By Alex Whalen (AIMS Vice President)
The recent campaign to remove tolls on the Confederation Bridge is a popular policy topic where rhetoric has become misguided.
Prince Edward Island Senator Percy Downe has pushed to remove the toll from the bridge, while P.E.I. Premier Dennis King has also pledged to work on lowering the toll on the Island’s primary connection to the mainland.
With discussions heating up, it is time for a recounting of the facts about this expensive piece of infrastructure.
The toll itself arises from a deal between the federal government, Prince Edward Island and the private company paid to build and operate the bridge, Strait Crossing. The current fee is fixed and rises by a percentage of inflation yearly.
This toll was designed to cover both principal construction costs and ongoing maintenance expenses of the bridge.
The basic case for a toll on any major piece of infrastructure is simple. The bridge cost more than a billion dollars when built in 1997, and costs millions[1] of dollars to maintain and operate yearly.
The question is how best can we, as taxpayers and users of the bridge, pay for that bill?
Tolls ensure that people who actually use infrastructure are the ones who pay. The removal of a toll won’t mean the bridge doesn’t cost money to operate or didn’t cost money to build; it would simply shift the burden of paying from the people who use the bridge (and thus pay tolls), to the tax base in general.
This is not fair to those who don’t use the bridge and could create the illusion the bridge is “free” without a toll.
The absence of a toll creates a free-rider problem. Everybody pays, but people who use the bridge – particularly those who use it a lot, like commercial trucking companies – would benefit unfairly from the artificially low cost to cross.
The burden of paying for the bridge is going to fall on some group of people, no matter what. This group should primarily be the people who actually use the infrastructure. Asking all Islanders to pay through the provincial tax base, or all Canadians through the national tax base, would not be fair.
Another common argument is that drivers shouldn’t have to “pay to leave their own province.” This is also bunk: You have to pay to get from Nova Scotia to Newfoundland and Labrador, or to travel within parts of many provinces due to road tolls. Indeed, there are many costs associated with travelling between provinces, including simply owning and maintaining a vehicle. Rightly, these costs are borne by users, not governments.
One option that has been discussed is to lower, rather than remove the toll. While this is not as bad as removing it completely, any toll rate that is artificially lowered by subsidy still falls into the free-rider problem. And all of this is to say nothing of the legal quagmire that could arise with bridge operator Strait Crossing if its revenues were to be cut by a reduced toll.
Strait Crossing has a contract to operate and maintain the bridge until 2032. Buying it out of that contract before it expires would be very costly for taxpayers. The appropriate time for a toll discussion is at the end of the contract when more options will be legally available.
But even then, there should be a toll set at a level that covers maintenance costs and supports the bridge financially.
We must also not forget that the bridge as it is currently constituted is a great deal for Islanders. Gone are the days of waiting for the ferry, frequent weather delays, and so forth. With the bridge, you simply show up and cross, with almost perfect reliability and convenience.
The idea that Ottawa should just pay the bill is also misguided. P.E.I. is already highly reliant on Ottawa to pay the bills, and there is no need to exacerbate this issue. Those who point to the unfairness in the federal government’s support of removing tolls on Montreal’s Champlain Bridge are correct; but the answer is for both bridges to be tolled, not neither.
The bridge is a prime example of a private-public partnership gone right. At a time when it appears impossible for governments to move forward projects – pipelines come to mind – our fixed link serves as an example of how things should actually work. We need to make more use of tolls to pay for infrastructure, not less.
Yes, it stings when you arrive to pay $47.50 to leave your own province. However, the fundamental truth remains: a toll is the fairest means of financing this costly piece of infrastructure. Removing the toll may be good politics, but it is neither fair nor wise.
