Libs mulling over latest loss in 407 dispute

by Libs mulling over latest loss in 407 dispute

TORONTO, (Aug. 17, 2005) — The Ontario Liberals refuse to throw in the towel in what is seemingly a losing battle with the owners of the private 407 ETR highway.
In yet another decision against the government, an independent panel of arbitrators has ruled that the contract conditions allow the highway owners to raise tolls as long as traffic doesn’t fall below 2002 levels.

The ruling is based on the establishment of “2002 as the Base Year achieved.” Base Year is defined in the contract between the province and 407 ETR. The achievement of Base Year permits 407 ETR to raise tolls above the toll threshold without incurring congestion payments, as long as traffic thresholds are met. The company designated Base Year in 2002 and has operated accordingly since that time. Two years later, the government alleged for the first time that the highway group had not achieved the conditions required to establish 2002 as the Base Year, leading to the arbitration.

ETR says the government’s case was based on a single off-ramp at Mavis road-one of 197 entries and exits on Highway 407.

“We have demonstrated our compliance with the contract in another dispute initiated by the Province,” said Enrique Diaz-Rato, President and Chief Executive Officer of 407 ETR. “We are very pleased with the decision, although we would have preferred to settle the existing disputes with the Province amicably, rather than through litigation.”

Transport Minister Harinder Takhar said the government is reviewing the decision, and may consider appealing since, as Takhar says, one of three arbitrators supported the government’s position. “With another 93 years left, it’s important to make sure taxpayers are protected,” he said.

Premier Dalton McGuinty has refused to back down from the dispute since promising to roll back tolls in his election campaign in 2003. The Liberals have been in court ever since, trying to wrestle control of tolls away from 407 ETR — a private consortium that bought the 108-km highway from the Conservative government in 1999 for $3.1 billion.

However, opposition Tories, as well as third party agencies familiar with the contract, say the Liberals simply don’t have the legal legs to win. Conservative party leader John Tory has insisted in the past that the government was not in a position to make such a “reckless election promise” and is now throwing away taxpayer money to save face.

There are other legal appeals pending, including efforts to require the 407 to seek government approval before raising tolls.

Earlier this year, however, the Ontario Superior Court upheld a decision by an independent arbitrator that ruled 407 ETR is not required to submit a Change Request, nor obtain any other government approval to change tolls or fees.

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