Highway 407: A Lawful Way Forward

Change the 407 Act supporters, this cause can really use your support right now. Please go to the Premier’s website and vote this policy idea up. If you have any positive suggestions, please post them there. This could go a long way to nipping this issue in the butt once and for all. Here’s the link http://commonground.ideascale.com/a/dtd/Change-the-407-Act!/13642-25935 Thank-you so much for sharing this and helping decision makers pay attention to this.


Change the 407Act!  Please sign & share the petition  http://www.change.org/petitions/premier-kathlynn-wynne-glen-murray-tracy-maccharles-change-the-407act

This week’s article can be found on page 14 in the October 24th, 2012 Toronto Caribbean.  Download your copy here http://caribflyer.com/tc-editions/Toronto-Caribbean-October24-Web.pdf Written by Jodie Parmar – Jodie Parmar, is a former Vice President, Corporate Development, Privatization Secretariat/Ontario and successfully led the $3.107 billion privatization of Highway 407.

My previous column discussed two of the three specific “lawful” options available to Premier Dalton McGuinty in the contract between the Province of Ontario and 407ETR to bring an end to spiraling tolls and inadequate customer service.

Unfortunately, during its first term in power, Premier McGuinty’s government pursued an “unlawful” option to control tolls and, consequently, suffered repeated defeats in the ensuing litigation process through arbitration and the courts. I appeared as an unpaid, expert witness on behalf of 407ETR during this litigation process.

As a face-saving tactic, the government entered into a settlement agreement on March 31, 2006. No new restrictions were imposed on 407ETR’s ability to increase tolls after years of expensive litigation. Essentially, Premier McGuinty raised a white flag in his dispute with 407ETR. These days when asked to comment MTO spokespersons are scripted to say, “407ETR is a privately held company, and has the contractual right to set toll rates to manage traffic on Highway 407.”

Fortunately, the settlement agreement does not restrict the Province’s ability to pursue “lawful” options to control tolls as there exists a third “lawful” option that rests in the middle of the spectrum between “Respecification” and the overriding power of the Crown to repudiate contracts by specific unambiguous legislation. It is an option that fully conforms to the governing agreements and legislation. Consequently, it should mitigate any concerns around a “chilling effect” on foreign investment in Ontario infrastructure projects or in the economy in general that may arise if the Province was to exercise its right to repudiate the contract.

If 407ETR and its private-sector owners can exercise the provisions of the governing agreements and legislation to their benefit (i.e., maximize profits and shareholder dividends through ever-increasing tolls), surely they can’t begrudge the Province of Ontario for exercising those provisions in the contract that are to the benefit of Ontarians. What’s good for the goose is good for the gander.

When I testified in 2004, I prefaced my comments with the Latin phrase, ceteris paribus. This phrase is literally translated as “with other things the same,” or “all other things being equal or held constant.” The governing agreements and legislation were drafted to take into account a potential need to recalibrate or reset the deal between the Province and the private operators subject to certain criteria. That criteria is now within reach of government of Ontario.

Given the inability of the Province’s senior civil service, lawyers and consultants to properly advise Premier McGuinty on how to best control tolls, I have previously offered to share this third option with the government of Dalton McGuinty subject to the government acknowledging the value I’m bringing to the table. Advice that is capable of providing extensive benefits (i.e., no less than $1 billion) to users of Highway 407 (e.g., lower tolls in the future) and municipalities (e.g., property tax revenue) through which the Highway 407 lands run or revenues recoverable to reduce the massive provincial deficit.

As reported by Robert Benzie of the Toronto Star on March 22, 2011, “Premier McGuinty says he’s “all ears” to a proposal that could return $1 billion to Ontarians from the owners of Hwy. 407…We are very much open to sitting down and having some of our representatives meet with this individual and hear from him any ideas that he might have.”

While there has been no follow up by any government representative subsequent to the Premier’s public comments more than one and a half years ago, I remain, as I have always, prepared to move forward in good faith with the Province of Ontario in a manner that promotes the broader public interest and appropriately rewards expertise in a knowledge-based economy.


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