For Whom the Roads Toll

On Wednesday, B.C. Transportation Minister Judith Reid stated that the Sea-to-Sky Highway would not become a toll highway. The justification for this decision is that “there is no free, direct alternative route to Whistler.” But this is more an excuse than an explanation: the only reason to worry about “free access” to Whistler is to guarantee access to those who can’t afford the toll, or who must use the Sea-to-Sky highway to commute to work. Both of these challenges can be easily solved with vouchers to offset the cost of tolls. Instead, all B.C taxpayers, not just those who go to Whistler will foot the $600-million bill for upgrade of the highway.

The rejection of a toll to fund the upgrade is a bad idea for several reasons. First, tax-based funding of transportation is inequitable: taxes are broad based, taking money from people who never use certain roads, and subsidizing people who do. Sometimes that subsidy is quite regressive, with lower-income people paying to fund mobility for higher-income people. Why should people who drive primarily to commute to work in Vancouver Lower Mainland pay to send skiers to Whistler?

Second, tax-based financing of transportation is usually horrendously wasteful. With no concerns for profitability or cost-containment, government transportation agencies have no incentives to bring projects in on time, or on-budget. Consider the Alex Fraser Bridge in Vancouver, for example, estimated at $130 million, but ultimately costing over $400 million. Or consider the Lion’s Gate Bridge upgrade project in British Columbia. Originally contracted at $88.6 million dollars, and scheduled for completion in December 2000, the bridge upgrades eventually cost the province $125 million and were completed late in 2002. After countless government boondoggles, how many BC taxpayers believe that the Sea-to-Sky high will end up costing the estimated $600 million dollars?

Third, fuel-tax based financing of highways can undercut efforts to reduce air pollution, and result in over-use of newly constructed capacity. Studies suggest that controlling air pollution as well as roadway degradation is best done by the use of proper economic incentives, rather than through command-and-control regulations. So the best way to make sure that roadways aren’t degraded rapidly by excess truck traffic is to establish a maintenance program funded by tolls paid by trucks in proportion to their impact on the roadway. By the same token, the best way to insure that motorists incorporate environmental concerns into their mobility decisions is to make sure that the cost of driving includes the cost of remediating their scientifically demonstrated environmental impacts. That’s not easily done if the transportation system provides motorists with seemingly unlimited highway mobility paid for obliquely via taxes, and sometimes by a third party altogether.

It would seem intuitive to anyone outside of government that people should only pay for the services they use, unless those are vital services that cannot be funded in any other way. And transportation most certainly can be funded in more equitable ways that provide better incentives for responsible use of highways.

Consider the 407 Express Toll Road (ETR), a highway that extends 108 Km east-west, just north of Toronto. The 407 was developed as a public-private partnership between Canadian Highways International Corporation (CHIC) and the Government of Ontario. There was a guaranteed construction price tag of $930 million, which was met according to budget and on schedule. The road was then sold to 407 International Inc. for $3.1 billion dollars, earning a windfall for the taxpayers in Ontario.

Even less-than-perfect toll-road projects are better than tax-funded transportation. Consider the Coquihalla Highway, which runs for just over 300 kilometers from Hope to Kamloops in British Columbia. The Coquihalla’s construction was estimated at $375 million, and though it came in at $768 million, there was at least a chance to earn the money back. The Coquihalla currently earns $43 million per year in tolls, and if it were sold, like the 407, ETR the Coquihalla Highway could earn a windfall for B.C.

The Liberals should go back to the drawing board to scope out some public-private partnerships and toll-based approaches that will give users of the Sea-to-Sky highway the mobility they need, apportion the costs according to use, create better incentives for environmental protection, and avoid wasteful governmental spending.