The Wake-Up Call (Part 1)

Because we are getting down to the short strokes in the DRIC file, it is necessary sometimes to give you a lot of information because it is important for you to understand the context in which decisions are being made by politicians and bureaucrats.

I can hear the groans already. Let me apologize in advance. It’s another one of my extra long BLOGs. It is so long that I am breaking it up again into two parts. Still, what else do you have to read on what may be a cold rainy and even snowy weekend!

I really would like to make them shorter but I don’t think I should. I assume that, if you have been reading my BLOGs for a while, then you know that they are somewhat lengthy. Yet, my readership numbers are pretty consistent. You must have a pretty good idea what you are getting into when you start reading one of my items.

What I believe is that it is my job not only to give you my perspective as to what is happening but to give you the facts behind my reasoning. In that way you will understand why I have reached the conclusions that I have. What I am suggesting as my answer is based on the facts that I believe are important and how I have brought those facts together.

I think that it is important for you to understand all of this when you read what I have to say. Unfortunately, sometimes it takes space and takes time to read.

Whether you agree or disagree with my thesis is then up to you. However, at least I am giving you an informed commentary.

This BLOG is a good example. Today, I will be writing about the siren call of infrastructure and how I believe taxpayers will pay out so much money that other Governmental boondoggles will appear miniscule in comparison years from now when the Auditor General does a report on the Infrastructure fiasco.

DRIC obviously will be the focus of this discussion because we know all about it and because in my opinion it is a classic Megaproject running amuk. It will be the first of many since it seems to be the poster child for P3 infrastructure investments in Canada.

In the subsequent BLOG, I will Blog about financing and P3s to demonstrate that this project does not make sense and that all that will happen is that billions of taxpayer dollars that can be used for more important things will be wasted over the P3 life of this project. If that happens here, it will happen elsewhere. It is inevitable.

Frankly, I as a taxpayer no longer have the desire to fund all of these boondoggles to help keep politicians being elected by bribing me with my own money. If there is some mathematical wizard out there who is good with numbers, I’m hoping that he/she can figure out how much money will be wasted on this DRIC project and let me know.

I am hoping that my BLOG will be a wake-up call before this infrastructure waste gets totally out of control. There will be winners all right but it will be not be the taxpayers of Canada. Enough of the introduction and apology.

Taxpayers of Ontario and Canada are about to be fleeced of billions of dollars.

Do you remember the Scientific Research Tax Credit fiasco? Here is how one commentator described it:

• “The government's biggest attempt to build our high-tech industry was the Scientific Research Tax Credit back in the '80s. It was well intended, but the big Bay Street firms and the accountants and lawyers and investment dealers poured through the thing, found the loopholes, and turned it into a farce. It cost the taxpayer about $5 billion and it was probably the single biggest scam ever in Canada.”

Forget that. Forget the billion dollar HRDC boondoggle or the Gun Registry. Adscam…mere peanuts. Wait until the Infrastructure bubble will burst. We will see taxpayers on the hook for the kinds of billions due to the subprime mortgage melt-down. Already, the Government has sunk in $75 billion to help our banks.

Windsor has become the text-book template for what will happen across this country as politicians look to infrastructure expenditures as their salvation prodded on by those who will gain magnificently from Government largesse during a time of crisis.

The rallying cry of jobs, jobs, jobs will eliminate any due diligence. One job is vital: the politicians’ main job is to get re-elected. That is all that counts. Who cares what it costs us as taxpayers especially if it can be buried as line-items in Government accounts! It was breath-taking to me how the US Government as an example could find $700 billion to save its financial system and how quickly legislation was passed by legislators who really have no clue what is going on.

Forget about the cost of the DRIC project. Notwithstanding that it will cost billions of dollars to construct (probably double what has been said so far), that is mere chicken feed in the scheme of things.

We are being seduced by the call for infrastructure projects to solve all of our economic woes. Let's spend today to get people back to work on whatever scheme is being proposed is the idea and who cares about whether the project makes sense or not. Rational thinking and protecting taxpayer interests do not seem to be requirements. Hop on the bandwagon or else

Last Friday,

• "Liberal Leader Stephane Dion pressed Prime Minister Stephen Harper on Friday to unblock promised multibillion-dollar infrastructure spending to create jobs as the two consulted face to face about the post-election session of Parliament amid a new wave of bad economic news...
  
  His comments to Harper came one day after Transport Minister John Baird, who is responsible for infrastructure, said the Federation of Canadian Municipalities had made "a powerful case" to get $8.8 billion in infrastructure funds from 2007 flowing."

At the PM/Premiers meeting:

• “All premiers are asking Ottawa to accelerate infrastructure spending plans to create jobs as the downturn erodes existing employment.
  
  “There's never a bad time to invest in infrastructure. It always creates jobs and always enhances your long-term productivity. But there's never been a better time than now,” Mr. McGuinty said.”

I am talking about taxpayers losing billions and billions and billions of dollars and not being the wiser. If I am right, there are going to have to be gigantic subsidies to cover the P3 investment costs and return on investment for the new DRIC Bridge, Plaza and DRIC Road for decades to come. Is that what we want?

I cannot see how an investor could make money otherwise using Highway 407 as the example I shall use in this BLOG. In addition there will have to be huge subsidies for the other border crossings if the DRIC Bridge will take away a huge chunk of everyone else’s business as the US DEIS suggests. Otherwise, they cannot afford to stay in business and will have to close down thereby jeopardizing trade in other areas.

Read on, dear reader, and gasp. My suspicions about the real purpose of DRIC may well be true after all. That is, it was designed to force the Bridge Company to sell out cheaply.

Until I did this BLOG, I really did not understand the financial implications of what could happen. Not only is it mind-boggling, it is effectively hidden because Governments will certainly not make a point of saying how much they are subsidizing the border crossings every year. The gap between actual revenues that can be collected from users and what a P3 investor requires to even consider being involved is about as big as the Grand Canyon.

By mid-2000 the Canadian Government already knew that the Bridge Company was going to expand its Canadian plaza and by 2012 was going to build a second bridge adjacent to its existing bridge. It was hardly a surprise frankly since the Bridge Company had announced that in 1998.

I have suggested on many occasions in my BLOGs that I have always suspected that our three Levels of Government in Canada are working together against the Ambassador Bridge Company notwithstanding the occasional squabbles amongst themselves. The DRIC Road brouhaha is the best example of the family feud.

Let us assume that I am right and that they agreed years ago to pretend that they were going to build a new crossing a mile away from the existing bridge using some kind of financing using the public-private partnership model. The purpose was to use the DRIC EA exercise as a threat to convince the Bridge Company to sell out cheaply.

Can you understand this? If I am right, then this is completely contrary to what we were told about DRIC and its decision-making. DRIC was not independently arriving at a conclusion but rather was justifying a conclusion that had already been reached. If you will recall one of my other BLOGs dealing with the border file and experts, then what I am saying is not so far-fetched.

Here are some of the multi-billion taxpayer dollar questions that need answering:

• Why was DRIC needed?
• Why would the Governments need to do anything when the Bridge Company was going to provide up to eight lanes of new traffic making 12 in total at its expense and the Governments knew it?
• Why would Governments continually talk about building additional capacity when none was needed, especially now with the economic melt-down in the auto industry that will take forever to recover if it ever does?
• If the purpose of a new crossing was traffic, why is the project going forward today when traffic volumes have tanked and a new bridge may not be needed for decades even forgetting how smoothly traffic will flow with the improvements in technology.
• Is DRIC nothing more than a farce designed to justify conclusions that had already been reached?
• Why are Government Ministers claiming to respect the process when they are actually discrediting it?
• Who will benefit from all of this if in fact the project really moves forward in spite of everything?

This border file is a complete mess since the underlying assumption of the Governments is that the Bridge Company would see the necessity to sellout. The Bridge Company caused the problem when they did not follow the script. When that didn’t happen, my view is that the Governments did not have a contingency to deal with that and now are doing anything they possibly can no matter how ridiculous.

The classic is the FHWA rep at the Cropsey hearings saying that the real purpose for the new DRIC Plaza is to provide redundancy for the Ambassador Gateway Plaza. If that is the case, then in both Port Huron and in Buffalo, new plazas need to be built to destroy totally other parts of those cities. That will be even worse for those cities than is being proposed today. There would be a riot in those cities if what was said in Michigan was really true.

I suspect also that the American Governments have been duped by the Canadians and became part of the solution without knowing they were fooled! The Americans bought into Canada’s Gateways and Corridors policy and were none the wiser for it and are still not! Canada had to react quickly to some American border initiatives to prevent our economy from suffering and did so.

As I said before, that is the main focus of why the Ambassador Bridge has importance to Canada but not the only reason for trying to beat up the Bridge Company. The other reason is strictly financial.

And money, the root of all evil, will be the subject of Part 2.