ACR saga highlights Conservatives priorities

Passenger rail services on the Algoma Central Railway have ground to a halt.   The third party operator that was hand-picked by CN has not worked out, but the problem was set in motion with some terrible planning by the Conservative government.  If anyone is wondering what the impacts of an austerity budgets are, this is an example of what focusing on cuts without determining how they will impact the larger economy looks like.

The problems actually began in 1996 when the Liberals stopped regulating the termination of train routes as part of their wider deregulation measures.   Then in 2013, the Conservatives cut Transport Canada’s budget which led to the removal of federal subsidies from rural passenger rail services while maintaining them for remote service.  At the same time they stripped the ACR of the remote designation and its subsidy was cut.  That triggered CN’s decision to abandon passenger services. 

CN says they are not in the passenger rail business and chose to walk away from a service that required the subsidy to break even.  The government’s role is another matter. They either didn’t know that the cut would end service or didn’t care that it would.  Either way the government’s poor planning has endangered a good part of Northern Ontario’s tourism economy, stranded the town of Oba - which is indeed remote, and cut a lot of people off from their properties.

Why any government would divest themselves from public transportation is a mystery.  Canada is the only G7 country that is moving in this direction.  There are strong economic, environmental, and even health benefits associated with government investments in public transportation.  Every dollar invested creates another four in economic activity.  In larger urban centres it gets cars of the road, and reduces pollution.  Perhaps the biggest reason to support a healthy investment in public transportation is that it creates more jobs than any other type of infrastructure spending.

What the subsidy-cut does is the exact same thing in reverse - kill jobs.  I have spoken with tourist operators who rely on the ACR as part of their business model and are concerned about the survival of their businesses.  Hundreds of guests a year won’t be able to get to these establishments.  Some won’t want to travel any other way, some won’t have the option, and the high cost of flying in those who still choose to come will eat into the meagre profits these businesses create.

What this shows is that the Conservatives don’t really understand economics.  They are disciples of a rigid theoretical system that only rewards the wealthiest among us and leave everyone else to fend for themselves.

Consider the bailouts to the auto industry.  They sold the shares that Canada acquired short just to balance the budget in an election year.  In essence they threw away money to look good for a couple of months.  They spend hundreds of millions of public money to advertise for their own benefit without batting an eyelash.  They drop lavish amounts on ridiculous things like gazebos in Minister’s ridings and fake lakes at a temporary media centre located on the shores of Lake Ontario, but they cry poor when jobs are on the line and people’s businesses are threatened in Northern Ontario.   How is that in any way responsible?