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P.E.I. Senator Percy Downe says extension of contract with Confederation bridge operator could help with toll relief

P.E.I. Senator Percy Downe told the Rotary Club of Hillsborough on Thursday that it doesn’t make sense that one multi-billion dollar bridge in Canada costs nothing to cross while tolls are charged on Confederation Bridge.
P.E.I. Senator Percy Downe told the Rotary Club of Hillsborough on Thursday that it doesn’t make sense that one multi-billion dollar bridge in Canada costs nothing to cross while tolls are charged on Confederation Bridge.

Prince Edward Islanders received welcome news at a town hall in Peterborough, Ontario on Jan. 13, when in response to a question asked by Ms. Pasha Bowser, a student from Summerside, Prime Minister Justin Trudeau stated that Confederation Bridge "was an expensive bridge to build and it's an expensive bridge to cross.”

Another equally welcome statement made by the Prime Minister about the bridge during the town hall was, “I appreciate the challenges you’re facing, and certainly I will make sure that I pass along my concerns to, your concerns, to our Islander MPs, and we will look at what can be done to make sure that people are able to travel freely, travel efficiently, and openly across this country at modest costs.”

Islanders look forward to the kind of collaboration and action that can be achieved from such discussions, and are eager to see what type of arrangement could be provided to alleviate the cost. The toll on Confederation Bridge is $46.50, making it the most expensive toll bridge in Canada, and Islanders would appreciate any relief the Government of Canada can provide.

However, when Ms. Bowser made the comparison between the toll on Confederation Bridge and the toll-free new replacement Champlain Bridge in Montreal in an attempt to seek federal assistance to alleviate the cost, the Prime Minister claimed that “the comparison doesn’t quite work” because the new Champlain Bridge replaces a bridge that does not charge a toll. But in fact, the Champlain Bridge did have tolls until 1990. Similarly, the new replacement Champlain Bridge, like Confederation Bridge, replaces a previously existing transportation link; however, the latter came with a toll that was insisted upon by the federal government. Islanders, who didn’t want tolls for the constitutionally-guaranteed continuous link, accepted them as the price they would have to pay for such infrastructure. Now they are faced with a multi-billion dollar new replacement Champlain Bridge that will not only be toll free, but will also be constructed, operated and maintained at the federal government’s expense. Furthermore, both the Champlain Bridge and the Confederation Bridge are federally owned. Delegating the authority to operate the Confederation Bridge to a private company until 2032 does not absolve the federal government of the responsibility for the $46.50 toll Islanders currently pay.

Prince Edward Island became Canada’s seventh province based in large part on the guarantee of a permanent continuous link to Canada. As time and technology moved forward, the nature of that connection evolved as one was replaced by another. Initially it was a steamer during the summer and iceboats in winter. Later, they were replaced by a year-round ferry. Subsequently, that too was replaced by the Confederation Bridge and seasonal ferry we have now. Just as the new Champlain Bridge will replace its predecessor, so did Confederation Bridge replace the link that had previously existed.

There have been a number of suggestions for addressing the problem of high tolls. For one, even though the Confederation Bridge contract runs until 2032, renegotiation is not an impossible option. Contracts are amended all the time. With two willing partners, any part of an agreement can be changed, and such changes need not be zero-sum; one side does not have to suffer for the other to benefit. The Government of Canada guaranteed annual payments of $42 million (in 1992 dollars indexed to inflation), plus all tolls, over 35 years to the company that operates the Bridge on its behalf (a contract period substantially shorter than the 100 years the Bridge is designed to last). However, if the contract is extended and the amortization period is increased, say for seven years, tolls could be reduced to as little as $20 overnight. In fact, if the contract was increased by a long enough period, the tolls could disappear altogether.

A second alternative is one the Government of Canada can undertake unilaterally. At my request, the Parliamentary Budget Officer (PBO) examined the fiscal impact of reimbursing Confederation Bridge tolls by way of a non-refundable tax credit. His findings, released in the summer of 2016, were that, based on the volume of traffic over the bridge, such a tax credit would cost $2.5 million per year for a 15 per cent credit, which would proportionately increase to $8.3 million for a 50 per cent credit, to $16.6 million to fully reimburse the cost of tolls.

I welcome and encourage the Prime Minister’s efforts to ensure that Prince Edward Islanders can finally travel to the rest of the country “at modest costs”, and like all Islanders, I look forward to hearing the result of his work with Island MPs.

 

- Percy Downe represents Prince Edward Island in the Senate of Canada

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