The province's plan to divest the Ontario Northland Transportation Commission has rallied Northerners to decry the decision.
At a press conference in Sudbury, March 23, Northern Development and Mines Minister Rick Bartolucci announced the “extremely difficult decision” and said while the business is good, the business model is not.
“Stagnant ridership, along with the ONTC's unsustainable financial path, are key factors in today's announcement,” he said. “The government is committed to completing this process in a fair manner, and it will be business as usual while this divestment takes place.”
ONTC Board Chairman Ted Hargreaves said the current business model is not sustainable “and not able to go forward in the future.
“However, divestment is not foreclosure and we are going forward in an orderly fashion and organizing assets and transferring those assets to other operating entities. It is a measure and step in hope and that is how we look at it.”
The ONTC, headquartered in North Bay, has more than 950 employees and Bartolucci said there are more than 130 of those who may be eligible for a retirement package. Ontario Northland, established in 1902, has more than 1,100 kilometres of track, passenger rail service to 28 communities, bus service to 56 communities, telecom services in 40 communities and manufacturing (refurbishment) facilities.
While the operation of the Polar Bear Express is to be ensured, all rail freight and refurbishment assets, as well as Ontera telecommunications, will be divested. The Northlander train between Toronto and Cochrane will be cancelled and replaced with an “enhanced” bus service, while bus services will be tendered to other operators. According to news reports, the Northlander is to cease operating some time this fall. The ferry service between Moosonee and Moose Factory will be consolidated with the Owen Sound Transportation Company, a government agency, which currently operates the Chi-Cheemaun which runs between Manitoulin Island and Tobermory. Since 2003, the government increased ONTC funding by 274 per cent. However, demand for services has stagnated. The current subsidy on the Northlander train is $400 per passenger, and no longer affordable. Government funding has increased from $28 million annually in 2003 and 2004 to $103 million this year. Since 2003, the provincial government has provided $439 million. Sales revenues have declined from $140 million in 2005 to more than $100 million this year. Ridership has remained stagnant at about 320,000 rides a year.
Municipal and union leaders were critical of the announcement being made in Sudbury and not North Bay, and that no consultation nor dialogue took place.
Kapuskasing Mayor Al Spacek, the president of the Federation of Northern Ontario Municipalities (FONOM), was “disappointed at both the decision and the methodology by which the announcement was delivered.
“I received an email this morning (March 23) informing me of the decision.”
Following the announcement, North Bay city council chambers were filled to capacity at a special meeting March 26 as the crowd listened to its municipal politicians vow to fight the government on its decision.
“I believe I might be out of order but the (Dalton) McGuinty government has given up on Northern Ontario,” said Coun. Peter Chirico.
The decision to sell off the business lines was done with no consultation and he asked whether it was preconceived and predetermined some time ago.
“We are all here to support you. We will not take this lying down,” he said. “Council is behind you and we will fight with you.”
Mayor Al McDonald said he is committed to working with all parties and to get all the stakeholders together.
“Like you, I was shocked. But we require a sound plan, with a contingency, because the loss of one job is one too many. The loss of 1,000 jobs in the North would be catastrophic.”
Brian Kelly, chairman of the General Chairpersons' Association representing all unions at the ONTC, told council his members were devastated by the news that will have a long-term negative impact.
“It's the province's first Crown agency,” he said. “This isn't a win.”
When the announcement was made, the government cited stagnant ridership numbers but Kelly said ridership was up.
“It's a lie and not stagnant. Per capita, we move more people than VIA Rail.”
A study done in 2010, Kelly said, indicated that Ontario Northland has an estimated total economic impact of $209 million in the northeast. For every dollar of direct revenue produced by Ontario Northland, the value to the province as a business output multiplier is $2.61. It also has an estimated tax revenue impact of $94.7 million.
“That's an investment, not a subsidy,” Kelly said. “Why were we singled out? Why is it the only government agency to go? It is not being done in the south. Everyone should be mad as hell.”
Kelly wants the ONTC to become a stand-alone agency and to allow it to make its own decisions. Currently it is under the Ministry of Northern Devlopment and Mines.
“We need stable funding and we would be no different than Metrolinx. Get your hands off the ONTC . . . (it's) not for sale.”
The divestiture has also pitted the unions against Nipissing MPP Vic Fedeli, who is accused of not supporting the employees of the Crown agency. Union members picketed his constituency office March 30.
In a Facebook message, Fedeli said the two sides – ONTC and the unions – are at opposite extremes. One wants to sell the ONTC and the other maintains it is not for sale.
“Both sides appear inflexible, yet both agree the status quo won't cut it anymore,” he stated. “So if we both agree business as usual doesn't work, I want to find new ways to maintain and deliver services that keep employment in Nipissing.”
Provincial NDP Leader Andrea Horwath said stopping the divestment is among the party's budget proposals to the minority McGuinty government.
ONTC bus drivers have suggested employee ownership since they fear privatization will reduce service. However, two Northern private carriers, Caribou Coach, based in Thunder Bay, and Tisdale Bus Lines of Timmins have both applied to the Ontario Highway Transport Board for the continuation of bus services that the ONTC provides.
The ONTC has suffered some body blows and tough fiscal years with forestry mill closures across the northeast and the May, 2010 closing of Xstrata's metallurgical site in Timmins with processing operations being consolidated in northwestern Quebec.
That closure resulted in an $8 million to $10 million loss in railway freight revenue, said Ontario Northland Chief Operating Officer Paul Goulet in an August, 2010 interview with Northern Ontario Business. In June of last year, the ONTC lost a bid to refurbish GO Transit commuter coaches when the contract was awarded to a Quebec firm for $120 million. The ONTC's bid was $2.1 million higher. The Metrolinx out-of-province contract sparked a wave of protest in North Bay and throughout the northeast.
A transition board has been appointed to work with Hargreaves to begin the divestment of the commission.
It includes Philip Howell, CEO of the Financial Services Commission of Ontario; Mahmood Nanji, assistant deputy minister, Ministry of Economic Development and Innovation; Jonathon Weisstub, head of new partnerships, Infrastructure Ontario; and Greg Percy, vice-president, operations, Metrolinx.