Tuesday, November 02, 2004

Chong forgets history and abandons sense

GO Transit Chair Gordon Chong - usually one of the more reasoned voices in the transit 'community' in the GTA - is caught here railing against those terrible rail giants CP and CN. He charges - without giving supporting figures - that these companies are charging 'usurious' rates.

TheStar.com - Let's clear tracks for commuters

Setting aside Chong's misuse of the term 'usurious' (CP and CN may charge high rates - albeit that no eveidence is offered - but they cannot be usurious as this term applies to the rate of interest on loans), his rant is full of distortions, misrepresentations and half-truths.

Chong charges:

The railway barons of today need to be told firmly that the old order has changed. It is time to put an end to the lopsided relationship between the railways (which have benefited from extravagant government largesse) and commuter rail authorities.

Well, both CP and CN are widely held public corporations. They are not owned by "barons" - they are owned by many average Canadians. In fact - as of latest filings - the largest shareholder in CPR is the Canada Pension Plan. No other ownership share exceeds 5%. CN is similarly widly-held - and is subject to a statutory upper limit of a 15% ownership stake.

He also states:

Imported, underpaid and exploited Chinese labourers from southern China were given the most dangerous jobs in its construction; in 1881, the officially incorporated Canada Pacific Railway Company was given massive cash subsidies, land grants and property tax exemptions;

Chong goes back over 100 years to find an argument to support a proposed current day theft from ordinary Canadian shareholders, mutual fund holders, and pensioners. What he forgot to mention is that for decades the Canadian government enforced below market rail rates on grain shipments from the Prairies (known as the the Crowsnest Pass Rate). The regulations held back necessary investment on the transcontinental routes.

Since the sunsetting of the regulations, Canadian Pacific has invested billions in upgrading the route through the Rockies. CN and CP are competing vigourously - and the routes are very busy with rail freight. I can attest that it is not possible to observe the Fraser and Thompson canyons for more than a few minutes without seeing a mile long freight train.

History and common sense show that it would be foolhardy to have the government mandate that the railways be forced to absorb lower rates. This would only lead the disinvestment on the routes.

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