Jean Denis Fréchette, the Parliamentary Budget Officer (PBO) has advised that he will be issuing a report on Wednesday, August 31st answering questions asked in this letter by Senator Percy Downe.
The following is a letter by Senator Percy Downe to Jean Denis Fréchette, Parliamentary Budget Officer (PBO), regarding the lack of tolls on the Champlain Bridge compared to the $46 toll on the Confederation Bridge.
The Government of Canada has announced that it will fully fund the construction of a new bridge to replace the Champlain Bridge in Montreal; and although tolls were charged on the Champlain Bridge until 1990, the new bridge will be toll free. According to the Government of Canada, the replacement of this important piece of infrastructure is budgeted to cost up to $5 billion and will open in 2018.
Given that the new bridge will be built using a Public-Private Partnership, the Champlain Bridge project is highly similar to that of Confederation Bridge, which links Prince Edward Island to the rest of Canada. One significant difference, however, between the two projects is the cost: Confederation Bridge cost slightly over $1 billion, about $4 billion less than the current projections for a new Champlain Bridge. Another no less important difference is that Confederation Bridge was a constitutional inducement by the Government of Canada to convince Prince Edward Islanders to join Canada.
Confederation Bridge plays an important role in Prince Edward Island and its history. When the province joined Confederation in 1873, the Terms of Union required that the Government of Canada be responsible for assuming and defraying the costs of efficient and “continuous communication” for the conveyance of mail and passengers between the Island and the mainland. In other words, a year-round connection between Prince Edward Island and Canada was a precondition for the colony’s entry into Confederation. As time and technology moved forward, the nature of that connection evolved: from a steamer during the summer and iceboats in winter; to a year-round ferry; and ultimately, to the bridge we have now.
Prior to the construction of Confederation Bridge, the Government of Canada insisted that Prince Edward Island agree to a 1993 amendment to the Constitution Act that clarified “a fixed crossing joining the Island to the mainland may be substituted for the steam service” referred to in the Terms of Union, and also noted that “nothing in this Schedule prevents the imposition of tolls for the use of such a fixed crossing between the Island and the mainland, or the private operation of such a crossing.”
Prince Edward Islanders understood, given the existing user pay policy for major transportation infrastructure projects, that if we wanted a bridge to replace the year-round ferry service, we had to agree to a constitutional amendment that included a toll charge; as such, travelers currently pay a toll of $46.00 to cross the 12.9km long Confederation Bridge. At $3.56 per kilometer, Confederation Bridge must surely be the most expensive driving experience in the country. The fees we pay to use the bridge, and the seasonal Wood Island Ferry service that connect our province to the mainland are a considerable financial barrier to anyone seeking to travel or trade outside our province.
However, it now appears that the toll rule for major transportation infrastructure is being changed. As such, Prince Edward Islanders cannot afford to ignore the precedent that would be set by a “toll-free” Champlain Bridge versus the $46.00 toll on Confederation Bridge; a constitutionally required “essential condition” of Prince Edward Island’s terms of joining Confederation. If all Canadian taxpayers must collectively finance both the cost of construction and maintenance of the Champlain Bridge, and Montreal ends up getting a $5 billion bridge paid for by the Government of Canada with no tolls, then Prince Edward Islanders expect to receive equal treatment.
Therefore, and in accordance with your mandate to “…when requested to do so by a member of either House or by a committee of the Senate or of the House of Commons, or a committee of both Houses, estimate the financial cost of any proposal that relates to a matter over which Parliament has jurisdiction”, I am requesting you to estimate the following financial cost:
1. What will be the total cost (construction, operations, maintenance, etc.) incurred by the Government of Canada for the new Champlain Bridge?
2. What will be the cost to the Government of Canada of the decision to eliminate tolls on the Champlain Bridge over the 35-year period 2018–2053?
3. To pay for Confederation Bridge, the Federal Government passed the Northumberland Strait Crossing Act in 1993, providing a guarantee for the builder of the bridge, Strait Crossing Bridge Limited, to retire bonds over 35 years through annual payments of $42 million (in 1992 dollars, indexed to inflation). The $42 million purportedly equals the cost of the annual subsidy for the PEI-NB ferry service that was replaced by the Bridge, and combined with tolls, is designed to pay for the operation and upkeep of the Bridge, as well as to retire the bonds.
What would be the cost to the Government of Canada to extend the contract with Strait Crossing Bridge Limited?
An estimate of how much tolls could decrease for each year the contract is extended.
4. A range of government-funded subsidies and credits exist for Canadians who are forced by circumstances to pay additional sums of money for travel, from the Public Transit Tax Credit in Canada’s larger cities, to the Deduction for Travel Benefits for Northern residents. Although differing in their application, they share a common goal in that they help Canadians defray increased costs of necessary travel. In that spirit, some tax-based measure to support Prince Edward Islanders, who face inordinate costs to travel a relatively short distance, would appear to be in order.
Therefore, if the tolls cannot be reduced, what would be the yearly cost to the Government of Canada if Prince Edward Island residents received a tax credit for their expenditures on Confederation Bridge tolls similar to the assistance other Canadians receive?
Percy Downe is a Senator from Charlottetown, Prince Edward Island.