I'll admit I'm not a political guy, but when did 407 tolls become the biggest issue facing the people of Ontario?
Are we that naive? I might be wrong but in order to remove tolls would we not have to buy the 407 back?
How many billions would that cost and with no tolls to pay that back, I guess we're out of pocket..
I just feel we have bigger issues to attend to.
Education
Health care
Immigration
Job creation
Etc..
I agree there a much bigger fish to fry but I also think these things can be mutually exclusive. This is why we have ministries.
Having a reasonably priced toll road would help Ontarians for the long term. We are growing and don't have the infrastructure to keep the pace. Buying back a road that is already built and in service is a much quicker way across the goal line.
I'll admit I'm not a political guy, but when did 407 tolls become the biggest issue facing the people of Ontario?
Are we that naive? I might be wrong but in order to remove tolls would we not have to buy the 407 back?
How many billions would that cost and with no tolls to pay that back, I guess we're out of pocket..
I just feel we have bigger issues to attend to.
Education
Health care
Immigration
Job creation
Etc..
Your comment is very simple but also very accurate. Buying out the lease has too many zeros to fit on a cheque. The fine print says we're screwed.
The last time I checked the 407 fee was about the same as what the government says it costs to run a car. You have the democratic choice of swearing at a traffic jam on the 401 or swearing at your 407 bill.
Please note that if you work for a government department and have a government car with transponder your drive to the office is usually free as is your trip shopping. Hundreds of dollars a week isn't a stretch of the imagination.
Imagine also the 407 being closed and the traffic diverted to the 401.
Governments make bad decisions and the taxpayer lives with them, sometimes in perpetuity. In the private sector there are consequences such as bankruptcy and reduced dividends for investors. Therefore private sectors hire people that know what they're doing. We pick people with nice hair.
Tipping the scales is that the private sector doesn't have to cater to the socially underprivileged.
I think the 407 is a huge issue. Toronto is slowly being choked by its own traffic. Essential workers( I include trades) are required to commute to a city they can’t afford to live in to keep it running and safe.The cost of the 407 is a painful alternative for them and downright greedy. The exorbitant costs keeps truck traffic on the 401 through the heart of Toronto making it downright dangerous. I can’t tell you how many horrifying accidents I’ve seen in the last few years on the overburdened 401, so yeah I have a huge problem with the 407. Anyone that doesn’t probably doesn’t live in The GTA or own a car.
Your comment is very simple but also very accurate. Buying out the lease has too many zeros to fit on a cheque. The fine print says we're screwed.
The last time I checked the 407 fee was about the same as what the government says it costs to run a car. You have the democratic choice of swearing at a traffic jam on the 401 or swearing at your 407 bill.
Please note that if you work for a government department and have a government car with transponder your drive to the office is usually free as is your trip shopping. Hundreds of dollars a week isn't a stretch of the imagination.
Imagine also the 407 being closed and the traffic diverted to the 401.
Governments make bad decisions and the taxpayer lives with them, sometimes in perpetuity. In the private sector there are consequences such as bankruptcy and reduced dividends for investors. Therefore private sectors hire people that know what they're doing. We pick people with nice hair.
Tipping the scales is that the private sector doesn't have to cater to the socially underprivileged.
Totally agree. If buying out the lease is too painful, new highways are needed. The highways may come at the cost of agricultural land and I'm not ok with that unless there is a way to extend growing seasons with greenhouses on current farmland.
Would think opening up the 407 would be a relief for the 401's perpetual construction and bottlenecks, not to mention the offset it could mean for the economy, environment and safety on our highways. As for motorcyclists, let's just say a nominal fee relative to autos and trucks but jaw-dropping penalties to those who abuse that privilege. Who enjoys the rage machine that is the 401 during rush hour or the giant pothole slalom? If it's part of someone's political platform and they make good on it early on in their term then they've got my vote. I'll keep dreaming in my pipe alongside lane filtering.
I'll admit I'm not a political guy, but when did 407 tolls become the biggest issue facing the people of Ontario?
Are we that naive? I might be wrong but in order to remove tolls would we not have to buy the 407 back?
How many billions would that cost and with no tolls to pay that back, I guess we're out of pocket..
I just feel we have bigger issues to attend to.
Education
Health care
Immigration
Job creation
Etc..
There are a lot of issues to deal with, some specific some are over-arching.
Managing the overall health of the economy, taxation and gov't expense control, productivity, investment, and infrastructure (which is where 407 fits) are just as important as the list you have above.
The 407, is part of the infrastructure needed to move goods and people through the GTA. If it's ignored, we're just building pressure on a problem that will be more expensive to fix in the future.
The challenge is finding a solution that's win-win. If I were king, I'd negotiate a higher speed limit (120KMH?) in exchange for cutting the tolls in 1/2. The expectation is the flow on the 407 would increase, lightening the load on the 401. Aim to double the traffic so the revenues are the same or better for the highway operator.
There are a lot of issues to deal with, some specific some are over-arching.
Managing the overall health of the economy, taxation and gov't expense control, productivity, investment, and infrastructure (which is where 407 fits) are just as important as the list you have above.
The 407, is part of the infrastructure needed to move goods and people through the GTA. If it's ignored, we're just building pressure on a problem that will be more expensive to fix in the future.
The challenge is finding a solution that's win-win. If I were king, I'd negotiate a higher speed limit (120KMH?) in exchange for cutting the tolls in 1/2. The expectation is the flow on the 407 would increase, lightening the load on the 401. Aim to double the traffic so the revenues are the same or better for the highway operator.
Even at half price most people will still not be able to use it cost wise. Sure more will but I doubt it will be double to make up for the shortfall of the decreased tolls.
***
CPP Investments owns 50.01% of the company. The province could start by buying this portion out at market value.
***
The lesson is to not sell assets in this way... apparently the government failed this class (Ontario Place).
Totally agree. If buying out the lease is too painful, new highways are needed. The highways may come at the cost of agricultural land and I'm not ok with that unless there is a way to extend growing seasons with greenhouses on current farmland.
Even at half price most people will still not be able to use it cost wise. Sure more will but I doubt it will be double to make up for the shortfall of the decreased tolls.
***
CPP Investments owns 50.01% of the company. The province could start by buying this portion out at market value.
***
The lesson is to not sell assets in this way... apparently the government failed this class (Ontario Place).
Market value is based on 70 more years of tolls that are already high and have no limit as well as a guaranteed monopoly on free flowing traffic in the gta. It has nothing to do with cost of land or the highway. Sadly, it's cheaper to build a new highway than write that cheque (although slower and with environmental consequences).
As for half price, that would quickly follow bells model. You thought you were signing up for internet for $100/mo, you were actually signing up for internet with a $50/mo discount and we have moved our base rate to $250. You are contractually obligated to run out term at $200+ a month.
I entirely agree about public leases. They shpuld never exceed 30 years. That gives lease a business cycle to build, profit and wind down if they choose. At 30 years, maybe lease is renewed, maybe a new lease, maybe back into public hands. That would have 407 back now for free. Thermea 99 year lease is a turd for us.
It should not be 70 years worth of tolls even though that is the time left on the lease. What the actual multiplier is (for example times revenue method) IDK but maybe between 4 to 10 years of revenue for most businesses, likely more in this case (see below). There are of course other valuation methods based on... EBITDA, net income, etc. But why not 70 years...for example, what is the NPV of revenue 50 years from now? How much do I need now in hand to offset that...?
The bad news is it looks to be making ~$487M in revenue per quarter. Even at 10 years multiplier that runs ~$20B easily but to be fair likely more as it looks like CPPIB paid $3B +250M per year based on performance for 10% (added to their 40% stake at the time) from SNC in 2019, so $30B+++ likely more for total value. And the real number may actually be >$55B for total value assuming 2019 and 2025 are not much different (pre and post COVID). Back of the napkin 55B is ~28 years revenue. But did CPPIB get a good deal on that 10%?
The 407 has a 0 congestion rating -- meaning it never gets enough traffic to slow down it's free flow speed. You could double the traffic on the highway and it would still flow as fast as cars are willing to drive.
Dropping prices will encourage more drivers - there is probably a sweet spot for price/volume -- it that can be moved around so price drops and volume increases, we all win.
What kind of deal does the 407 have with the province where Service Ontario can deny license renewal for unpaid tolls and how a private company can have the OPP patrol it? Not to mention, road maintenance and snow removal!
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