The private sector consortium that bought Highway 407 for $3.1 billion from the Ontario government has won another ruling in favour of raising tolls.
407 ETR won a key arbitration dispute against the Ontario government in August 2005. The consortium that runs the highway includes companies like SNC-Lavalin, the giant Canadian engineering firm, Spanish company Cintra Concesiones de Infraestructuras de Transporte and Macquarie Bank, an Australian infrastructure financing company that owns $12 billion worth of real estate across North America.
The arbitration resulted from the Ontario Liberals’ promise to roll back tolls during the 2003 election. The government is now in a legal battle with the consortium to keep toll increases lower than what the consortium wants.
The arbitrators ruled that 407 ETR could use 2002 as the base year for calculating toll increases. The ruling means that tolls can increase if traffic doesn’t fall below 2002 levels. Traffic levels are bound to be greater than in 2002 due to congestion and the fact that there are more cars on the road in the Toronto area.
The province has even more legal battles with 407 ETR over trying to force the consortium to seek government approval before raising tolls. Over the last six years 407 ETR has raised tolls six times. Toll rates are now 250 per cent higher than at the outset of the deal. The peak rate for light vehicles will rise one cent to 14.95 cents per kilometre and the off-peak rate will be 14.1 cents per kilometre beginning Feb. 7, 2006.
The former Conservative government signed a 99-year contract with 407 ETR. Could this mean close to 100 years of litigation over what should have been a public asset but instead has been a silver-plated project for the private sector?