Scott Thompson: Highway 407 tolls rise again. Why sell an asset that generates revenue?
For years, people have been complaining about the 407 ETR and the outlandish toll prices the private company charges on a road that was initially designed to ease congestion on the 401.
Soon, the priority changed from transportation to making money for investors when the Mike Harris government made one of the stupidest mistakes in Ontario political history and sold the 407 to balance a budget heading into an election.
Where is that value now?
For this one-time political cash injection, Ontario gave up decades of profit (a 99-year lease) that saw the private-owner portion (from Burlington to Pickering) report net income of $157 million on revenue of $382 million in the most recent quarter — up almost 10 per cent from the previous year and a flat profit margin at 41 per cent.
Considering the trouble governments have with managing health care and energy costs, you’d think they would hang on to projects that actually generate revenue for the province. But nope.
It’s not about you and me, it’s about a political party getting elected.
WATCH: 407 ETR customer data stolen in ‘inside job’ (May 2018)
So should we be surprised that toll prices are about to go up again on the 407 as much as 14 per cent in some areas?
I wouldn’t feel so bad if the money was at least coming back to taxpayers instead of a company in Spain and SNC Lavalin, which has floated selling its stake at a profit.
Canada Pension Plan also owns 40 per cent, which I guess is good for Canada, but that should have been another indicator of the profit potential missed by Ontario.
So what have we learned from this?
In government, which is constantly begging for money, don’t sell something that continuously generates a profit.
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