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Highway From Hell

ARE WE THERE YET?

But there must be some sort of limitation, right? Well, until 2013 and 2014 you were out of luck. There was no debt limitation period. The 407ETR was the only company, heck! the only organization in the province of Ontario (and probably in the world) where their debtor's debts never expired! But not to worry because justice is here. In 2013 a judge declared that expiration occurs two years after plate renewal denial. Which leaves the door open for the company to keep adding interests and demand payment forever, just as long as they never request plate denial! Furthermore, up to 2014, the 407ETR collected debts even from people in personal bankruptcy!!! Eventually they were forced to stop this by a court order… which is currently under appeal!

We wonder what's next.

  • Generational debts? Sorry son, but my 407ETR debt will be passed onto you upon my death. You don't mind, do you?
  • Payment is species? Hey… you owe us money… say… you are not using that kidney… are you?
  • Transcendence debt? Please tell the medium that we need to contact Joe urgently because the 407ETR demands payment in ethereal currency.

ARE WE THERE YET?

But that's OK because the sale lease of the 407ETR was an excellent deal. According to the same Transportation Minister "With sale proceeds of more than $3.1 billion, Ontarians will receive double their investment in Highway 407. This is a great day for all Ontarians."

Yes indeed, as it was later on confirmed by the Member of the Provincial Parliament, Mr E.J. Douglas Rollins, who said "How many dollars do we have invested in the 407 at the present time? As of March 31, the taxpayers of Ontario have somewhere around $104 billion." This number was later on confirmed by independent sources. This number, 104 Billion CAD breaks down as 1.6 Billion in construction costs + 102.4 Billion CAD in land purchases.

So, let's get this clear. A government sold a so-called "public asset" in a private, secret deal at a loss of "only" 97% or 100.9 Billion CAD. Yes indeed! A great day! And yes, it is Billions with a B… pocket money…when it is not your money!

ARE WE THERE YET?

But it get's better. The people of Ontario not only lost 100.9 Billion CAD in a single transaction… a transaction that must rank amongst the top ones in the category Stupidest Government Transaction Ever, but they lost all proceeds from the tolls too. Let's take a look.

407ETR Profits and Assets

As you can see, Consortium profits have been raising almost constantly since inception. Not only that, but even in the years were loses were made (1999 to 2005) Assets were rising steadily. What this tell us is that the so-called loses were simply re-investments. The Consortium had profits since at least 1999, which is to say almost since inception.

All that money (currently to the tune of about 250 million CAD per year) was lost to Ontarians and will continue so for another 81 years!!!

ARE WE THERE YET?

But we are not yet finished, not by a long shot. We know that the 407 ETR is a money making machine. But we haven't looked at the opposite end of the transaction. If the Consortium is making money, who is losing it? Ontarians, of course!

We know that all people travelling through the 407 ETR are paying ridiculously high and exorbitant prices. But that is their choice. What we are interested in is the other people, those who cannot afford to pay the toll. How much damage are they suffering?

For that we will need some data. Fortunately enough, the government of Ontario as well as the "owners" of the 407ETR do keep some sort of statistic. We can take their numbers (for 2010 - the latest) and convert them into Daily Average Vehicle Kilometers Travelled (DAVKT) for comparison purposes.

The DAVKT is simply the daily average of kilometers travelled by all vehicles in a given highway. This gives us a representation of the utilization of each highway. The higher the DAVKT the higher its utilization. If we crunch the numbers we get:

DAVKT for the QEW and the 400 series excluding the 407ETR =                 102.273.960

DAVKT for the 407ETR series excluding the 400 series and the QEW =     5.346.670

Once we have these numbers, we can add them up to figure out the total:

Total DAVKT = 107.620.631

The 407 was originally designed to bypass the QEW and the 400 series of highways because they all run East-West. As such, the goal was to distribute total traffic more or less equally among highways. Which means that should the 407ETR belonged to Ontarians, a full third of the Total DAVKT would be seen on it. One third of the total DAVKT is 35.873.544

Now we want to find out how many DAVKTs that should be assigned to the 407ETR are running through the 400 series + QEW. This is easy:

Not Diverted DAVKTs = 1/3 Total DAVKT - 407ETR DAVKT = 30.526.874

Now we want to convert DAVKT back to the Daily Average Vehicles (DAV). In order to do so, we divide DAVKT into the travelled distance. This is:

Not Diverted DAV = Not Diverted DAVKT / 407ETR Distance = 30.526.874 / 107.3 = 284500 Not Diverted DAVs

What this means is that in any given day, approximately 284500 vehicles travel the 400 Series and QEW that should not be there because the 407 should have diverted them.

Now we want to find out how many people are in those 284500 Not Diverted DAVs. In order to do so we need to know the average occupancy (AO) per vehicle, which happens to be in the order of 1.1 people/vehicle. Thus, we can calculate how many people are affected by their inability to pay 407ETR tolls. This number is:

Not Diverted DAV x AO = 285000 x 1.1 = 313500 people

What this means is that about 313500 people every day are negatively affected by 407ETR tolls.

Lastly, we want to have an estimate of the economic cost of this diversion. For that, we need to know what is the difference in travel time between the 407ETR and the other sister highways. This time was estimated to be in the order of 30 minutes at rush hour (a ridiculously conservative number, but let's accept it). We will also assume that during non-peak hours, there are no time savings. About 80% of all vehicles travel during rush hours. In addition, we want to find out the average value of one hour worth of a person's labour. In Toronto this number is approximately 20 CAD.

And so, the estimate of the total daily economic damage inflicted by 407 ETR tolls is about:

Damage (in CAD) = 313500 x 0.80 x 0.5 x 20 = 2.5 million CAD

In other words, just because the 407 ETR has tolls (thus preventing everybody from using it), the province of Ontario and Ontarians suffered an approximate damage of 2.5 million CAD a day or about 700 million CAD during 2010. And if we add wasted gasoline, wear and tear, health impacts and so on, this number reaches the tidy sum of about 1 Billion CAD for the same year. We can now do a simple calculation, 1 Billion times 99 years, we get 99 Billions. Which means that if the government of Ontario would not have betrayed its citizens, Ontario could have financed a brand new highway from savings in efficiency alone!

We also know that the 407 ETR profits for 2010 were 77 million CAD. This means that in order for them to have this profit, Ontarians must suffer 13 times its equivalent damages!!!

Thirteen times!!!

This is the real price of government action. Pain and suffering.

ARE WE THERE YET?

Of course not. Not a chance. As a consequence of the 407ETR diverting only about 18% of the traffic it was supposed to divert, the remaining 82% must continue using the QEW and the 400 Series of highways. Consequently, the traffic jam that was already known to be on its way in 1950 has come to pass. Which means that the traffic is now unbearable. Think about it. The QEW and the 400 series are overloaded. Even if the province would have the money to build new highways (which it doesn't), it can't do it due to the monopolistic clause in the 407 contract. Thus, there is no real solution and the amount of vehicles continue to grow year after year. And what do governments do when faced with insoluble problems caused by their own stupidity? They implement meaningless solutions. Enter the High Occupancy Vehicle lane or HOV.

What is an HOV? It is a dedicated lane which only vehicles with a high number of people can use, the idea being forcing people to carpool thus diminishing the total number of vehicles. Cute but incredibly stupid.

Toronto statistics indicate that since the implementation of HOV's in the QEW the number of carpoolers rose from a "natural" number of 11% to a 28%. Success, right? Not a chance. The problem is that in the past the QEW had three lanes but now one of them is being used by an HOV lane. Which means that the QEW is now effectively a two-lane highway. The increase of carpoolers would seem to justify this decision because although there are now only two regular lanes, one third of the people use the third (or HOV) lane. Consequently, we are effectively back to a three lane highway. No harm no foul, right? Well…no.

Why is this so? Because if you look carefully at their statistics, they mention people carpooling, not vehicles. People do not clog highways, vehicles do. To find out if the HOV actually decreased the number of vehicles, we need to look at… you know… vehicles! When we do so, official numbers indicate that the number of vehicles has increased steadily by about 3% per year, regardless of HOV lanes!!!

Why is this so?

Because much that central planners and statisticians want us to believe, the reality is that the actual chances of finding and coordinating carpooling operations is low and a royal pain in the neck. Such operations are clumsy, irritating and prone to human errors. Not to mention the fact that many carpoolers used to take public transportation to begin with. Carpooling is simply not a solution for the vast majority of commuters.

And how about public transportation? In the GTA? Not a chance! Actual statistics demonstrate that if a normal commuter would be forced to use public transportation, the vehicle travel time would have to be increased anywhere from 1 to 2 hours. This is beyond ridiculous!

And so the HOV lanes are the perfect excuse for more people to take the -already overloaded- highways!

The HOV lanes are a dismal failure. But of course this does not bother politicians and legislators because, you know, they never travel during rush hour!!!

Because of the existence of HOV lanes (a program that is expanding), commuters in the GTA have and will continue to have an ever increasing commute time, far beyond the 30 minutes of time savings that the original design for the 407 was designed to deliver.

Note: please see the Glossary if you are unfamiliar with certain words.

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