly this is supported and that we are conversant with legislation which would address some of those other concerns.
Mr Chudleigh: I guess I'd just say that with the amount of opposition we generally get to change, this is one change that has universal support and is strongly held in most cases.
The Halton urban structural plan, which has been under development for some 10 years or longer --
Ms Mulvale: Ten years at least.
Mr Chudleigh: -- and is coming to fruition, attests to the fact that Halton does its long-term planning very carefully and very well, as does this highway. I was wondering where the term "Neyagawa" came from.
Ms Mulvale: The roadway to the south is Neyagawa-Dorval. We are twinned with Dorval, Quebec, and we're also twinned with Neyagawa, Japan, which is in the prefect of Osaka.
Mr Chudleigh: Is this indeed the same road?
Ms Mulvale: It jogs.
Mr Chudleigh: But it connects with Dorval, so it'll be a direct link between the QE and that highway?
Ms Mulvale: Yes, it will.
Mr Chudleigh: Again, an example of excellent planning.
Ms Mulvale: Thank you.
The Chair: To the Liberal caucus, Mr Cordiano.
Mr Cordiano: Thank you for your presentation. I just have a few short, brief questions. Let me make one thing clear, though, before I ask you some questions. We're not here today to discuss whether a highway should be built or not. I think everyone agrees that the highway needs to be built. What we're here today to discuss is whether this highway should be privatized in the manner that's being contemplated by Bill 70.
To that end we, as the Liberal Party, are concerned that what has been put before us by way of Bill 70 does not effectively address the concerns that have come up in light of this; concerns around what will tolls be like after the private sector operator is able to determine what those tolls ought to be, with no oversight from the public whatsoever or the minister. It's not contemplated. We're also concerned with getting good value for money for the taxpayer. I've suggested, and I'll be introducing an amendment, that the auditor of Ontario examine this deal to ensure that. I think everyone would want to be certain that the public interest is served and that there's no question that will be done.
As well, I have concerns with the fact that the private sector operator will be exempted from paying property taxes as a result of Bill 70. I don't know how you feel about that, but Ontario Hydro pays for their right of way. The CN-CP pay for their right of way. So everyone is paying. I don't know if you know of any business in your community that is exempt from paying property taxes.
Ms Mulvale: If I could respond to the question this way, as a taxpayer, I respect and appreciate your interest in taxpayers' rights, but the taxpayers of my community are not being served well on a daily basis because a highway, long-promised and spoken to by your colleagues who served in Halton during the Peterson administration, has yet to be built. You have to determine how you will deliver that.
I am just here to urge you -- and we could dialogue with you at some other time on that; I'm sure our constituents probably would. But the message from my community is that from 1962 until 1998, the planning stage is far too long. Build the highway. If we had built the highway earlier, you wouldn't have had to wrestle with the issue of whether it should be privatized or not. It would have been built under the previous system, which was that they were built by the provincial government.
Mr Cordiano: And the Peterson government had allocated monies to do just that, as you'll recall, for the link.
Ms Mulvale: We had announcements from them, but we never saw the highway built, unfortunately.
Mr Cordiano: I'm sorry?
Ms Mulvale: We had announcements. I've been mayor for 10 years, so I was at those announcements. I'm not here to argue with you. I'm here to focus you, from my community's viewpoint, on the imperative, and that is to build it. You can wrestle at another forum on the means of building.
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Mr Cordiano: But if you will forgive me, this forum today is not to discuss whether the highway should be built or not. It will be built. We're all in favour of that. The forum today is really to address the concerns around privatization and whether we have a framework which will work, which will ensure that taxpayers are not at some future date overburdened because of the failure of this government to see that far ahead. That's why we're here today, to ensure that the public interest is served.
Ms Mulvale: I'm here speaking on behalf of my constituents, who are also taxpayers. Their interests daily are best served by the highway being built. They are totally frustrated. They do not want it to be delayed over some of the other issues. For them, the priority, with respect, is not whether it's private or public but when it will be built.
Mr Cordiano: I agree with you wholeheartedly. Again, I think that's a consideration for the minister and the government, to expedite that construction if they so choose. They could have chosen to do that before any consideration for privatization. Several years ago they could have decided to continue with the construction of the 407 quite separate and apart from privatization. So I don't see that is an issue, if you will forgive me.
The Chair: We're going to move now to Mr Pouliot.
Mr Pouliot: Thank you, Your Worship. We're honoured certainly, mes homages, that Oakville, one of the most prosperous cities in Canada --
Ms Mulvale: We're normally in the top five and we choose emotionally to have the nomenclature of 10.
Mr Pouliot: That's right. You seem to be competing not in a field of one but in a field of five, so that's a pretty select group. We want to wish you continuous success.
Your Worship, it wasn't too long ago that your clerk administrator, I think it was -- well, on a day like today, they were talking about business occupancy tax, one of the seven bills regarding property taxation. It's a puzzle extraordinaire, and I saw the pain, because like both of you, she is committed. I could see the dollars going out the back door with no alternative. So welcome.
Thank you for bringing a copy of one of my former letters. I sign far fewer letters nowadays, but nowadays I read them all, I can assure you.
Ms Mulvale: I'm heartbroken if you didn't read the letter that you signed to me.
Mr Pouliot: On a more serious note -- I know you can't say that and I respect you and your opinion -- they flirted with the concept of Highway 407. They could see just-in-time delivery, the need for expediency arising, but when it came time to ask the question vis-à-vis the 407, they shied away, both of them. We didn't. We put rocks in the box, shovels in the ground. We showed our commitment.
The letter that you talked about was in 1993. We were midway through our term. If it had not been for the interruption, courtesy of the taxpayers --
Interjection.
Mr Pouliot: -- that's democracy; that's OK; that's how we got there in the first place -- we would have completed it. The letter says so. You say, "Can we believe?" Of course you can believe. Look at the first segment. Look at the $1 billion that has already been spent.
At the risk of being repetitious -- and Mr Cordiano, my friend and colleague, has already said that -- no one is opposed to building the 407. What we're opposed to is process. You see, we are seeking the same port, but we take different routes. We know, and there's perhaps nothing wrong with it, that they will sell at the first bid to get $1 billion so they can reconcile the budget. It's their affair, but in doing so, our fear is that the users of the highway will be left on the hook. They will pay a little more, if not a lot more, and they will pay for a lot longer. Those are the questions on behalf of the consumers. The raison d'être, the fait accompli -- it will happen -- has already been established for the need and the expediency vis-à-vis the 407, so let there be no quarrel there.
Are you confident that your special part of Ontario will be addressed first in terms of the timetable? Do you wish to have the expansion start with Oakville?
Ms Mulvale: If there is difficulty -- and I understand there are still some lands to be acquired on the easterly side. We are saying the westerly portion of this is ready to go. If you have to bid the contract in part or something, do not delay this link, because the land is assembled and the people are ready.
We believe in the wisdom of the people. They elected all of us. Democracy says the people are always right and so the party in power will make the decision on how to deliver this highway. With the greatest of respect, that is democracy, and the people will hold us accountable, as they interrupted your administration, if they're dissatisfied with the decision made in terms of some of those financing details. We have confidence that you can proceed on the west. If you have to delay the east, we just ask you to please get on with it.
Mr Pouliot: We're all in favour of it, except process.
The Chair: On that note, on behalf of all the members of the committee, I thank you for taking the time to come to see us this afternoon. I know it's a long drive either way, but we do appreciate your advice today.
Ms Mulvale: Thank you again for your courtesy, Madam Chair.
ONTARIO TRUCKING ASSOCIATION
The Chair: I am now calling representatives of the Ontario Trucking Association, please. Good afternoon and welcome. We're glad you're with us this afternoon. Before you begin, would you please take a moment to introduce yourselves for the Hansard record. I'm sure you know you have 30 minutes of presentation time and hopefully time for questions as well.
Mr Michael Burke: My name is Michael Burke. I'm the manager of government relations with the Ontario Trucking Association. With me is Mr Stephen Laskowski, the assistant manager of government relations with OTA.
We're delighted to be here today. Some of you may be aware that going on at the present time is the annual OTA convention. Consequently our president, Mr Bradley, is unable to attend. However, when we found out that the previous Minister of Transportation was going to be here today, we thought we would find the time to come here in person and provide you with our comments and remarks.
I'd just like to begin by talking a little bit about OTA so that people have a clear understanding of who we are and who we represent in the industry. We're the largest trucking association in Canada and the third largest in North America. We're the only trucking association in Ontario that represents all sectors of the Ontario trucking industry. Our members have operating revenues in excess of $5 billion and employ approximately 150,000 people.
OTA works with a large number of transportation and other groups. We're a member of the Canadian Trucking Alliance and we're also a founding member of the Better Roads Coalition, a coalition which is dedicated to the maintenance and expansion of the road system in Ontario.
I'd like to talk a little bit about the importance of trucking from an economic perspective. I won't spend too long on this point, but I just want to mention that Ontario's economy is dependent on truck transportation. It's estimated that more than 95% of the goods moved into, out of and within Ontario rely on truck transportation. As we all know, trade is the engine of growth in Ontario and 85%, by value, of Ontario's trade with the United States is shipped by truck.
Why is that the case? The reliance on truck transportation is expected to continue in the future. Transport Canada freight forecasts show that Ontario will lead all other provinces in terms of growth in trucking over the next decade. The reason for that is quite simple: The trucking industry and the services the trucking industry provides are really the only mode of transportation that can meet the demands of a modern economy, and the fact that we're now serving an economy that's based on value-added manufactured goods.
We talk a little bit in our presentation about trade and traffic and congestion in the GTA. I won't go through everything we've provided. We just ask you to have a look at it, but we do make a few points about congestion and the costs of that congestion on the economy as a whole. We do refer to a recent study by the Ministry of Transportation, referred to as the 1997 Strategic Goods Movement Corridor Analysis. This study basically tells us that the daily commercial volumes on the 400 series highways are both substantial and increasing.
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We talk a little bit about the cost of congestion, which in the GTA area alone is close to $2 billion, or 30% of the cost of moving goods. How do we resolve that? Obviously, we're of the view that the road system has to be enhanced. That has been our position for a number of years, and that certainly was our position during the planning stages of Highway 407.
With respect to the 407, our view was that, faced with the possibility of not seeing Highway 407 completed for another 25 years without the introduction of tolls, the trucking industry saw no alternative other than to propose the imposition of toll roads as a means of completing the project within a reasonable time frame. However, we certainly did not accept tolls lightly and based our support on a number of conditions. For the most part those conditions were reflected in Bill 17, the original legislation introducing the 407.
What we were looking for at the time was the assurance that tolls must only be imposed on significant new highway construction -- at the time we certainly did not, and would not now, accept tolls on existing highways; an alternate route must exist so that road users would have the option of using the toll highway or not; tolls would cover the cost of construction only; maintenance of such roads would be paid from existing revenues; the tolls would come off the highway once the debt was retired; tolls must be collected using the most advanced technology possible; and tolls should be set at different rates reflecting peak times.
All financial data relating to the toll highway should be open to the public. We also feel that trucks should be assessed at what we consider to be a fair rate.
We mention the issue of fuel taxes only because these taxes are paid whether or not you use the toll road. Obviously, we have concerns with respect to the amount of money that's collected versus the amount of money that's reinvested back into the road system. For us, this is a competitive issue. We're looking at the commercial diesel fuel tax rate in Ontario. It's roughly 44% higher now than it was a decade ago.
With respect to the highway itself, we very much want to see the 407 completed. We feel that until it's completed it will never truly be a Toronto bypass, and its effectiveness then would not be measured.
We feel that the importance of extending the highway westward would have a number of positive developments, such as offloading the chronically congested sections of the QE through Oakville and Burlington, as the last presenters mentioned. It would serve the expanding population of Halton region, offer a direct connection between the northern GTA, Hamilton, Wentworth and Niagara Peninsula, and provide connections with the Niagara frontier border crossings, which are of particular concern to us considering that we do a lot of trade with the United States.
There are certainly advantages to extending the highway eastward as well, for similar reasons and for similar benefits in that particular area. We've maintained that, with respect to the toll rates currently, we feel they're excessive for commercial traffic. To give you an example, a tractor-trailer using the 407 during peak periods would pay approximately 30 cents a kilometre. That means the annual cost of a round trip on a fully completed Highway 407 would exceed $20,000 per year. It is cost-prohibitive for the commercial industry to use that highway. So we would certainly like to see an environment or a situation where there were incentives to reduce the cost of the tolls, making it much more viable for the commercial industry to use.
Another big bone of contention that we have with the existing situation, and we hope this could be addressed, is the whole issue of out-of-province carriers. Right now we have a situation whereby if a commercial vehicle uses the 407 and doesn't pay to do so, he or she, the owner, faces penalties. The Ontario Transportation Capital Corp has acknowledged that they really have no way of enforcing the collection of tolls on out-of-province vehicles. From a commercial perspective, this becomes a competitiveness issue. The same thing with respect to transponders: Commercial vehicles are required to have transponders with them. If a commercial vehicle from out of province or the United States uses the highway, there is no enforcement mechanism to ensure that they use a transponder. These are some of the things that we would hope the new owners of the 407 would be able to remedy or provide us with some assurances that these inconsistencies could be remedied.
With respect to the bill itself, OTA supports the sale of the highway. We are anxious to see the highway completed. We feel that this may be the most effective way of ensuring that that happens. However, that does not mean that we do not have some concerns. Upon first reading of Bill 70, we did have a number of questions, particularly:
Is Bill 70 establishing a mechanism that would make it easier to impose tolls on any new or existing highway?
Does Bill 70 allow the new owners of the highway to exempt out-of-province carriers from paying tolls or otherwise create a situation where only Ontario vehicles pay the tolls? That's the one I just spoke to.
Does Bill 70 confer special business advantages upon the owners of the highway?
Does Bill 70 allow existing infrastructure links with Highway 407 to be tolled?
Those are things we seek some assurances on.
We talk about the specific sections and we do have some analysis and some understanding as to why the bill was worded in such a way. We'd certainly like to make sure that those assurances make their way into the final bill.
What we would like to see as well is perhaps a system of fuel tax credits. Since Ontario carriers travelling on the 407 are using taxed fuel, will the tax credits be available to carriers using the 407? This is the case in certain US jurisdictions.
Toll rates: The government must assure the trucking industry that reasonable rates will be introduced for commercial vehicles, recognizing their importance to the economy and the financial viability of Highway 407. Owners of Highway 407 should be compelled to consult with OTA regarding issues related to the industry.
Marketing: The government must ensure that the new owners introduce innovative marketing strategies, ie, volume discounts, fleet discounts, free transponders for the trucking industry. We're hopeful that marketing will be such that people are encouraged to use the highway.
Extensions: The government must ensure as a condition of sale that the highway purchaser must, in an expedient manner, build the western and eastern extensions of the highway. I would also like to add that we certainly want to ensure that the current provisions of the Highway Traffic Act are enforced on the highway as well.
That concludes our comments and we'd be happy to attempt to answer any questions anyone may have.
The Chair: We have six minutes, roughly, for questions from each caucus. We'll begin with the Liberal caucus.
Mr Cordiano: Thank you very much for your presentation. There's a lot to think about in this bill and I think you've expressed that in your presentation; a lot of concerns that I've raised and I'd like to explore those with you further.
Let's start with marketing. It was interesting, your comments about marketing. What if the new owners of the 407 decided to market the idea that the 407 would be truck-free? How would that grab you?
Mr Burke: When you look at Ontario trucks, it's almost truck-free right now.
Mr Cordiano: But there still are trucks on it.
Mr Burke: We're hopeful that situation would change. No, of course, we don't want to be banned from the 407. Absolutely.
Mr Cordiano: Bill 70 is limitless in what the new owners of this highway can do. There are no restrictions there. They could jack up commercial rates to the point where no trucks will use it. That's a marketing tool.
Mr Burke: That's almost what we're looking at right now. What we're looking for is some motivation to change. We don't think that a new owner would want to exclude the trucking industry, simply because of revenue. I think if they were to do that they'd get flak from surrounding communities because those trucks wouldn't be able to serve those communities. Certainly if that were the case, that would meet with opposition from OTA. I'm not convinced, however, that that would be the case as the bill is currently written. I suspect you feel differently.
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Mr Cordiano: I'm pointing out the extreme case that could arise. It's my job to point out what could happen.
Mr Stephen Laskowski: This has happened in states in the US. New Jersey went through an experience like that. Whether they deliberately attempted to shift truck traffic off the turnpike, they raised the rates by 100%. The trucking community did not go on to the turnpike. Financial chaos set in on the turnpike, and they have, since that point, in a four-year period, revisited, re-marketed to the trucking industry, reduced the rates and brought in volume discounts. Any private highway must, in turn, look at the trucking community as a financial variable. Without the trucking industry, the road most likely will not work.
Mr Burke: The people in New Jersey recognized that it wasn't in their interests to discriminate against me or create a situation whereby commercial traffic was not on the roadway.
Mr Cordiano: I don't want to argue with you. I'm raising the extreme cases, and a case can be made that there is enough traffic on the 407 now that it is viable with very few trucks. Most people will comment that the 407 is not travelled by many trucks, and you've suggested that yourself.
Mr Burke: There are two reasons for that, primarily. One is the rates, and right now, as it is currently available, it is not a Toronto bypass. It's difficult; if someone is going across from Windsor to Montreal, for example, you have to go out of your way to get to it and then get back. Once the eastern and western extensions are built, then we can have a much better analysis as to how effective and useful it is.
Mr Cordiano: But you are concerned about tolls. You're already concerned about tolls. I've spoken to you before about this.
Mr Burke: Yes. We've been concerned about tolls ever since it first opened.
Mr Cordiano: Right. What I'm suggesting to you is that Bill 70 does not contemplate any kind of restrictions on tolls. You're just dependent on the operator doing his part and ensuring that he has a viable business entity. That much I believe in. However, what I'm suggesting to you is that if the usage is increased -- the capacity hasn't been met yet, we have quite a way to go, and yet the highway is a phenomenal success, according to what the Minister of Transportation has told us and the previous minister and the one before that, all suggesting that already the numbers are so lucrative you could increase traffic flow on the highway without trucks and still do very well. But anyway, that's another story.
The other thing is with respect to business tax. Bill 70 exempts the new owners from paying any business tax, or property taxes.
Mr Baird: Not business taxes.
Mr Cordiano: Property taxes.
Mr Burke: They'll pay corporate.
Mr Cordiano: Therefore, I wonder if any of your members would like an exemption from paying property taxes. We should all line up and say, "If they're going to receive an exemption" -- Ontario Hydro, CN, CP.
Mr Burke: Are property taxes paid on existing highways? I don't think they are. This gets into the whole debate about highway cost allocation, who pays their fair share. I'm quite prepared to sit here and debate that issue, but I don't think everyone wants to stay here all night. Quite often people raise the whole issue of the railways, but it seems every time that is raised as an example, the billions of dollars the railways have received in direct subsidies and recapitalization grants are excluded. That whole issue of rights of way and who pays what is part of a much broader debate with respect to highway cost allocation. That's something we have been debating and arguing for years and years, and we fully expect we will continue to do so.
Mr Cordiano: I can appreciate that but the fact is there is an exemption in this bill for property taxes.
The Chair: I have to interrupt. Mr Pouliot.
Mr Pouliot: Welcome. Always a renewed pleasure. We go back something like 14 years.
Mr Burke: We do.
Mr Pouliot: Say hello to David, Mr Bradley. He's at a convention?
Mr Burke: He is. He's going to be very disappointed.
Mr Pouliot: Good. I remember the debate and the repartee we had on the regulations -- shared onus on capacity, axle weight, repartition, slack adjusting, the brakes. The bloody brakes -- it's always been a residual problem.
Mr Burke: It just demonstrates how the issues don't change.
Mr Pouliot: That's right; that 34%. In fact, we established with you a blue ribbon committee on safety and it went rather well. It's still going quite well.
Mr Burke: Much of what was in that blue ribbon task force on truck safety was incorporated in the Target '97, truck safety.
Mr Pouliot: There are others, I'm sure, but that's one thing the revolution did not brush aside.
You're right; it's an oversight on collecting the fee, for those who have not participated, who don't pay, for the users who do not. The Ontario Transportation Capital Corp has no jurisdictional capacity. It's not their job. We know what they are. They were instituted by virtue of the partnership between public and private. They went and borrowed the money, if you will. They operate at semi-arm's length. Then they collect the money and they pay the debenture, they pay the bankers back. That's their role. But it's an oversight. It would be the role of MTO.
MTO has all sorts of reciprocal arrangements on a myriad of issues with most of the states, if not all, and certainly with, in most cases, all Canadian provinces. It's their job to be vigilant, because if you go to Nova Scotia and you don't pay your toll there, it should be reflected on your licence here as well.
Mr Burke: Yes. Can I just interject briefly? I don't dispute what you're saying, but so often in our industry we do have complaints but the whole thing boils down to enforcement. If things aren't enforced, then things aren't going to happen.
Mr Pouliot: The deficit caught me a little by surprise. I need your help. It could be as high as $20,000 per year. You've mentioned 30 cents a kilometre. Who told you that? Which merchant of fear did you --
Mr Burke: We sat down with a calculator and figured it out. If you're going at peak hours throughout what would be the complete extension, at the current toll rate during rush hour, a round trip, you're looking at in excess of $20,000.
Mr Pouliot: That's 170 kilometres. That's once a day?
Mr Burke: Twice a day. It's a round trip.
Mr Pouliot: That's 844 multiplied by --
Mr Burke: Two hundred and twenty working days.
Mr Pouliot: Yes, 20,080 hours at your designated workplace will constitute a year's work. I thank you for helping me. That seems to be quite -- I know a lot of people who don't drive cars who are worth more than $20,000. At this rate, if they chase the truckers out, all you will see are some of the others, like the brokers and others who drive exotic cars like BMW, Mercedes-Benz. Highway 407 was built to facilitate -- the truck traffic has, what, doubled in the last seven years?
Mr Burke: At least.
Mr Pouliot: And it may double again in the next 10 years. It's the way of doing business. Yet you support it. In fact, if I was to take my shirt off, I'm still all black and blue from my relationship with you when I was minister. Now you see, my friend, I'm sitting here as a member of the third party. This is my last turn. I have immunity.
Mr Burke: If memory serves me right, I was with you the day you announced the 407 and I spoke quite favourably about the prospect --
Interjections.
Mr Pouliot: We're very supportive. There's no doubt that the difference between the present administration and the third party is not on 407. If they can build it as safe and as fast as possible, so be it. We have some difficulties with the financing part of it and we have some difficulties with an open process, that's all. It's no more than that, it's nothing that cannot be reconciled, but it's certainly no less than that. I welcome your presentation.
Mr Burke: Thank you very much. We're delighted you were here today.
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Mr Spina: As usual, the OTA has come forward with a well-researched document. I want to understand, and I'm going to pick up on something that Mr Pouliot really began. Do you have some idea of the annual operating cost of a rig? I'm talking about an average annual operating cost of a rig. A private owner, a guy who buys --
Mr Burke: Looking at taxes, for example, if you look at what an average 18-wheel truck pays per year in taxes to the federal, provincial and municipal governments you're looking at about $40,000 a year. Then you also have to include fuel costs on top of that, labour costs, costs of servicing the vehicle. So it's significant.
Mr Spina: Would it be $120,000?
Mr Burke: That wouldn't be unreasonable. Again, it varies, depending on the type of the truck.
Mr Spina: I realize that. I'm looking at an average.
Mr Burke: I can't give you a precise figure.
Mr Spina: What I'm trying to put into perspective, Michael, if I may call you that --
Mr Burke: Certainly.
Mr Spina: I'm just trying to put into perspective the general operating cost of the rig versus your guesstimate here of $20,000 operating toll costs on an annual basis and cross-referencing that to the comment that you made in an earlier section of the report, which is that the cost of congestion, $1.9 billion, is roughly 30% of the cost of moving goods. Is it fair to say that if the annual operating cost of a rig was $120,000, the cost of moving goods because of congestion was $40,000, or 30% of that $120,000? I want you to correct me if you don't agree with me. I'm saying if the cost of congestion is costing this driver $40,000 a year and the cost of the tolls is costing $20,000 -- you can juggle the numbers up or down -- is there a saving --
Mr Burke: When we're talking about the cost of congestion, we're talking about costs to the economy. We're talking about costs to manufacturers, to shippers, to people who benefit from the services. We're talking about delays. One of the reasons, as this report indicates -- a benefit of the trucking industry is that it can respond to just-in-time delivery requirements and quick-response delivery requirements. It's the only mode of freight transportation that is equipped to do so. When you have congestion like we have in the GTA, you have that slowed down, so the manufacturing process suffers. People who benefit from the services of freight transportation suffer. It's a cumulative effect. This is an impact on the economy as a whole.
When you're looking at the trucking industry specifically and the cost of doing business, you're looking at the cost of labour; you're looking at the cost of fuel; you're looking at the cost of taxation; you're looking at the cost of buying the equipment, which alone is in excess of $100,000 for one rig. You combine that and you're looking at an industry that is still operating on extremely tight profit margins. We haven't had a real significant change since deregulation. It's becoming increasingly difficult to operate. The industry certainly wants to operate safely and make sure that it can continue to make the investment in safety.
We do operate on tight profit margins where volume is increasing and the industry is certainly busy, as a reflection of the expanding economy. But, again, we have to pay close attention to our bottom line. If you're looking at a situation where you could realistically pay an additional $20,000 just to use a section of highway on top of what you already pay in road user taxes, that makes it cost-prohibitive, and it does not encourage use of that highway.
Mr Spina: I understand. Thank you for the comments in your report.
The Chair: Mr Hastings, there's time for a brief question.
Mr Hastings: I'd just like to review your basic position and contrast it with the Liberal opposition here, Michael. That is, essentially you guys want this extension, this configuration, this stuff done. The process issues should not in and of themselves create barriers to getting on with the job -- not to dismiss in any sense at all the proportion of your concerns.
Mr Burke: We are certainly not opposed to this bill. We would like to see the highway built. We want to see the extensions built. We have concerns, as I indicated, with respect to tolls. We'd like some of the current status quo situation to change. We're hopeful that will change, and that's why we're here today to speak to our concerns. No, we do not oppose the bill, but we certainly don't want to see this bill become an indication of general support or be seen as an indication of general support for toll highways. Our concerns with respect to tolls on existing roads are still very much in effect. Our position really has not changed in that respect.
The Chair: Gentlemen, on behalf of each of the members of the committee, I thank you for taking the time to come before us this afternoon with the views from your association.
Mr Sergio: Madam Chair, before you proceed, I'm looking at the binder which we got today and I'm looking through the bill itself. I can't find sections 13 and 14 and now I realize that page 8 is missing. I wonder if the staff can help me with that.
The Chair: We'll look into that. We'll see what we can do to fix that for you. While we're looking into that, I would like to call upon representatives of the Greater Toronto Home Builders' Association.
GREATER TORONTO HOME BUILDERS' ASSOCIATION
The Chair: Good afternoon, Mr Brescia. Welcome.
Mr Vincent Brescia: Good afternoon, Chair. My name is Vincent Brescia, and I am the director of government relations for the Greater Toronto Home Builders' Association. I would like to thank the committee for the opportunity to present the views of the residential construction industry here today. I've brought a copy of my presentation, so hopefully you have a copy of that in front of you.
Before I discuss the specifics of the bill before us, I would like to take a moment to give you some background on our organization.
The GTHBA is the voice of the residential construction industry in the greater Toronto area, and has been representing the industry since 1921. We represent the residential home builder, whether they build single detached homes, semis, townhouses, apartments, lofts, conversions, or any other type of residential construction. We also represent the in-fill and custom home builder as well as the professional renovation contractor.
Our membership includes the suppliers to the industry: the brick manufacturers, the window and door manufacturers etc. We also represent the subcontractors, whether it's bricklayers, carpentry, drywall, or trim. As well, we represent many service and professional firms, as well as the financial institutions associated with the industry.
All told -- no pun intended -- our organization has over 1,000 member companies, maintaining businesses, residences and operations throughout the greater Toronto area.
Last year our members sold close to 27,000 new homes in the greater Toronto area. Each of these homes generates approximately 2.8 person-years of employment, which includes direct employment in our industry, which are things like the framers and the drywallers; it includes indirect employment such as the suppliers, the lawyers, the advertisers etc, and induced employment, which is basically the spinoff in economic activity generated by the direct and indirect employment. Altogether, that means last year's sales of 27,000 translated into more than 75,000 person-years of employment in our industry.
Altogether, the residential construction industry in the greater Toronto area is a $7-billion a year industry, making it one of the largest industries in Ontario. The health of Ontario's economy and job market are typically a reflection of the health of the residential construction industry. Practically every budget and financial update by every minister of the province looks to the housing starts indicator as a first indicator of economic performance.
If you're wondering why I am telling you all about the economic importance of our industry for Ontario's economy, it's because it is of direct relevance to the bill before us today. The economic benefits and job creation which our industry provides depend on a well-functioning transportation infrastructure. Highway 407 is a critical component of this infrastructure.
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I am here today to relay the support of the Greater Toronto Home Builders' Association for the passage of this legislation and to emphasize the need for the full expansion and completion of Highway 407 across the greater Toronto area. We believe that this bill can expedite the much-needed expansion of Highway 407, alleviating growing traffic problems in both Halton region and Durham region.
On the west side, there are a number of important traffic problems developing which could be expedited by the construction of Highway 407 across Halton region. Difficulties are currently being experienced at the west end of Halton region where five lanes of eastbound highway traffic essentially merge with three lanes of eastbound traffic along the QEW.
Similar problems are happening on the eastern side of Halton where five lanes of westbound traffic are merging with only three lanes of westbound traffic, again on the QEW. Anyone who has driven on this stretch of highway knows now to expect the inevitable traffic delays and congestion which occurs in these areas.
The problem has been steadily worsening over the past 20 years. As it gets worse, the problem spills over into the local road network. Regional Road 5, in particular, has seen dramatic increases in traffic levels in recent years. As traffic congestion worsens on the QEW, Highway 5 is increasingly functioning as an alternative for many drivers. This leads to unacceptable traffic levels on the local road network and starts to raise issues surrounding safety and noise levels and things like that.
Why is all of this a concern to home builders? It is a concern because the transportation infrastructure in the region has essentially reached its capacity. Congestion is proving to be a deterrent to new investment, as a dependable highway system is an essential element for many industries. This in turn will have negative consequences for the provincial economy: industrial and commercial investment will get diverted to other jurisdictions; the jobs associated with developing the plants and offices won't materialize; the opportunity for people who would work in these developments will be lost; and the spinoff benefits of these jobs, such as increased consumer purchases, which includes new homes, and tax revenue for the province, will be forgone.
If this problem is left unresolved, it will also lead to pressure within local municipalities to restrict or reduce all types of development, including residential development. I'm sure you can understand why we wouldn't want to see that.
New development in the region is occurring in a northerly direction, as the southern parts of the region have been developed. The Halton urban structure plan will designate land for development between Regional Road 5 and the future Highway 407. These lands have the potential to house over 200,000 people. However, the current congestion levels in the existing infrastructure mean that it will have difficulty absorbing the traffic generated by new development. Any resulting impact on new development would have an impact also on the tens of thousands of people employed directly or indirectly in our industry.
The immediate construction of Highway 407 will increase the road system capacity, providing congestion relief and facilitating the proposed development of the Halton urban structure plan.
A similar problem is developing on the east side in Durham Region as well. Limited road capacity and high congestion levels on the western side of the region are isolating the region from the greater Toronto area and hampering its economic development.
Durham currently only has 24 lanes of road access across the city of Toronto border, and four lanes of road access across the southern York region border. This compares to 190 lanes across the York region/Toronto border, and 104 lanes across the Peel region/Toronto border.
This has clearly had a negative impact on Durham's development potential. The Greater Toronto Home Builders' Association believes that this in turn has negatively impacted on investment and economic development in the greater Toronto area, with the resulting loss of income generation, tax revenue and jobs.
The GTA is expected now to grow by about 2.5 million people over the next 30 years. Most of this growth will take place in the regions surrounding the city of Toronto. Durham region, for example, is expected to double its population by the year 2021. However, the problem is that these growth forecasts do not take into consideration the limitations on the infrastructure where the growth must take place.
Like Halton, Durham's existing growth has taken place along the southern portion of the municipalities along Lake Ontario, essentially following the Highway 401 corridor. However, much of the future development of the region, as proposed in its official plan, will be in the northern portion of these municipalities. This development, and all its associated economic benefits, will depend on the completion of Highway 407. Highway 407 is essential in ensuring the development of the Seaton lands and a new airport facility in Pickering.
The GTHBA would like to see the extension of Highway 407 to Highway 35, and the connecting links to the 401, as soon as possible. This will prove to be a catalyst for economic development of the region and will enhance the competitiveness of the greater Toronto area vis-à-vis our competing jurisdictions.
Enhancing Durham's ability to attract job-creating industrial and commercial investment will also help promote more balanced development in the region. Many industries and businesses these days have adopted just-in-time delivery inventory management tools. A key component of the locational decision for these industries is whether or not the site will have relatively good access to a major highway network, and one that is not congested. We cannot afford to lose investment in our economy because of a failing highway infrastructure. The GTHBA believes we should be making every effort possible to enhance this infrastructure, which will pay for itself 10 times over with the spinoff benefits to our economy.
The full extension of Highway 407 across Durham region will immediately take pressure off the existing highway infrastructure, further enhancing economic development potential along that corridor as yet another economic spinoff, and enhancing the economic competitiveness of businesses currently located along the corridor.
The completed section of Highway 407 has proven to be a resounding success and has even exceeded expectations. My understanding is that the daily traffic volumes are more than double the level that was expected, a level in itself which was seen as more than adequate to ensure the economic viability of the highway. This on-the-ground example has no doubt significantly enhanced the perceived investment value of toll highway development by the private sector.
In this regard, the GTHBA commends the government's initiative to explore the private sector's interest in financing, owning and expanding Highway 407. We know that these types of partnerships have been successful in other jurisdictions. If proven successful here, this venture may enhance the volume and speed of investment into the province's highway infrastructure, significantly improving our economic competitiveness.
We are happy to see in subsection 36(l) of the proposed legislation that expansion and extension of the highway is made a requirement in the legislation, based on terms to be negotiated between the potential owner and the minister for privatization. We encourage the minister to make speedy and full completion of the highway across the GTA an important consideration in these discussions.
We also concur with the failure-to-comply provisions in section 36(2), whereby the Minister of Transportation will carry out the expansion or extension work at the owner's expense, should the owner fail to comply with the terms and conditions agreed to with the minister of privatization.
While these provisions will ensure the timely development of Highway 407, there may be a considerable time lag between now and when an agreement is actually reached regarding the purchase of the highway or the construction of the highway extension. These things can often take a long time to develop. In this regard, we would like to encourage the government to begin any planning, approvals or construction work possible to bridge this gap. For example, the required environmental assessment study for the eastern extension of the highway should begin immediately. This would ensure approvals are in place and in fact enhance the value of the asset, which the government is potentially selling.
Regional and local municipalities in the east and west have made substantial investments in infrastructure in planning for new growth in their respective areas. It is important that the development of the highway through these areas is sensitive to local plans for growth. There will be a number of cases where local or regional roads, services, storm water management facilities and easements will cross, link with or be affected by Highway 407.
We suggest that provisions be made to require the private sector partner chosen for this initiative to consult with, and give due consideration to, the municipal concerns and issues in developing the extensions and expansions, including locational decisions surrounding interchanges.
In conclusion, I would like to reiterate the overall importance of Highway 407 to our economy and to our industry in particular. In order for housing to remain affordable in the greater Toronto area, it is imperative that enough residential land be brought on stream to accommodate the large growth expected here over the next 20 years. Without this, land costs will go through the roof, leaving first-time home buyers locked out of the market. Our sales will drop off as an industry, having a major impact on both the local and the provincial economies. The extension of Highway 407 across the GTA is the linchpin in this equation.
In addition to this, there will also be important benefits in enhancing productivity and quality of life here in the GTA with the full completion of the highway. Congestion ties up people's time. This increases the cost of doing business in our region, and for parents who want to get home in time to see their children or take them to a soccer match or to the park, this is an important quality of life issue. The congestion relief that can be provided by the Highway 407 extension will enhance productivity and the quality of people's lives.
On behalf of the Greater Toronto Home Builders' Association, I would like to thank you again for allowing me to discuss this important piece of legislation, and I would be pleased to answer any questions you may have.
The Chair: We have time for about five minutes for questions from each caucus, and we begin with the NDP caucus.
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Mr Pouliot: Thank you for your kindness.
Mr Brescia: Good afternoon.
Mr Pouliot: Good afternoon, indeed. A renewed pleasure; we met under other auspices.
Mr Brescia: Yes.
Mr Pouliot: It's a renewed pleasure, indeed. Business is good with the Ontario Home Builders' Association?
Mr Brescia: It's been a good year, notwithstanding the rather large strike this year, which was pretty tough on our industry.
Mr Pouliot: Yes, that legal work stoppage has certainly been a deterrent to your organization, to the many members you have. You must be a friend of Mr Greenspan. With low interest rates it's a very good environment, is it not?
Mr Brescia: It's a very good environment.
Mr Pouliot: Our party is not only not opposed, but we are proponents of Highway 407 and its extension, there's no question. I'm sure the good people of Peterborough will say we were prodded into it and that we don't do anything on our own. But necessity is the mother of invention, so of course fear was the motivator in this case.
You mentioned in your presentation that you were not opposed to private financing of a highway project for the 407.
Mr Brescia: Yes.
Mr Pouliot: Are you concerned about the ability of the private sector to borrow money at a cost which surpasses that of a public entity, that of government?
Mr Brescia: If the success of the highway is as I understand it, I'm sure their costs will be higher, but it's a business decision on their part. These aren't dumb folks; they know what they're getting into. Yes, their borrowing costs are probably a little higher, but they're going to make the business decisions that are necessary to --
Mr Pouliot: I agree with you that they don't all emanate from hedge funds or from capital. They have the best brains, too. The comparison has no validity. This has validity; it's today's Globe and Mail. It reflects the market action here: Canada -- 9% coupons, June 1, 2025, which is less than 30 years, so it has some relationship -- 5.54%; Loblaws, 6.82%; Union Gas, 6.42%. So at present you're looking at anywhere from 75 to 100 basis points on a 25-year issue, which means on a project of $1.5 billion -- the existing 69 kilometres cost $928 million plus the toll fee, so it costs about $1.2 billion. So you're looking at at least $1.5 billion, if not $2 billion. So you're looking at $15 million to $20 million per year more because of their lack of matching capacity to borrow, and they're profit-motivated. The government sell the highway, above all -- and I'm imputing motive; that's OK --so it can take $1 billion, put it against the deficit and say: "Look, we've balanced the books. You got a 30% decrease in your personal taxes and we've balanced the books. We'll have another budget, and then we'll issue the writs and we'll start walking on water." I know. Been there, done it for 14 years. This is the way they will play it, too.
What we're concerned with -- and I think the three parties are, if I may. We all want the highway built as quickly and as safely as possible, but the concern is the methodology. How do you arrive at doing this? We're not satisfied that they will have the long-term ability by virtue of being profit-motivated -- there's nothing wrong with that -- by virtue of their costs being higher. The reality is that we'll pay more tolls, higher tolls and pay them forever. Is that not a concern? It's a departure from the 407 as we know it. We could build the expansion using the present system, as opposed to a completely private system. We're selling one of our flagship assets, nobody knows to whom. Do you have a concern about that?
Mr Brescia: I'd have to say any concern in that vein from our perspective is far outweighed by the speed-of-construction issue. This thing just can't get done fast enough as far as we're concerned.
Mr Pouliot: She's nice, isn't she?
Mr Brescia: Yes, and congratulations. From our perspective, profits aren't necessarily a bad thing. If it attracts investment it's going to make things happen faster, and that's certainly our hope. It's the speed. We're glad the government has taken a shot at this, because if this can make it happen faster, we are absolutely thrilled. In terms of what it does for the tolls, they can't raise them too high because then they'll lose the traffic. This is where the market is going to work on this thing, hopefully. That's what we're certainly hoping.
Mr Pouliot: It's a good point. I thank you.
Mr Baird: I'll go quickly. Thank you for your presentation. I appreciate the time you've put into it.
You said in your presentation -- I think it was an off-the-cuff remark -- that the provincial Ministry of Finance often looks at the health of your industry in terms of the overall economy. Since it's such an important business community in Ontario, I want ask you a business question. When the government puts a tax on the whole building industry, whether it's a development charge, whether it's retail sales tax, any tax, do the owners of the construction company pay for that out of their profits, or do they just put it on the price of a home?
Mr Brescia: They all get tacked on to the price of the homes.
Mr Baird: So it's just stacked right on.
Mr Brescia: Yes.
Mr Baird: And that would be the case with just about every kind of tax.
Mr Brescia: Exactly.
Mr Baird: Great. Following from that, we have an extensive highway network in Ontario. On the 416 and the 417 in my area, there's no property tax paid on those highways; on Highway 7 there's no property tax paid; Highway 401, I could take the highway to Guelph, I could take it to Windsor, I could take it to Hamilton, Niagara, Brantford, London -- you name it, and there's no property taxes whatsoever on those highways.
Now, Highway 407 is going to be privatized. If we were to single out the taxpayers who drive on that highway and require the owners of that highway to pay property tax, by your admission they would just add it to the tolls. Would that be fair and something that would be supportable? Would the construction industry and home building industry in Toronto feel they should be singled out and be the only one to have to pay property taxes on the road they use?
Mr Brescia: That's a good question. To tell you the truth, I hadn't really thought about it, but given the spinoff benefits a highway has, my gut instinct, and this just an off-the-cuff reaction --
Mr Baird: Because we certainly don't support it.
Mr Brescia: Yes, keep it off. You know, this asset is far too important to the economy. I'm here speaking of our industries, but there are a hundred industries out there that would come and say the same thing I am.
Increasing the cost reduces the economic development potential, the potential for expansion of the highway, because the numbers work less and less as you get farther away from the traffic areas. We'd just like to see the whole highway network expand.
Mr Baird: Because this company would have to pay corporate tax, it'd have to pay employer health tax, CPP payroll taxes, EI payroll taxes, retail sales taxes -- the whole nine yards.
Mr Hastings: Mr Brescia, thanks for coming in today and giving general support for this proposed expansion. We've been hearing from the two opposition parties, particularly the Liberals, that they're generally, in principle, in favour of this particular project, but they have several concerns. The NDP were essentially the fathers of it. The gentleman sitting right across there, Mr Pouliot, got this thing going. But they keep talking about these concerns. I'd be interested in your comments in terms of the methodology. Their methodology for getting there would be considerably different from ours. Yet both parties, particularly the Liberals, had the opportunity; as Mr Cordiano mentioned, they allocated the dollars for this about nine years ago to get the thing going, yet nothing happened. Can you tell us what you figure is the fundamental difference between their methodological approach and this one? They are hung up to a great extent on process, whereas on this side we're more oriented to getting on with the job. Where would your industry fall into those categories?
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Mr Brescia: It's pretty clear from our presentation that speed is everything to us, and I'll say it again: It can't happen soon enough. Our intuition on this is that there might be a "get it done" attitude with some of the investors who might take an interest in this now that they've seen the success of the first part. It was a great job and a great idea to make it happen. It's an enormous success. I think they might be driven to make it happen sooner. Once they get involved, time becomes money and they can't get it done soon enough themselves, if they get involved. That's why we're excited about the idea of the attempt at privatization. That's just high level, and that's as much as we delve into it.
Mr Hastings: Do you have a fundamental concern with the exemption of the taxation?
Mr Brescia: Not at all.
Mr Hastings: Would you cite any other instances of structures that have been built in the greater Toronto region where there has been tax exemption, either created by legislation or by regulation? All we have to do is go to the exhibition centre, the national trade centre.
Mr Pouliot: The SkyDome.
Mr Brescia: I'm sure there are many. This is one that's worth it.
The Chair: We'll move to the Liberal caucus.
Mr Cordiano: I was interested in your comments about how the costs are passed on to consumers, any increases. My concern with property tax exemption for the eventual owners of the highway is that if you do it for them, why aren't you going to do it for Ontario Hydro, then, or the railway? They're paying property taxes.
More to the point, if we have any further privatizations, does that mean those will follow this precedent and be exempt from paying property taxes? Here we get into this difficult predicament. We're creating a precedent here, as far as I can see. The minister failed to indicate why he was doing that, other than the fact that private operators shouldn't have to compete with the public highway. To my thinking, it's certainly unfair. You have one taxpayer. They're paying Ontario Hydro rates; they're consumers of hydro, and they pay for that. They're going to be the same taxpayers that use the 407. There's something not right there.
I understand your urgency to build the highway. I would ask the government why they didn't commence this process three years ago. Why wait till the end of their mandate to start this? We allocated funds in 1989. That's ancient history now, but I'll point out that we allocated the funds, and of course we lost the election in 1990. The previous government had every intention to move ahead with the expansions at both the western and the eastern end, yet they got interrupted as well. So no one is against the expansion of the 407 here. That's not what we're discussing today. What we're here to discuss and what we're here to ensure is that the taxpayers get a good deal for any sale. That's why I'm proposing that the auditor of Ontario examine this deal, to ensure that we get a good deal, that it's fair. I think everyone concerned would want that to happen.
Mr Brescia: You raise some interesting issues. I'd have to say honestly, from our perspective, I haven't given enough thought to some of those issues. But my reaction to your last point is that property taxation itself, whether you decide to apply it or not, is going to affect the ultimate value, assuming -- and let's hope -- we have some good negotiations and we have good negotiators on our side. It's simply going to affect the value the taxpayers get out of it. In terms of the return to the taxpayers, from that particular angle, I don't see it as being an issue.
Mr Cordiano: We should scrutinize it, though.
Mr Brescia: Absolutely. I don't have a problem with scrutinizing it. You raised some important issues about equity.
The issue I have with highways is that we don't seem to have trouble getting the electrical infrastructure done and getting the gas infrastructure done and all the other utilities, and this is a utility, really. We need this to happen. If keeping the taxes off helps to speed it, then it's an investment well worth making for all taxpayers.
Mr Cordiano: We've got problems with Ontario Hydro now, so if we eliminated the taxes they pay, presumably they would be more efficient and less cost to the users. I'd throw that out for discussion. That's what the government is proposing.
Mr Sergio: Mr Brescia, we all agree on the completion of the highway, both east and west, all the way to the Niagara region and past Highway 35 and so forth. We need it for a number of reasons.
In your position, you're speaking on behalf of the builders and developers and so forth. They come in, they build houses, they make their money and go away. But in answer to one of the first questions, this is going to be a private highway. We won't have any control. There is no control whatsoever here.
Mr Baird: Total control.
Mr Sergio: Read the legislation. Read your own legislation. This is going to be a private highway. They can do whatever they want. Our concern, Mr Brescia, is not only with respect to getting the goods delivered on a timely basis, in an efficient way, but also to look after those taxpayers out there. I'm concerned that those taxpayers, the ones in the new subdivision up in Peterborough or Niagara-on-the-Lake, let's say -- they will have to go back and forth, and we heard $20,000 a year for two trips a day for one deliverer. Can you imagine, $20,000 a year?
If we are saying, "Look, they don't have to pay taxes," well, hold on a second. All the highways now are under the control of the corporation, the province of Ontario. Once it's sold, we lose that. Once you become a lessor, you've got to pay businesses taxes.
Now you're saying, according to the government member's view: "Jack up the price. They don't pay taxes, so let the user pay." It's not only going to be the user, but this is going to be all the taxpayers of Ontario, regardless of whether they use it or not, because now it's a private highway. The toll is going to be established not by you, by me or by the Premier, whoever he or she may be, but by those people who have gotten sole control, sole authority, to decide how much they're going to charge for those tolls. Those people who move to a subdivision in Peterborough may not be able to afford those tolls to use Highway 407.
Those are our concerns, but we all agree that the highway should be built very expeditiously. Instead of giving a 30% tax cut, as my colleague said, they could have done that three years ago. You and I and the people below us, let's say, haven't seen anything from the 30%. If they really wanted to create jobs and hold this within the government's control, they should have said, "To heck with the 30% tax cut, and let's build the highway and still be the owners." Thanks for coming.
The Chair: On that note, thank you very much for coming. On behalf of all the members of the committee, we appreciate your perspective from this important organization.
GREATER PETERBOROUGH CHAMBER OF COMMERCE
The Chair: Now I'd like to call representatives from the Greater Peterborough Chamber of Commerce. Good afternoon, everyone. Welcome to the committee. As I'm sure you know, you have 30 minutes for presentation time and, hopefully, time for questions. Before you begin, please introduce yourselves for the Hansard record and for the committee members.
Mr Don Frise: Actually, I was going to introduce the people who are with me through the text. Is that OK?
The Chair: That's perfect.
Mr Frise: My name is Don Frise. I'm the general manager of the Greater Peterborough Chamber of Commerce. I was asked to provide the written presentation, and then all our panellists will be available for questions afterwards.
It gives us great pleasure to appear before you today representing the Greater Peterborough Chamber of Commerce. Our chamber is now in its 109th year of operation, with over 1,000 voting members, who employ almost 20,000 people in our area. The chamber is dedicated to creating a prosperous community by promoting the free enterprise system, a healthy business environment and acting as the voice of business.
In addition, we are also pleased to represent, at their request, New Corp, a new community organization responsible for coordinating economic development in the city of Peterborough and the county of Peterborough.
Our chamber has a history of working closely with the city and the county on economic issues. As an illustration of this fact, Alderman Mike McIntyre, representing the city of Peterborough, and Dave Brady, who is the 1998 president of the Greater Peterborough Chamber of Commerce, are with me today. Unfortunately, Joe Tiernay, representing the county of Peterborough, was going to be with us but was not able to attend.
We are here to support the government's initiative to sell Highway 407 to the private sector. However, we also want to share our vision of provincial highway infrastructure that we feel is necessary to allow continued growth into the new millennium. We challenge the committee to make its decisions based on long-term solutions rather than short-term fixes.
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To illustrate what we mean by long-term vision, we would remind you of the Prince Edward viaduct, the bridge that connects Bloor Street with Danforth Avenue over the Don Valley. In 1910, an engineering firm from New York, Jacobs and Davies Inc, made a survey of Toronto's transportation problems and recommended that the city begin constructing a subway and also a viaduct across the Don Valley. Torontonians voted on these issues in 1912; they turned down the vision to do the subway but voted for the construction of the viaduct. Those responsible for the construction had the vision to ensure that a lower deck was built under the viaduct for later use as a public transportation line. When the Bloor Street subway was built almost 50 years later, this vision saved the city of Toronto millions of dollars. Actually, if they had built the subway back when it was originally proposed, it would have saved something like $500 million.
In addition to my colleagues from the city and the chamber who have joined me today is John Bowes, a local realtor, community leader and a past president of the Greater Peterborough Chamber of Commerce. In 1990, John headed a committee which researched the highway system of Ontario, with particular emphasis on the completion of Highway 407. When it was learned that there would be an indefinite delay in completing the eastern section of Highway 407 due to lack of funding, their research turned to innovative methods of financing infrastructure including toll roads. The outcome of this research was a report titled The Ontario Motorway Network. Copies of an abbreviated version of that original report have been provided today for the committee's information.
Some of the key elements of the report included -- and these are my thoughts, not John's; John might have some others, if you're interested, later on -- a system of controlled-access highways which would run parallel to existing routes to form a new network linking all parts of the province, construction to be completed within a 10-year time frame -- ie, it would have been completed by the year 2000, if that had gone ahead. The purpose of the network was to facilitate and stimulate international and interprovincial trade. Financing was to come from a combination of private and public funds, with the costs to be recovered over a period of years from toll roads and other fees and concessions. The proposed roads would be designed, built, financed and operated by a new crown corporation to be called the Ontario Motorway Corp.
The plan called for construction of the M1 route, which is virtually identical to Highway 407, first. Revenue projections done by the committee suggested that the cash flow from this first highway would be strong enough to help finance and in fact maybe totally finance some additional roads to be built, but not all the roads to be built, that it would be strong enough to at least get them going. The roads would then be built in sequence. The plan called for the extension of Highway 407 through the Niagara region to a new border crossing to the United States, with its network of interstate highways.
The second route was to cross the province from Windsor to Ottawa, parallel in many areas to the existing Highways 407 and 401. This was a new centralized Ontario highway intended to facilitate international trade and tourist travel as well as to stimulate regional economic development beyond the greater Toronto area.
The third route in the transportation plan was a northern Ontario corridor to the Manitoba border.
When the minister introduced the current legislation last month, he gave credit to the former NDP government for starting construction of the Toronto segment of Highway 407 as the first provincial highway to be financed, at least in part, by user fees. This may be true, but we do point out, with all due modesty, that the government of the day acted only after persistent prodding from organizations like those represented here today, which provided their visionary report not only to successive ministers and members of provincial Parliament, but also, in May 1990, to the Royal Commission on National Transportation.
Hansard reports it was stated in the House that 407 was "a highway with no beginning and no end." Those of us who are familiar with Toronto don't have to look too far to find examples of similar situations from the past. The ski jump at the east end of the Gardiner Expressway and the Allen Expressway are just two examples of broken visions and incomplete dreams.
Our community realized over 10 years ago that unless the province greatly accelerated its rate of spending on highway infrastructure, we would quickly choke off growth across the province. Although the chamber has never been a strong supporter of increased user fees, licences or taxes, our organization came to the conclusion that a plan using tolls and the private sector was probably the only reasonable way to add the infrastructure that was required in a reasonable time frame. For these reasons, we support the government's initiative to sell 407, but we are greatly concerned when we read news releases that state that the highway will be extended to Highway 403/QEW in the west and ultimately to Highway 35/115 in the east.
We urge the committee and the government of Ontario to ensure that a definite commitment to complete the road to 115 and 35 be included in any agreement for privatization, accompanied by a specific time frame for completion. If the highway were left in the hands of government, we have a very clear process for communicating our concerns if completion of the highway is not reached quickly. If the system is privatized, who do we complain to if no formal agreement has been made and/or the work has not been completed in a reasonable time frame?
Our second concern revolves around the continuation of the vision outlined in the Ontario Motorways Network. We believe that the agreement struck by the government should ensure that if the 407 is as profitable as some have projected, the people of Ontario should share in these revenues and they should be used to reinvest in continued expansion of highway infrastructure that will link the entire province and help to stimulate economic development.
In a brief written in 1990, our chamber suggested that construction of the 407 would help to alleviate congestion on Highway 401; help to reduce the serious problem of worsening response times for emergency vehicles; act as a major stimulus to economic development north of the overcrowded Lakeshore area; prove to be a cheaper alternative to adding new traffic lanes on Highway 401; serve as an alternative transportation route in case of some catastrophe on Highway 401; and help to reinforce east-west communications in Ontario.
In short, we were sold on the construction of 407 some 10 years ago and we are still sold on its need in 1998. We believe that privatization is a reasonable route for the province to take to accelerate the process of extending and completing this valuable and necessary link in our province. At the same time, we believe it is imperative that the government of Ontario ensure that any agreement made to sell the highway include a definite commitment and time frame for the completion for not only the west but the easterly portion of the highway in order to ensure that it doesn't become a road without a beginning or without an end.
We challenge the committee to make its decisions based on a vision of the future. We believe that the revenues generated from Highway 407 will be substantial and that steps should be taken to ensure that we do not shortchange ourselves in sharing these revenues and ensuring that they are reinvested in a continuing expansion of transportation infrastructure in the province.
On behalf of my colleagues, once again thank you for this opportunity to share our vision and concerns regarding the construction and privatization of Highway 407.
The Chair: We have six minutes for questions from each caucus. We begin with the government.
Mr Galt: Thank you for the presentation, and for coming in and supporting the eastern part of the province. It's certainly encouraging from the Northumberland point of view to hear you pushing for the eastern extension.
We heard a presentation from Durham this morning, and they were doing an interesting comparison. The number of lanes coming into Toronto, as I remember, is something like 24, versus 100 and some from the north and well over 100 from the west. So we're a kind of a poor cousin in the number of lanes coming into the GTA from the east.
I go back to the early 1960s when we read in the papers that we were going from the four-lane 401 across Toronto to 12, and in some areas 16 lanes now in place. It's taken 35 years to get them in place. When that was in the news, we thought we'd never have a problem again. But here we are looking at another bypass.
You talked a lot about your vision into the future, and there's a neat one that you made reference to, the viaduct. We're not selling the land in this case, we're only selling the value-added, so to speak. The bill does not state the length of time but that will be in the request for proposal. What would you think in terms of length of time? You look down the road 15, 20, 30 years, and probably that's about the time when it's going to be worn out. Does Ontario really want a worn-out road? I don't mean to tell you the answer, but there are some concerns about, how long should this time frame be, 99 years, 10 years? Do you have any gut feeling about how long we should be looking at this sale to take place? If they're going to build this eastern extension and the western extension, it's going to take a few years to get them in place. They also have to get their revenues back. Do you have any feeling in the vision? Because you were talking a lot about a vision.
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Mr Frise: I don't know whether I have any particular time frame in mind. The report of John Bowes and his committee did said it needed to be built within 10 years. The whole idea was you were going to generate revenues on the first stretch and then you were going to use that to finance the additional infrastructure. So it was going to be an infinite time frame you were looking at under those circumstances, because it would have taken some time.
On the other hand, I remember when Ed Philip was the Minister of Transportation, and it wasn't that many years ago that he said it wasn't going to be built in our lifetime. We have part of it built now and hopefully we're going to get the rest of it built in a big hurry. But in terms of how long the agreement should be made for, I don't know that I have an answer. John, would you have any suggestions on that?
Mr John Bowes: No, I didn't know there was going to be a time limit on it under the present proposal. In our research of toll highways in Europe and other parts of the world, it usually appeared to be a 30- to 40-year agreement. I'm a little surprised to be hearing the present proposal to effectively turn it over to the private sector indefinitely. But as long as the province is keeping control of the land and there's some basis for sharing the revenue through the leasing of the land, a longer-term agreement might not be such a bad thing.
Mr Galt: I know it was maybe not exactly a fair question, but it's something we're struggling with, and you did mention the vision. We don't intend to be indefinite. Although it's not specified in the bill, certainly it will be specified in the agreement. It's not to be for ever and ever; there will be a time frame there.
Mr Frise: Maybe I could just suggest, though, that if the proper agreement is reached and if the private organization that takes it over is successful in running it in an entrepreneurial way, and if the government strikes a deal where it's going to be sharing in the profits, you may not really care exactly how long it goes, as long as it's being run in an effective way, it gets built in a very short period of time and it's generating revenues back to the province that we would suggest need to be isolated and put back into additional infrastructure. That being the case, the time frame probably doesn't matter.
Mr Galt: I think that has been very well said, particularly that we get that link hooking into 115, right?
Mr Frise: Yes.
The Chair: Further questions? The Liberal caucus.
Mr Cordiano: I suppose, then, just to pick up on the point that was made earlier, the idea that you're advocating is you have a road that's generating revenues that could finance the construction of other roads. If I could believe that, it might not be such a terrible idea. But imagine what governments do with revenues no matter what they derive them from. They go to all sorts of uses which the government of the day deems to be appropriate, some of which are terribly stupid and some of which are in the public interest. Do you have that much confidence in government?
Mr Chudleigh: Perhaps you should ask which government.
Mr Cordiano: I was going to say "this government," but I was being charitable.
Mr Bowes: If I could comment on that, the vision we are bringing here today isn't just for the competition of the 407, but for the extension of the 407 to Ottawa, to the Niagara-Buffalo crossing and so forth, eventually to northern Ontario, to the Manitoba border.
We are just suggesting that before you go out and make a deal to sell the 407, which is going to be a very busy and profitable route, you think about these future extensions and have some mechanism to take a portion of the revenue. Say you have a percentage lease where 10% of the revenue comes to the province for the land. In France they sold concessions to private toll road corporations and they found that some were much more profitable than others. Some traffic didn't come up to their expectations, so they created an equalizing body of, I think it's called Autoroutes de France, for the purpose of taking surplus funds from the busy sections, say around Paris, and helping to subsidize the operation of the less busy sections. That's what we'd like to bring to your attention.
Mr Cordiano: Pretty interesting plan. Thank you.
Mr Sergio: Thank you for coming. Just to follow up on that, we have a double responsibility. One is to build highways throughout, not only for the benefit of the individual residential driver, if you will, but also for the delivery of goods and services in a very efficient manner. But ultimately, the other responsibility of ours -- whether that particular highway is in private hands as we are directed here or in government hands -- is to provide a very affordable system of transportation. Otherwise, what is the purpose? If we're going to build something with taxpayers' dollars, then we're going to sell it, and they're going to be making all the profits, and they're going to make it so unaffordable that our people will say, "Hey, what have you done here?" Do you believe, speaking of that particular mechanism in there, that we should have some little power left so that we can come down and say "Hey, look, our people are getting gouged here both ways."
Mr Frise: I'll try to respond to some of that. Obviously the government is going to retain ownership of the land and obviously it's going to have some leverage there. What gets built into the final agreement, I don't know, but there are a couple of things that I think are important. The first is that the plan that was proposed by John Bowes's committee in the past -- and to some extent 407 has gone this route -- is a parallel system of roadway which follows another road already in use. So you have parallel routes, one of which you have to pay to go on and the other one of which you don't. That means that both parties benefit, that if we divert some of the traffic, people who are willing to pay, on to the toll road, the people who go on the non-toll road benefit as well. There's a benefit to both. I think that's an important concept, and it was built into that original mechanism that these roads which were going to be built across the province were all paralleling another route.
Up through to the Manitoba border, our friends from northern Ontario have been concerned for years that if they get one truck accident on the road up there, they're basically out of commission. They can't do anything. Some of this infrastructure is really required.
The second part of it is, keep in mind that if it's not built, it's of no value to anybody. So the critical thing is, as the gentleman who went before us said, "How quickly can we get it built, and how quickly can we start building a new development within our area?"
One of the interesting things that came out of a report back in about 1990 from the Ontario Ministry of Transportation was that they discovered that economic development tends to follow the development of transportation infrastructure. I shook my head at that one because I thought that Van Horne and others had figured that out about 100 years ago when they built the railroads.
But basically, if we look at 401 as an example -- a very short story: I talked to some kids about 10 years ago about 401 and why we need to have 407, and they said, "The problem with 401 is that they built it right through the middle of Toronto." I said, "Exactly." That just proves the point that development tends to follow the development of infrastructure. They didn't realize that that had been the north Toronto bypass when it was built.
Mr Sergio: The question still remains, if I have the time, will we have a mechanism where we have some control so that if you, the new owner-operator, go out of line, we have some mechanism in place? Would you like to see a mechanism in place?
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Mr Frise: I think, as the previous gentleman said, that the market will help to dictate what the tolls are going to be, because if the tolls are too high, people won't use the road. But time is money, and interest costs money. So those are the choices that I think people are going to be making. To some extent that will be a control that's in place. On the other hand, I certainly wouldn't suggest, and I don't think the members of this group would suggest, that the government abdicate all of its authority to act.
Mr Sergio: Yes, we appreciate that, but two trips a day, $20,000 dollars a year -- I think Mr Pouliot had the figures -- for a delivery person to use 407 now? That's a lot of money. Thanks for coming.
Mr Pouliot: Thank you, and welcome.
Mr Frise: By the way, it's amazing what you can do if you don't care who takes credit for it. So congratulations on the 407.
Mr Pouliot: It's qualified. This may be true, but we do point out, with all due modesty -- I like that -- that the government of the day acted only after persistent prodding from organizations.
Gentlemen, I know the dilemma that you face. I take it that as a chamber of commerce you don't get many compliments. It's quite difficult to convey one. And you're right, it's hard to help people.
On your page 3, you quote Hansard, that it was stated in the House that 407 was "a highway with no beginning and no end," and then you go on to illustrate, I think rightly so, two examples. Sometimes it ends that way. Highway 407 was built from the premise of expediency and economy of scale. If you give the engineering, design and building authority to one consortium, you will achieve better value for money and it will be done quicker. We felt comfortable because we said that the province reserves the right, as always, to set the standards: You build in accordance with the specs and we will monitor compliance.
At the beginning we too thought that in the best of worlds, they could come up with the financing themselves. Candidly, I don't think we gave too much thought -- we make the point today, maybe because we're sitting here -- we didn't spend too much time thinking about the cost of borrowing and the impact that it would have on the consumers. But since they came back and they said, "Look we'll build it, of course, but we don't have the capacity to borrow. Will you do the borrowing?" -- hence the capital corporation.
In this case, unless it's revenues that are indirect, oblique, revenues that are controlled by the province -- it would be land rental, if you wish -- and we're asking that the money be dedicated to the construction of other highways. I'm so often wrong, but my experience of politics is that the Premier and the Minister of Finance, often the Deputy Premier at the same time, have a very close relationship, and all the other ministers pull on the blanket. It's hard to have a dedicated fund. It's very difficult, because all premiers and finance ministers love to have the money and then they dole it out to different ministries. They'll tell you: "Health never gives us any money. Who's going to pay for health?" So they'll use every scheme, and it's not that wrong.
But in terms of Highway 407, it's going to lead -- they'll tell you this more eloquently than I can. We're great believers, the three parties, but we have some scepticism as to the method to arrive there. But if you fear expediency, have no fear. If there's one thing this government can do, it is to make things happen. I only hope that since it's a highway, the pillars have a good quality of foundation. The good engineers at MTO will be supervising it.
I welcome your presentation. I think you're right on, but you too wish to be served first. Everybody's in favour of the project, but they all say "Start at my place." "No, no, no, why don't you start at my place, more importantly?" That's the engineering and that's the engineers, but it's going from 69 to 164 kilometres. Give the contractor three years, four years.
Mr Frise: I don't think we're actually advocating that the construction start at 115 and 35, but rather that there be a concrete time frame put in place at the time that privatization comes about. Otherwise the problem you have as you go east -- and I'm sure you've heard from others who have talked about the eastern extension and the need for development and how we have really skewed development within the GTA. It has happened much more in the west than in the east. We need to have the transportation put in there. If you just drop it out in the middle of some field or in some community that's not prepared to take it, then what have you really accomplished? That's why it's important that it goes right through to 115 and 35.
Mr Pouliot: We should be so lucky. You mentioned people in northwestern Ontario. The riding that I'm honoured to represent is 1,000 miles long; 400 of those miles -- we go all the way, not to James Bay, but farther north to Hudson Bay -- have no road system. Joseph knows that. The road system in this province ends in Pickle Lake. You'll never have four-laning. We don't think there's a need, but there certainly is a need for an appropriate passing lane.
The Chair: Gentlemen, on behalf of all the members of the committee, I thank you for taking the time to come before us this afternoon with your advice. It's greatly appreciated.
DURHAM REGION REAL ESTATE BOARD
The Chair: I'm now calling representatives from the Durham Region Real Estate Board, please.
Mr Ted McCracken: Madam Chair, I'd like to thank you for the opportunity to address this committee. My name is Ted McCracken. I'm the president of the Durham Region Real Estate Board. I am a broker with the firm of Colliers Macaulay Nicolls and I specialize in commercial and industrial properties.
The Durham Region Real Estate Board represents approximately 600 realtor members and has a jurisdictional area which extends from Brock Road in Pickering as our western boundary to the Newcastle-Hope town line, just this side of Port Hope. To the north, we extend as far as Lake Simcoe and Lake Scugog. It's a large geographic territory and we have basically five roads that traverse it from east to west.
The largest and only controlled-access highway is the 401. Two secondary highways, number 7 and number 2, are in many cases simply extensions of residential streets as they pass through our communities. Last, we have Concession Road 4, Taunton Road, which hooks up with Steeles Avenue in Toronto, and we have what we sometimes refer to as the south service road, which parallels the 401 and goes through name changes -- Bayley Avenue, Victoria Street, Bloor Street -- as it passes through the various communities. These are the routes that our people use to transport themselves between Toronto and our communities.
The Durham Region Real Estate Board cannot endorse Bill 70 in its present form. We suspect it will continue the ongoing discrimination imposed upon the people and businesses of Durham region by the Ministry of Transportation and successive provincial governments. These may sound like harsh words, but we believe they are justifiable.
The south service road, south of the 401, does not extend across the Rouge Valley, where it would connect with Lawrence Avenue. Therefore, all of the traffic on that road has to divert on to the 401 at White's Road. According to traffic counts, that's 20,000 vehicles per day. Highway 2 handles approximately 30,000 vehicles per day. That volume is consistent from the Toronto boundary all the way out through Oshawa. It doesn't rise and fall, there are no peaks and valleys; it's steady traffic.
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The 401 itself has 170,000 vehicles moving between Durham and Toronto at the boundary line. Taunton Road and Highway 7 are in most cases only four lanes and, as I previously said, they connect to Toronto at Steeles Avenue. We're considerably north of that. If you live in Durham and work in the GTA, if you have a business in Durham and need to ship into the GTA, there are no other options than these roads.
Compare this to our friends in Mississauga. If we use Highway 10 as a north-south reference point, you have 120,000 vehicles using the 401. You have another 98,000 vehicles on the 403, 130,000 vehicles on the QEW, and the major east-west streets of Steeles, Britannia, Eglinton, Dundas and the Lakeshore each average about 20,000 vehicles. Far more vehicles move from Peel into Toronto than from Durham, but they have considerably more options. A single fender-bender doesn't spell disaster at a morning rush hour. A rolled-over truck doesn't add a couple of hours to everyone's drive time. We have no alternative routes that we can use to avoid an accident location.
Compounding the problem is the comparison of our roads to theirs; specifically the number of lanes. The 401 between Highway 48, Markham Road, and the 427 averages about 300,000 vehicles per day. This equates to about 18,000 to 25,000 vehicles per lane of traffic. From the airport out to Erin Mills Parkway, the traffic counts decline from 16,700 vehicles per lane to 10,000 vehicles. In Durham, we decline from 13,000 vehicles per lane down to 10,000 vehicles at Pickering and then we balloon back up to 17,000 vehicles per lane at Whitby. This escalation is caused by a reduction from 12 lanes to six at Brock Road and results in major traffic jams each and every rush hour; no exceptions.
A further factor that must be taken into account when looking at traffic flow counts is the 24-hour day. Although it cannot be substantiated from the source data we used, it is logical to assume that suburban traffic would tend to be more concentrated during rush hour time periods, while traffic in off-peak times would be proportionately higher within Toronto. To put this into a comparative example, let's examine one of Toronto's favourite phrases: the Don Valley parking lot. The Don is always busy. The traffic never stops except in rush hour. But the Don only averages about 80,000 vehicles per day. The 401 through Whitby averages almost 100,000 vehicles per day. We have a problem and nobody seems to care.
Congested roads are unattractive to industry. Business will locate where it is the most cost-effective for them to do so. Industry has been telling us for years that Durham doesn't work if you want to do business in the GTA. They have told us that by locating in Mississauga, Vaughan and Markham. Those communities have exploded while our growth has been marginal by comparison. The jobs that should belong in our community, to our neighbours and to our children, are not there. They're elsewhere. In Durham we have become the economic backwater of the GTA; a strong statement, but we believe it.
Based upon the preceding, one should expect that we would embrace Bill 70. Unfortunately, we recall too many previous plans and promises made but not delivered. Oshawa still sits with two vacant fields waiting for GO Train stations promised by the last Liberal government. Municipal, regional and provincial politicians all basked in the publicity of announcements on the 401 widening as far out as Highways 35 and 115. We were told that there would be express and collector lanes as far as Whitby and five lanes each way through Oshawa and Bowmanville. Unfortunately, it was the NDP government that told us that. The reality, we're now told, is that there are no provincial funds allocated to complete the 401 beyond Brock Road -- none. Although Durham residents have paid their fair share of provincial tax dollars, the proposed solution is for us to pay again to a private corporation which will correct the government's shortcomings. Even that we would probably accept if we thought it would happen, but it won't.
The press reports that revenue from the existing 407, while covering capital costs, is not adequate to build the necessary reserves to support ongoing maintenance. Whether this is accurate or not, it casts serious doubts that a private toll road through Durham region would be viable unless toll rates were significantly increased or subsidized. Our MPPs have assured us that we need not be concerned because the sale of the 407 to the private sector will be conditional upon its extension through Durham. Our question is, when? We need roads now.
The fourth paragraph of the government's press release of October 19 states, "The highway will be extended to Highway 403/QEW in the west, and ultimately to Highway 35/115 in the east." What does "ultimately" mean? It certainly does not mean soon. To the Durham Region Real Estate Board it means another empty pre-election promise. If the government wants our support on Bill 70, if our MPPs want our support in the pursuit of their next mandate, we want to see a timetable clearly stated in Bill 70 for the start and completion dates of the proposed extensions. It's either that, or please honour the previous commitments made to Durham region and finish the 401.
The Chair: Thank you very much. We have six minutes for questions from each caucus. We begin with the Liberal caucus.
Mr Cordiano: Now I don't feel so bad, I say to the former minister. We're all in the same boat now.
All joking aside, you have raised some very good points and concerns that are legitimate. We need a comprehensive plan and a comprehensive vision for transportation in the GTA -- the entire Golden Horseshoe area, actually; it goes beyond the GTA. I think the time has come to begin to put that forward, and we haven't seen that from this government.
Your point is well taken: Previous governments have made commitments and broken them. The former minister tells me -- is that how he put it? -- that the grand interruption of elections got in the way. Of course, we did it to ourselves, we interrupted ourselves, no prodding from anyone else. I think your concerns are well-founded. Will the extensions of the 407 be built, and what are the time frames for that? It's absolutely critical. If we go along with the very idea of privatization, it is as a result of our concern that these extensions be carried out, be constructed in a timely fashion.
We have concerns that extend beyond that, and that's why we're expressing those concerns here today. Again, the minister fails to put forward enough detail, as you have suggested he do with respect to the timing of the construction projects. We have concerns that go beyond that, but I would say that your concerns are well-founded.
What would like to see in terms of a timetable? Would there be, in Bill 70 itself, which is what we're here to discuss, stipulated times for the completion of the extensions?
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Mr McCracken: We've watched the 401 being widened for almost 10 years now. They are finishing off the final sections just immediately to the east of Brock Road. We are told there's no funding to go beyond that point. If the funding was available, we would expect, under normal circumstances, that the 401 would be extended through Ajax in the year 1999 and would probably hit Whitby no later than the year 2000, possibly 2001, and would hit Oshawa by the year 2002. That is not when we need it; we need it today. But reasonably, that's probably the soonest we could expect to see traffic congestion relief from Oshawa into Toronto. Whether the 407 can be built in that time frame is questionable.
I can give you an example right now of a US corporation that has a contract with General Motors. If you look at Pickering, many of the industrial buildings in Pickering are used by suppliers to General Motors. Pickering is no longer an option for this company, because with just-in-time delivery to General Motors, they cannot deliver within a 45-minute cycle time from their plant to the assembly line. Pickering is too far away from General Motors to serve as a landlord for their requirements. That is terrible. Putting the 407 in doesn't solve that problem.
Mr Cordiano: The 407 is part and parcel of what we need to alleviate the flow of traffic off the 401. That would certainly help. This government has not made, since it was elected in 1995, any commitment to a comprehensive plan, and certainly they could have initiated the construction of the 407 back then; they could have started this process a lot sooner. Why do you think that got in the way? Furthermore, the fact is that the government has had revenues. We have seen a tax reduction in this province which now amounts to about $5 billion worth of revenue that has been forgone. Those are the choices that have to made provincially. The provincial government chose to have an income tax cut when there were other needs --
Interjection.
Mr Cordiano: We're talking about highways here today. I have the floor. You'll get your turn. Be patient. By the way, that won't get you into the cabinet either.
It's important to recognize that governments do make critical choices. This government decided to have an income tax cut. And yes, I am being partisan. I am being political, because this is a forum for that. At the end of the day, the highways do not get built when you have a $5-billion tax cut.
I hear what you're saying today. The priority was to build the additional --
Mr McCracken: When you look at congestion within the GTA, there are areas where you can say that it would be nice to have more roads but they're not necessary.
Mr Cordiano: They're not critical.
Mr McCracken: We believe in Durham it's critical. The problem is that successive governments have tended to ignore the needs of Durham region. I think there's a political bent there. For years we were NDP when we had Liberal governments in Queen's Park. When we changed that, for some reason it didn't seem to do us any benefit. We voted against the government and it didn't get us roads. We voted with the government and it hasn't got us any roads. We're confused. Where to do we go next time?
Mr Cordiano: If you figure it out, let us know too.
The Chair: Mr Pouliot, please.
Mr Pouliot: I'm trying very much to be your friend, but somehow some people are more compatible and some other people on the other end are less compatible. On the friendly side, I very much valued your presentation. It's very much to the point: You've reached a crisis stage.
It's true that the 401 has for some time been oversubscribed. It's the busiest highway in North America. Three years ago we had the "honour" of surpassing Santa Monica as the busiest highway. You're quite right. If you build it, cars will come, cars will flock indeed.
It's well organized, well-thought-out, but it's an immense project. I will maybe bring it home by giving you an idea. Do you recall the bump on the Gardiner Expressway, once you get past the CN Tower, Ontario Place, and you're on your way to the airport? That thing has been there for years and years, and for months and months the magnitude of the project -- if you take the Lakeshore, to give you an idea, $1 million doesn't even bring you across the street there. So you're talking about a lot of capital dollars.
You mentioned the Liberals, you mentioned, unfortunately, the New Democratic Party, and you also mentioned the government of the day, the Progressive Reform -- I mean the Progressive Conservative Party.
"The fourth paragraph of the government's press release on October 1998 states, 'The highway will be extended to Highway 403, the QEW in the west and ultimately to Highway 35/115 in the east.' What does 'ultimately' mean? It certainly does not mean soon." When these people tell you "ultimately," it means in the fullness of time. It means you should be so happy to live such a long life. And then you go on to say -- and this surprises me from you; this is the unfriendly side -- "If the government wants our support for Bill 70, if our MPPs want our support in the pursuit of their next mandate, we want to see a timetable clearly stated in Bill 70."
You're with the Durham real estate board. I want to thank you, because I was never aware that the New Democratic Party of Ontario received the support of the Durham Region Real Estate Board prior to our election. I apologize. I want to thank you very much for the support of the real estate board for the New Democratic Party. It must have been a first, Mr McCracken.
Mr McCracken: The real estate board has never endorsed any party. At this point in time, all the members of parliament in Durham region are members of the Conservative government, and that is the first time Durham region has elected an entire slate of one party. Oshawa-Whitby has traditionally, with the strength of the CAW, stood as an NDP stronghold. That was reversed. The Liberals have had successive strength in certain areas within Durham. But this is the first time one government has received a clear mandate from the entire region to do something.
Mr Pouliot: I hope they can deliver, sir.
Mr McCracken: So do I.
Mr Pouliot: If I were you, I would hold their feet to the fire and say, "You've made a promise, you've made a commitment, and I want to see some results."
There's good news. Durham was very much in the cards when the concept of Highway 407 was developed. It is of such magnitude that it takes a little time. In this case, you have ample proof that the project has not only started but will be continuing. A project of this magnitude can only be developed if you have a good partnership in terms of engineering, in terms of design, in terms of construction. We were talking, at the height of the recession, about 20,000 badly needed jobs, where the spinoff was that for every dollar you put in directly, indirectly you would eventually get $2 back. They're of the same concept; I'm not going to disagree with my colleagues on that one. I think all systems are go in terms of the 407.
The difficulty we have, which we share with the opposition, is the method. We don't have enough guarantees to say yes to what we read. But in terms of the overall concept -- and I say this candidly -- I can only commend the people who are picking up the torch and going with it. We certainly disagree with them philosophically. Philosophically, we have more difficulties agreeing or disagreeing with our friends. They accept that, but philosophically we are in disagreement. That is all there is.
But in terms of the project, all three parties are saying, "Go to it, and go to it quickly," so the needs you identify here can be addressed. When you see detours, construction people at work, pavement taking place, the people of Durham begin to smile, because economic development is what it's all about, your just-in-time delivery, your door-to-door delivery, people being more competitive by virtue of 407. We're certainly in agreement with your presentation -- minus the threat of whether you're going to vote for us or not.
The Chair: We have three members of the government caucus who have questions.
Mr Spina: Mr McCracken, thank you for the presentation. I'm as puzzled as you are, because in Peel county we had seven Liberal MPPs from 1985 to 1995, and we got the 403, the 410 and the expansion of the 401.
I would suggest to you, sir, that I think there are a few other dynamics that took place. I don't mean to make an excuse here, but I think we have to examine all the issues that impacted on Durham county. I think back to a marketing study that I researched and made a recommendation to the corporate body I was involved with at the time for branch offices. At the time, the Pickering airport was in full-blown proposal stage, and expropriation took place etc. The 407 was clearly an integral part of the Pickering airport development. I'm sure if you were around you would remember that. To lay blame on all the three successive provincial governments is a little narrow-minded, with due respect, sir, because I think a lot of the slowing down of the expansion of the highway system -- or maybe its coming to a screeching halt -- had to do with the cancellation of the Pickering airport project.
That doesn't mean that Durham should have been ignored forever. I fully agree with your statistical analysis and I fully understand your comment about, why are the numbers so different and why don't we have the highways on our side of the city? They are needed; I don't think anyone argues that.
To come to the present day, we have an alternative. One is do what previous governments have done -- we can build a highway tomorrow, float another $5-billion bond, and it's done -- or, in an attempt to try to use some fiscal conservatism, try to find a methodology by which we can get it done. To the best of my understanding, this government has still not done it's job; we're not finished our mandate. We hope, and it's really a statement more than a question, that we will have the opportunity to have this thing on the books on the go before this government's mandate is up. We see this as the vehicle, and I'd hope that you would have input, perhaps, on the regulatory structure that would address your biggest concern, which is the subsidization and the toll rates in terms of the double payment between paying taxes and paying tolls.
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Mr Galt: It's interesting, our Liberal colleague talking about the tax cuts, that because of the tax cuts we couldn't do other things, when in fact it stimulated the economy. The revenue is coming in somewhere in the neighbourhood of $6 billion more per year just because of those tax cuts. When they increased the taxes some 33 times and the spending doubled, they certainly didn't go and build any roads or having anything extra at that time. You can throw your tax cut and some of those comments around, but have a look at your Liberal government taking in something like $3.9 billion a year in revenue from gasoline in the province of Ontario, and how much did they turn back? Over 10 years, only $185 million. Talk to your own cousins in Ottawa.
Sir, thank you very much for your presentation. It's interesting that so far we've had -- you're the ninth presenter, and four of the presenters have been pushing for the extension east. The other presenters have been pushing for extensions in general, but it's very obvious that we need to get this moving to the east. I represent Northumberland, so I'm also very interested and recognize the bottleneck at Brock Road; I get into it on regular basis both coming into and leaving the city.
We have an awkward situation in the east. When you get east of the GTA, not only do we not have the infrastructure, but the banks are not prepared to loan money to large industries. It's just not there, and therefore, to move the economy is particularly difficult.
Do you think normally, like in the west or the north, the infrastructure comes first and then the economy booms? Or did the economy boom and then the infrastructure had to go in to service it? Which really comes first in making things happen?
Mr McCracken: The growth in Toronto was conditioned by Pearson International Airport, which is infrastructure. Without Pearson, Markham and Vaughan would not exist as they do today. Because those communities grew, the roads filled in the rest of the infrastructure. Vaughan is the perfect example of that. There is no reason that Vaughan would develop if it wasn't for Highway 400, the 427 extension, the 407 and the airport.
Mr Galt: So possibly if Pickering Airport had flown -- excuse the pun -- 407 might have been there much sooner, or something similar to it.
Are you aware of any opposition in the Durham area to this extension?
Mr McCracken: Yes, not to the 407 per se but to the lack of consensus between municipal, regional and provincial governments and representatives. They can't get their act together and decide where it's going to go, specifically access routes: Lake Ridge Road versus Brock Road seems to be the major headache, which seems to be a real --
Mr Galt: Not a big issue on environmental assessment as it relates to the Oak Ridges moraine?
Mr McCracken: If you're going to bring a road from 407 down to 401, to me, it makes more sense to do it through vacant farm land than through a built-up urban area. That's the difference between Lake Ridge Road and Brock Road.
Mr Hastings: Mr McCracken, with your industrial-commercial-real estate experience, how many industries or plants would you estimate we've missed or are about to miss with the extension not going through except ultimately?
Mr McCracken: In terms of 407 it's difficult to say. In terms of Durham region right now, if you talk to the investment community, if you talk to the major developers like Orlando, Runnymede, Invar, they're not prepared to put money east of the Rouge River. They perceive it to be an area that is a bad fiscal investment, and that's basically because you cannot service the GTA, the Toronto market, from Durham. The fact that they are not prepared to invest money means we have had very little development, which then means -- it's a Catch-22 -- industries that look to come to us don't have real estate they can lease.
Mr Hastings: So if we hadn't had the overextending back in the 1980s, we would have had some of that money provincially to do some of the things you are advocating. The Peterson regime spent at about 15% annually, compared to the provincial product that was coming in at about 3.5%. It's part of the accumulation of the frustration you're facing.
The Chair: On that note, our time is up. Mr McCracken, thank you very much for taking the time to come before the committee today with your perspective on this matter. We appreciate it.
Mr McCracken: Thank you for the opportunity.
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CANADIAN COUNCIL FOR PUBLIC-PRIVATE PARTNERSHIPS
The Chair: I now call representatives from the Canadian Council for Public-Private Partnerships. Good afternoon. Welcome. Please make yourselves comfortable. You have 30 minutes for your presentation, and hopefully there will be time for questions as well.
Ms Glenna Carr: I am Glenna Carr, president of the Canadian Council for Public-Private Partnerships. I have with me today Rocco Sebastiano and Mr Gordon Willcocks. Rocco is an associate with the law firm of Osler, Hoskin and Harcourt and Gordon Wilcox is partner with the law firm of McCarthy Tétrault. We also have our executive director, Jane Peatch.
I am not a lawyer, but as many of you know, I was at Queen's Park for many years as a deputy minister. It's very nice for me to be on this side of the table for a change.
Let me just tell you a little about the Canadian Council for Public-Private Partnerships and why we are here. We are a non-profit, non-partisan organization. We were created in 1993 to increase the extent of infrastructure and public services which could be offered across this country bringing together the talents of both the public and the private sectors. Our main purpose is to see economic and social benefit for Canadians. We believe that both sectors possess strengths which, when combined, can enhance services that the public currently receives and will increase the level of service in the future in a more cost-effective way.
We are a national organization. We have representation from every province and every territory in the country and all three levels of government. We have 170 member organizations, about half and half from the public and the private sectors, representing thousands of individuals across the country. Our headquarters are here in Toronto. Our purpose is to serve to educate and increase public understanding of the value of public-private partnerships, including publishing, research on best practices, case studies, and providing expert advice and public fora.
We brought today and would like to table with you best practices guidelines on initiating contracts and contracting with the private sector. Our organization is guided by a board of directors from across Canada and chaired by the Honourable Donald Macdonald.
We're here today to express our support for Bill 70. We believe that the legislation will serve and protect the interests of the public, that it has an intent to allow for creative solutions to be brought forward and that it will deliver an extended and safe highway to the public. We think it's an extremely positive step and one that reinforces our basic premise, that governments can achieve very strategic initiatives without all of their fulfilment falling full-weight on the general taxpayer.
The private sector can play a very effective role and can become part of the network of providers that will make those plans a reality. Our comments here today are somewhat technical and do relate to the details of the legislation, but we do want to indicate our support for it.
Mr Sebastiano and Mr Willcocks have reviewed the legislation in detail -- as I said, they are experts and lawyers -- on behalf of the council, and Mr Sebastiano will speak to the amendments that we believe would strengthen Bill 70.
Mr Rocco Sebastiano: I'd like to thank you in advance for the opportunity to be here before you.
I'd like to read an excerpt from the council's best practices guidelines which I think sets out the theme of our comments on the legislation. The quote is as follows:
"Public-private partnerships are all about bringing the strengths and resources of the public and private sectors together in a way that results in public objectives being met in the most economically efficient -- that is, least-cost -- manner. In economic theory terms, public-private partnerships are based on the premise that competitive markets would generally provide greater efficiencies and productivity in delivering infrastructure to end-users than can be achieved through public ownership and delivery."
A successful P3 -- to use that term, rather than "public-private partnerships" all the time -- is achieved where the private sector is permitted to bring innovation, creativity and efficiency to bear on a project, particularly during the procurement process. This innovation and creativity may be in the financing, may be in the engineering, in the operations, management, maintenance and rehabilitation through the concession period of the project. The traditional procurement methods, like simply going through a prescribed tender process, does not encourage or generally doesn't permit innovation and creativity to come to bear on a project and hence does not necessarily allow these efficiencies and productivity to come to bear.
In looking at new procurement methodologies, our sense is to focus on, what are the end results? It's less on process, about how you go about achieving the end results, and more on, what are the end results, what are the goals to be achieved -- whether it be public safety, whether it be consumer protection -- and to allow the private sector to come to the table and propose innovative ways of perhaps achieving those goals.
It is in this light that we've reviewed Bill 70. We've tended to focus our comments on a number of sections, not many, that highlight our concern in that respect and ways you can perhaps look at the bill in improving the procurement process overall.
The first two sections we'd like to comment on are sections 15 and 16. These two sections are clearly intended to protect the user of the highway from abuses, perhaps, in the toll collection process. We agree that the government should be concerned about consumer protection policy, but we believe the bill should set that out as an end goal and that the details and the process by which these goals are achieved should be left to subsequent regulations or agreements between the ministry and the successful private-sector proponent.
For example, if you turn your attention to section 15(1), it specifies that "a toll or fee becomes payable when an invoice for it is mailed...and interest on a toll or fee begins to accrue 35 days after the invoice is mailed." This section presupposes that mailing will always be the method used in the toll collection process. Given the current changes and future changes to direct account debits, other forms of electronic billing, this section, as an example, doesn't give the type of flexibility to permit innovation and bring down the costs of toll collection.
Section 16 specifies in great detail the toll collection process, the dispute arbitration process and those systems to be used by the owner in collecting tolls on the highway. Once again, it's our view that the legislation should focus on the end goal, which is consumer protection. It should allow the private proponent to come forward and propose a toll collection process and system which is accountable and subject to public sector review and approval. It's very likely that the private sector proponent may have a more efficient and innovative toll collection process than is envisaged in section 16.
The next section I'd like to briefly speak on is section 26. Section 26 requires the private sector operator to control the use of highway 407 in accordance with the current and future policies of the Ministry of Transportation. In addition, the section permits the Minister of Transportation to use the Highway 407 lands to manage transitways and objects and structures for highway or transportation purposes. Subsection (3) of that section also provides total control of ancillary revenue opportunities on the highway to the Minister of Transportation, without consultation with the minister for privatization, without consultation with the successful private sector proponent.
The end result of that section is that it permits the Minister of Transportation to prescribe the use of the 407 lands and the adjacent lands in a manner which the private sector may view as inefficient and which may affect the economic feasibility of the project. The private sector may wish to propose sources of ancillary revenue which may permit a more creative financial structure and which, in turn, provides greater efficiencies to the province and to the end users of the highway.
All this, we believe, can be accomplished without sacrificing the government's goal of ensuring public safety or other policy objectives of the Ministry of Transportation.
The next section I'd like to speak on is section 28, which requires a private sector proponent to manage the highway in compliance with what is a defined term, being "ministry safety standards." The difficulty with this is that the term "ministry safety standards" is defined to potentially include all policies and all regulations and rules of the ministry, no matter how remotely related to public safety objectives. Now, the difficulty with this is that if you were to take the opportunity to review the ministry's standards and specifications, they don't simply set end results. They deal with process specifications, methodologies and the methods by which you achieve those goals. It's not only in the design process but also in the way the highways are operated, the way they're maintained and the way they're managed.
Applying the ministry standards across the board without consultation with the minister for privatization and the successful private sector proponent would not provide an opportunity for the private sector to propose more efficient and cost-saving operations and management and maintenance techniques which would, at the same time, still achieve the government's goal of ensuring public safety.
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Section 29 is another section we'd like to briefly comment on. That talks about the Ministry of Transportation's rights to broad search and inspection powers, to come in and inspect to assure itself that the private sector proponent is operating the highway in accordance with the ministry's safety standards. Those sections don't require the minister to act in any reasonable manner and, quite frankly, don't provide the private sector the opportunity to come forward with what may be less intrusive, less costly, more efficient procedures to achieve the government's goal of ensuring compliance with the standards.
Last, I'd like to touch briefly on section 56, which is the section which allows the government to pass regulations under the act. Clearly, we agree that there's a purpose and a necessity to have regulations to be enacted at some later point to carry out the purposes of the legislation, but we would suggest that there be some philosophy or regulatory philosophy set out that the regulations are intended to require also performance measurements and end result objectives, and once again, as we've commented on the bill, should not prescribe or dictate processes or methods without further consultation both with the minister and the private sector proponent.
Briefly, those are our comments. Our intention is to promote successful public-private partnerships. These successes are achieved where the procurement process undertaken by the public sector permits the private sector to bring innovation and creativity to the table. This innovation and creativity will bring efficiency gains which will benefit the public sector by maximizing value and benefit to the end user by reducing costs. We've provided you with a few examples of how Bill 70 can be improved to achieve a more successful public-private partnership for Highway 407.
Once again, thank you for the opportunity to be here before you. Although we have not proposed any technical wording for amendments in this document, we would be available to do if so requested.
The Chair: Thank you very much. There are just over 5 minutes for questions from each caucus, beginning with the NDP caucus.
Mr Pouliot: Thank you very kindly for your presentation. It's certainly some food for thought. Glenna, if I may, with high respect, it's certainly a renewed pleasure. Administrations of different stripes have valued your expertise and dedication and certainly the standards you adhere to in terms of ethics. Your contribution is certainly not lost.
If you find it different to sit on a different side of the table, I share in that experience. I find it, in my case, quite difficult to sit on this side of the table. In fact, the worst day when you are in government is far ahead of the best day when you're a member of the third party.
You make me nervous by way of your presentation. Conformity with safety standards: I need your help. When we're talking about safety standards, we all know the hallowed, sacrosanct issue being discussed. Most people would agree that the government would have the first and final say. If one is to adopt techniques that could, while adhering to the standards, save money or make the project more expedient, cheaper, more affordable, so be it.
I trust that's already being done to some extent or has been done with Canadian Highways International, which was the successful bidder, where there was constant liaison, communication, between MTO and its "standards" and the innovations or the alternatives being proposed by Canadian Highways International. I think it went rather well.
I want to bring you back to another section, third line, page 2: "This innovation and creativity may be in the financing, design/build or operating aspects of an infrastructure project." We couldn't be more in agreement. It's the new way of doing business in terms of major infrastructure projects. All three parties are on record as having acquiesced in this new method of doing business for Ontario.
One snag we experienced with the first phase of 407 was the financing aspect. Presenter after presenter mentioned that, all in all, the financing is part of the project. I don't usually read financial pages, but this morning I made an exception by way of the presenters. It indicates, on the 25-year coupons or debentures, the spread between sovereign, provincial and municipal. We're talking about a difference of 75 to 100 basis points.
When it comes to a project like the extension or expansion of Highway 407, you're looking at $1.5 billion to $2 billion. We know that the first phase -- smaller, 69 kilometres -- costs $928 million plus the toll. I think I remember signing that document. So we're looking at $15 million to $20 million per year in terms of carrying costs -- per year. With privatization, this would be passed along to the tolls. We're all in favour of expanding the 407, but our problem is that while we search that port, we take on different routes.
Ours is a matter of saying, "Yes, a new partnership, and preferably go a little more with the private sector." But in terms of selling the infrastructure -- you're too ethical to say the following, but I maybe have immunity; I'm in the political arena here. What they will do -- and maybe there's nothing wrong with it -- it depends the way you look at things -- is that they will take the billion dollars, they will put it against the deficit and they will say, "We'll wait for the federal budget, make some adjustments to the provincial budget, debate the budget, issue the writs, and begin to walk on water and say, 'We've arrived,'" and in the meantime they're selling our flagship.
I'd like to hear your comments with a focus on safety. It makes me nervous. I believe that governments are already listening. I wouldn't wish to give more without strong guarantees that the public -- I'm not imputing motive. They're all good builders and they all want to adhere to standards, but I want to be on the side of the angels when it comes to safety.
Ms Carr: Perhaps I could comment both on the safety issue and on the financing aspect and then turn it over to my colleague. With regard to the safety issue, what we're basically trying to say is that in legislation the government must protect public safety and must ensure standards, but we don't think you necessarily want to get bound up in the detail of the specific standards in the legislation. That is because the determination of what is safe can change over a period of time and the conditions can change. What might be appropriate in terms of speed, in terms of access etc, may vary over time.
With regard to the issue of financing, the day before yesterday, Nova Scotia Highway 104 was awarded a national award by the Canadian council for innovative project financing. It is also a toll highway. They have managed to transfer risk, but the governments, both federal and provincial, are maintaining some role in the financing.
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The innovative thing about public-private financing is, are the risks actually transferred from the public to the private sector? If risks are not actually transferred or shared in a predetermined fashion, then probably you're quite right, it is cheaper to do the financing strictly by government debt. The issue then is, what are you forgoing in terms of other services and other infrastructure that you might produce? It's a question of difficult choices.
Mr Pouliot: Excellent point.
Mr Spina: Thank you, Ms Carr and gentlemen, for your presentation. It was enlightening, because you've approached it in a very positive manner, with an indication of, "We know this is going to happen; we want to help you make sure it happens as best as possible." We appreciate some of the recommended amendments.
The argument that our colleague from the official opposition puts forward is that he feels that the privatized highway should be responsible for paying property assessment taxes like any other business. That's out of one side of his mouth, and out of the other side of his mouth he's then also concerned that the toll structure will result in runaway costs to the consumers who will use the highway. Well, of course, if one can go with the other. But I wondered what your opinion was of this. We have some idea of what you've said with respect to risk. Part of our objective is to transfer the risk from the provincial government to the private sector operator. What is your thought on the property assessment issue, keeping in mind also the structure Mr Sebastiano had recommended regarding the tolling methodology?
Mr Sebastiano: If you were to burden the road with property taxes, that would have to be reflected in the ultimate financing of the highway, because that revenue has to come from somewhere. Ultimately, if that were a burden on the project it would have to be passed on to the end-user. Currently, the 407 is not subject to assessment and the highway seems to be a great success, notwithstanding some hue and cry at early points about the level of the tolls on the highway. But people seem to have accepted it, and the level of toll revenue on there is quite high.
The additional problem with increasing the debt load on the highway and increasing the toll rates is that it will affect the projections on what will be, on a go-forward basis, the amount of volume you'll get on the highway. Obviously, the more you charge people, the less likely people will take the highway.
Ultimately, it affects the economic feasibility of the project. That's clearly a decision that this government needs to make, whether it feels it's appropriate to do so.
Mr Spina: What would your recommendation be?
Mr Sebastiano: I can only speak on my behalf.
Mr Spina: All we're asking for is your opinion.
Mr Sebastiano: My opinion would be that it would not be appropriate to add additional cost to the project above the design-build obligations that will be built into the project on the 407 east and west, because ultimately the end-user will have to bear that cost. I don't know that the municipalities were necessarily expecting to achieve that windfall.
Mr Hastings: Mr Sebastiano and Ms Carr, do you subscribe to the thinking, even in this bill, that there is still the overarching hand of bureaucratic detail that's quite wide and broad? I take it from your comments and from your amendments that there's too much detail for the devil, that there should be a Chinese wall or whatever specific techniques of limiting that influence of government, especially in the regulatory powers.
Ms Carr: Mr Hastings, knowing your presence on the Red Tape Commission, I think you're an appropriate person to ask this question.
We believe there are some details that are too specific to be in the legislation. My colleague Mr Sebastiano has mentioned two of them: the mailing of the notices and the specificity around the 35 days. Technology will simply overtake that. Why would you tie your hands by specifying that in the legislation when that really should be left to regulation and change in practice? We believe there is a little too much detail and specificity in the legislation, and some of those things would be better dealt with in regulations.
Mr Sebastiano: One additional comment: Section 6 of the legislation provides the opportunity for the successful private sector proponent and the minister of privatization to actually enter into agreements, not only now but presumably on a going-forward basis, which would be intended to achieve those results and goals set out in the legislation. The legislation, I believe, contemplates an opportunity to deal with some of these details once you've allowed the private sector to come forward and satisfy the minister, whether it be the Minister of Transportation or the minister of privatization, that they can achieve those goals and execute those agreements and move forward on that basis.
Mr Cordiano: You've piqued my interest. There's quite a number of things I would like to discuss with you, and I don't know that we'll have all the time necessary, but let me try to deal with some of the issues.
First of all, on the question around property taxes, Ontario Hydro and CN and CP pay costs in lieu, which is a form of property taxation. From our calculations, we've determined that the same thing for the 407 would be approximately $90 million per year. That's how much revenue would be forgone, given the exemption that exists in Bill 70. That's my first point. Obviously, you don't agree with me and you agree with the bill that this revenue should be forgone. Then I ask you, what's to happen when Ontario Hydro is to be privatized? Should they also receive that exemption? Should the ultimate private owners receive that exemption?
Ms Carr: We'd be happy to come to the hearings on Ontario Hydro privatization and speak to that at the time.
Mr Cordiano: You've very adeptly avoided answering the question. I see that your skills as a deputy minister are still intact. Let me go on.
Mr Sebastiano: If I could quickly respond, the issue comes down to the fact that currently the municipalities do not receive that revenue. The current tolls being charged on the highway do not reflect a portion which is being paid to municipalities in lieu of anything.
Mr Cordiano: No, that's right.
Mr Sebastiano: Ultimately, if that were built into the structure, it would be another form of taxation on the users of the highway.
Mr Cordiano: My point is, you can make the same argument for Ontario Hydro users, the same taxpayer. If you're trying to create a model for privatization here, it's important to recognize that you are setting a precedent.
Mr Sebastiano: But I think you're talking about two different commodities and a much different marketplace. To draw the analogy is a much more complicated one than we probably have time to respond to right now in the few minutes we have here.
Mr Cordiano: I don't think so. The 407 would be a near monopoly or virtual monopoly, similar to the Ontario Hydro utility. It's a monopoly and it's very similar. There isn't anything that would compete with 407.
Mr Baird: Highway 401.
Mr Cordiano: No, it doesn't. Excuse me. You're not getting the same level of service. You're not getting the same kind of access that you are on the 407. That's why it was built.
That point being made, I want to go back to another point with respect to risk transfer. There's a study done by the Privatization Council in Washington, DC. They suggest that one of the main reasons for privatization of projects like highways is so that property taxes will accrue to the state -- local property taxes to the municipalities, the state etc. In addition to that, one of the other benefits is with respect to transferring risk to the private sector. However, they suggest that there would be a great deal of due diligence required in order for that to take place.
My concern right now is that the public has taken most of the risk with respect to the construction and operation of the new technology on Highway 407. Those upfront costs were absorbed by the taxpaying public, the Ontario treasury, and if the technology had proved to be a failure, we would have been stuck with some sort of elephant. Luckily, it wasn't; my compliments to the former minister and obviously the current government for getting it running and operational -- not without some difficulties. This also ties in to the question of safety concerns, minimum safety standards. If you will recall, the opening of the 407 was delayed because of concerns around safety: Was the highway ready? The OPP voiced those concerns, as did others, including the auditor of Ontario.
Those are some of the things that concern me, like my colleague Mr Pouliot, with respect to maintaining the ministry standards. On that part I don't know that I agree with you, because I think Bill 70 specifies that the standards will be maintained.
Ms Carr: We agree with that. The problem is that right now it says that every single safety standard will apply to Highway 407. Highway 407 is a specific piece of highway constructed for a specific purpose in a specific geographic area, carrying certain kinds of traffic. It's very different than a highway would be in northern Ontario, for example. The point we were trying to make, and maybe we weren't clear enough, is that there should be safety standards and they should be specific to that highway. It's best defined in regulation.
The Chair: On behalf of all the members of the committee, I thank you for coming before us. You are our last presenter this afternoon and it was a very interesting presentation.
Colleagues, I would like to draw your attention, if I may, to some special guests in the audience. We have some members of Parliament and of the Senate from Ireland, specifically Mr Ahern, Mr Dennehy, Mr Belton, Mr Rabbitte, Mr Finneran and Mr Judge. We welcome you very much to our committee hearing this afternoon. I speak on behalf of all the members of the committee. I hope you're enjoying your day at our Parliament and your visit to Ontario. Welcome.
Colleagues, that was our last presenter of the afternoon. We will reconvene tomorrow at 9 o'clock for clause-by-clause consideration of this bill. Arrangements are being made for you to receive the amendments.
Any further business? Seeing none, we are adjourned. We'll reconvene tomorrow at 9 o'clock.
The committee adjourned at 1644.