Today's topic originated in an e-mail we recently received. The contents of the letter were, in essence, a horror story. Unfortunately, we don't tend to do horror stories unless they have an underlying root cause that shows a general behaviour. Strange things do happen by coincidence far often than what it is believed. In statistics they are called outliers and typically they represent the unusual, not the standard. It is for this reason that we tend not to do individual stories. However, this story did point towards a potentially interesting topic which we researched.
TRAFFIC CONGESTION
Traffic jams are as inevitable as death and taxes. We have all been stuck in them, regardless of which part of the world we live in. As it stands, the province of Ontario (Canada) is one of those places. It's capital (the city of Toronto) is packed with cars. The so-called city is in reality an amalgamation of smaller cities which were blended together few decades back, but growth hasn't stopped. The city is so large and so fused with other cities that the area is now known as the Greater Toronto Area or GTA. As you can imagine a city of about 6.5 million inhabitants must, unavoidably, suffer from traffic jams.
Also, as with any other city, most jobs tend to be concentrated in the centre getting less and less dense towards the periphery. Consequently, most people work near the centre and live in the outskirts. Therefore everybody rushes to work in the same direction at the same time in the morning and they all rush in the opposite direction at the end of the work day. Ergo, everybody and their cats and dogs take the same highway at the wrong time.
Originally, the GTA "enjoyed" only one key highway pompously called the Queen Elizabeth Way (or QEW) which traverses it from East to West following the coastline. Thus, everybody ended on it.
Eventually, it became painfully obvious that it wasn't enough. Thus a companion highway denominated the 401 and running more or less parallel to the QEW was built. The 401 was built further north as the GTA expanded in that direction. Eventually, not even the 401 and its sister routes (404, 409, 427) were enough. BTW, the 401 is the busiest highway in the world. And here is where our story begins.
SOMETHING MUST BE DONE
Recognizing this "tiny" issue, a new highway (further north from the 401) was planned in 1950 by the conservative government. Its goal would be to bypass the busiest sections of the 401 and the QEW. Recognizing the criticality of this need, the government began construction in 1987, only 37 years later. By the mid 90s (after only 10 years of socialist governments) the province of Ontario found itself short of funds (i.e. bankrupted)…what a surprise. Thus, they proposed to make this highway a toll route. Again, recognising that this was a priority, the government (conservative again) did very little until 1997 when its first section was opened. You can see the 400 system of highways in the picture below.
THE COMMON SENSE REVOLUTION
In 1995 the people of Ontario got tired of socialism and they decided to vote with their asses and elect a Conservative government whose political slogan was "The Common Sense Revolution". Said government had all the answers and made a few critical promises; among them, that they will balance the budget (as if doing so would make any difference). Problem was that the economy of Ontario was in the dump. And so the government did what any government does every time they need money, can't tax, can't borrow and can't print; they sell the family jewels. In this case, the 407. It was sold for 3.1 billion CAD. Presto! The budget was balanced. Furthermore, considering that the accrued construction costs of the 407 was of 1.8 billion CAD, this looked like a really good deal…for the government.
And there you have it, ladies and gentlemen. Democracy in action. Elected officials officiating the will of the people for the greater good…
Or would you like to know the truth?
WHO, US?
Of course, since the government knew that any proposal to sell the highway would trigger a massive political firestorm, they did what all governments do; they did it in secret. This "deal" had the following characteristics:
- It was carried out and signed in secret with secret arrangements
- In order to save political face, it was not a sale… but a 99 year lease…
- It contains an anti-competitive clause (the province cannot build a competing highway until the lease expires)
- It was sold to a private Consortium which was given the ability to charge any toll price they desire
- The consortium is exempt from paying property taxes on the highway
- The government stated the proceeds from the sale as "revenue"
ARE WE THERE YET?
Once the deal was sealed, the Consortium spent about 500 million CAD to finish the 407, which was finally opened in full in 2001... and the race to squeeze out the last cent from desperate commuters began.
As you can see, the toll rate was raised time and time again from the very beginning, at a rate of about 8 times (yes, times) faster than inflation. This is, they collected profits at a rate 700% above the inflation rate.
Of course, tolls are per kilometer, not trip. This makes them horrifically expensive.
Furthermore, the following "improvements" in tolls have been implemented:
- Toll prices increase during rush hour
- Monthly Transponder Lease
- Monthly Account Fee
- Enforcement Fee
- Video Toll Charge (if no transponder is used)
- Trip Toll Charge
Ahh… but then we have other tolls under consideration:
- Per wheel road-friction charge
- Exit beep transponder change
- Emissions exhaust surcharge
- Illuminated signage surcharge
- Night illumination surcharge
- Lane-change option
- Off-ramp closure protection
No, we are not making this stuff up. If we would be the owners of the 407ETR, we would add the following tolls:
- Gravity (after all, we are leasing the land under the highway)
- Oxygen use (because we can)
- Shade (because our lamps are shading you)
- Touristic attraction (well… after all you are enjoying our highway)
- Left turn (for righties)
- Right turn (for lefties)
- Displaced volume (after all, you are using our space)
- Noise (because we are "green")
- Blood, toil, tears and sweat (because you complain every time you pay your bill)
Our tolls make as much sense as theirs, which is to say none whatsoever. Considering that they were already making profits in 1997, it becomes very clear that the 407ETR is simply a money making machine.
But that's OK because according to the Ontario Transportation Minister in power at the time "A 99-year term is needed to ensure the private-sector operators make a reasonable profit and road users are protected from paying exorbitant tolls"
ARE WE THERE YET?
But if toll rates are so high, it will be unavoidable that people will simply stop paying them altogether. Oh… what to do… what to do… Hold on! Let's blame it on the government… er… let's pass it on to the government! Yeah… that's right!
And so one of the "secret" clauses of the "lease" indicated that should a person would not pay their "debt" to the Consortium, the Province of Ontario would deny the renewal of the licence plate to the debtor! Even worse. The province would do so with all the vehicles that said person owns!!!
What a sweet deal! This must be one of the most unique arrangements in the world. Not only is a government guaranteeing a monopoly, but it becomes the enforcer of a private Consortium!!! For free!!! On tax money!!! This is mind boggling.
But hold on because it gets better. It so happens that the 407ETR had the nasty tendency to bill erroneously and even to bill people who had never, ever set foot on the 407ETR; people that were, of course, denied license renewal!!! Best of it all is the fact that the 407ETR does not produce any evidence of debt at all! The province must comply on their say-so. If this is not insane, we don't know what it may be.
Buckling under public pressure, the (new) government of Ontario (did we mentioned that the previous conservative government blew-up under the weight of their own incompetence?)…anyhow… this new government stopped plate "denial" but two court orders forced them to continue the practice. Yes. Democracy in action. Law and order.
Note: please see the Glossary if you are unfamiliar with certain words.
