PoV: Grits tried to fool us, but ONTC gets reprieve – by Brian MacLeod (Sudbury Star – April 6, 2014)

The Sudbury Star is the City of Greater Sudbury’s daily newspaper.

It’s impressive to watch the magnitude of the climb down the Ontario government is doing on the Ontario Northland Transportation Commission. To what end remains to be seen.

Northern Development and Mines Minister Michael Gravelle announced Friday that four divisions of the ONTC–buses, the Polar Bear Express, rail freight and refurbishment services –will continue to be government-owned and run. At issue is almost 1,000 jobs in the North, nearly 600 of which are based in North Bay.

In March 2012, the Liberals said the sale of the ONTC was a necessity that would save $266 million over three years. This would be needed to achieve some of the far-reaching cost-savings required to balance the province’s budget by 2017-18. The Drummond Report briefly alluded to the ONTC, advising that its services “could be provided more effectively and efficiently through private-sector involvement.”

The North was expected to do its part in budget savings and the ONTC was a heavily subsidized operation. Hence the storied Northlander passenger train between Toronto and Cochrane ended in September 2012. But two things happened. There was a massive and sustained revolt along the Highway 11 corridor, especially in North Bay –a Tory-held riding that was once Liberal– and in Timmins.

But the jaw-dropper was a report published in December by Ontario Auditor General Bonnie Lysyk (an earlier version incorrectly identified the AG as Jim McCarter) that concluded selling the ONTC could cost the province up to $820 million due to pension and severance expenses, which could take up to 10 years to recoup in subsidies that would no longer be paid.

The government, McCarter concluded, had not done its homework on the issue. The $266 million in savings said to be reaped within three years of the sell-off “did not clearly or fairly communicate the potential financial impact of the proposed divestiture,” she wrote.

How could it? The province, it turned out, didn’t really know how much selling off the ONTC would save until after it announced how much it would save.

Wrote McCarter: “It was only well after the divestment announcement of $265.9 million in savings that the government obtained the information that would normally be needed for a comprehensive business-case analysis.”

He did conclude that selling the ONTC, which still requires millions of dollars in annual subsidies, “would reduce the taxpayer burden” in the long term.

But actual savings would likely arrive only after about 10 years.

It’s apparent that after the Drummond Report, the province decided it had to be seen doing something to address the deficit. The hastily announced ONTC sell-off turns out to have been little more than a quick hit that wasn’t true.

And although the province will still operate the ONTC, its future remains in doubt. It’s hoped that a strategic alliance with Metrolix, which operates transit in the GTA, for refurbishment of its fleet would make the ONTC viable.

Without such an alliance, Gravelle’s announcement on Friday is just a stay of execution.

For the original version of this article, click here: http://www.thesudburystar.com/2014/04/05/pov-grits-tried-to-fool-us-but-ontc-gets-reprieve

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