Saturday 10th December 2016

Resource Clips


New way to the Ring of Fire?

A think tank suggests Ontario’s development corporation is on the wrong track

by Greg Klein

Is there a better way to plan, fund and build Ring of Fire infrastructure? A “think piece” released by the Northern Policy Institute on June 17 suggests the Ontario government has taken the wrong approach. A better model would be that of Canada’s transportation authorities which relieve taxpayers of most costs, speed up the process and allow greater stakeholder input, according to a 14-page report.

The study was written for the NPI by Nick Mulder, who says the new Ring of Fire development corporation being created for Ontario would follow a Crown corporation model unsuited to challenges posed by the region 500 kilometres northeast of Thunder Bay. He recommends Ontario create an agency based on Canada’s port and airport authorities and “tailored to fit the unique challenges of RoF development.”

A think tank suggests Ontario’s development corporation is on the wrong track

“An effective model would place the onus and risks on all the stakeholders and not just the provincial government and taxpayers, while maintaining elements of independence, inclusiveness, risk sharing, market-driven, political independence and legislated legally binding powers.”

The recommended model began with a 1990s Transport Canada overhaul, the report states. New, local transportation authorities took over from the federal government in a process that opened up wider consultation, streamlined decision-making and raised the bulk of money from stakeholders, while allowing other financing possibilities including public-private partnerships and capital markets.

“Issues such as uncertain mineral markets and prices, a growing provincial deficit and debt, as well as unresolved aboriginal demands and environmental assessments, suggest that there is good reason to transfer more of the responsibilities off the shoulders of the provincial government,” Mulder states.

He notes that Canadian airport authorities spent $14 billion on their facilities between 1995 and 2012. Had they remained in government hands, “such achievements would never have been realized, given the lack of financial resources from the Consolidated Revenue Fund and its slow, complex, cumbersome decision-making.” In place of federal funding is federal revenue—Ottawa got some $300 million out of the airports in 2013, Mulder writes.

Federal and provincial governments put up a total of $60 million for a $175-million container terminal at British Columbia’s Port of Prince Rupert. But the port put up $25 million of its own money while CN Rail TSX:CNR and the port operator provided $85 million.

In Vancouver, “the port, terminal operators, shippers, railways and government have worked together and shared the costs and risks to expand and improve the access to the port by jointly investing over $2 billion from 2000 until 2013.”

Similarly, “Fort McMurray and Nunavut airports are good case studies. In these local communities, partnerships were formed and decisions were made collectively to expand airports to meet increased demand. They were creative and sought out other funding models; in the case of Nunavut, financing was secured through a public-private partnership.”

But, Mulder emphasizes, “More important than simply a cost-saving exercise, the commercialization of hundreds of airports and ports across the country now allowed communities and users—rather than the federal government—to decide the use, the potential and the viability of these important assets.

Issues such as uncertain mineral markets and prices, a growing provincial deficit and debt, as well as unresolved aboriginal demands and environmental assessments, suggest that there is good reason to transfer more of the responsibilities off the shoulders of the provincial government.—Nick Mulder, for the
Northern Policy Institute

On the other hand, the authorities can become federal cash cows, Mulder concedes. He also challenges the cliché “if you build it they will come.” They didn’t come to Montreal’s Mirabel Airport or BC Rail’s Dease Lake line in the 1970s.

The NPI describes itself as an independent think tank that researches policies “to support the growth of sustainable northern Ontario communities.” The report was funded by Lakehead University, Laurentian University and the Northern Ontario Heritage Fund Corp, but reflects the author’s views.

The NPI has further studies pending on the region.

Mulder tells ResourceClips.com he’s not aware of other reports on a Ring of Fire governance model. “The province is hiring Deloitte to do a report but I haven’t seen anything from them,” he says. Ontario contracted the consulting firm to help create a northern development agency last February.

With a lengthy career in the federal civil service, Mulder says, “I got promoted to deputy minister but they put me back in Transport in ’94 because I knew where all the skeletons were.” He remained at the post until 1997.

“A large part of my career has been dealing with Crown corporations and looking at other models. I was involved in the privatization of Canadian National, the commercialization of Nav Canada, setting up the airport authorities, setting up the port authorities, etc.” He intends his report “to generate debate,” he says.

But do the transportation authorities represent a range of stakeholders similar to those of the Ring of Fire? Mulder insists they do. “If you look at the airport authorities, they have representatives from various entities, not only from municipalities but from business communities, social groups, etc. If you look at the Port of Prince Rupert, they’ve got quite a few different types of people with different backgrounds.” Pointing out the container facility’s financing success, he adds, “You don’t have to get the taxpayer to fund everything.”

His report describes the Ring of Fire as difficult terrain covering about 5,000 kilometres, but with most mining-related activity taking place “on a 20-kilometre strip of land.” The vast wetland contains peat, marshes and many rivers. It’s home to about 24,000 natives from nine Matawa bands.

“Transportation is by water, over ice, via three small airstrips or by float planes.” The nearest roads are 300 kilometres southwest and 340 kilometres south. Railways begin about 400 kilometres distant. “Major power lines are also hundreds of kilometres away.”

Mulder’s report follows the June 12 election victory of the Ontario Liberals, who promised $1 billion to help develop the region, which has had three rival transportation proposals promoted by different companies.

Download the 14-page report.

Read about the Ring of Fire as an Ontario election issue.

Read about Ring of Fire transportation proposals here and here.

Read an April 1 Ring of Fire commentary.


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