September 23, 2004

Dufferin Construction’s GM says:

Fund highways with proceeds of Petro-Canada sale

BY KORKY KOROLUK

DCN CORRESPONDENT

OTTAWA

Proceeds from the sale of the federal government’s share of Petro-Canada should be used for funding highways, the general manager of Dufferin Construction said Tuesday.

The reason, Lloyd Ferguson said, is simple: “The purchase of Petro-Canada was originally funded through a Canadian ownership tax on all sales of oil and fuel in Canada.”

Speaking to a mixed audience of construction industry people and journalists at the National Press Club, Ferguson said the federal gasoline tax of 10 cents a litre “is being extracted from motorists, so they should be the beneficiaries” of the sale.

Ferguson is also chairman of the Canadian Construction Association’s Roadbuilder and Heavy Construction Council.

He expressed some optimism that federal-provincial negotiations to rebate a portion of the federal gasoline tax to the provinces will yield results.

“The government has laid out three main priorities: health care, a new deal for cities and child care,” he said. “Health care seems to have been looked after for now. As for the new deal for cities, the stars seemed to be aligned as they should be, so it’s now a matter of process.”

What that process might be remains unknown. Formal negotiations have not yet begun, although there has been some initial public sparring.

Whatever the outcome, Ferguson said all the funds must be used for new infrastructure or infrastructure renewal. The money must be fairly distributed. And, noting that municipalities are creatures of the provincial governments, “there must be provisions so that the provinces can’t grab the money for themselves.

“Premier Dalton McGuinty has already said that won’t happen in Ontario. The other premiers need to say the same thing.”

Ferguson also said he was surprised by a weekend statement by John Godfrey, the federal minister responsible for cities and infrastructure.

“We think of a fuel tax,” Ferguson said. “But the minister pointed out that he was talking about the gasoline tax. It doesn’t include diesel. So we need to do some work on that.”

He also traced the decline in infrastructure spending.

During the 1960s and 70s, that spending increased by an average of 33 per cent per year. But from the 1980s to the present, it has increased by an average of only six per cent a year. Inflation during the period 1979- 2002 averaged four per cent annually.

During that same period, Canadian population grew 32 per cent and the trend toward increased urbanization accelerated.

Now, though, the “the federal government accepts the fact that our infrastructure needs attention—something the municipalities have long known,” as more costs have been downloaded from federal to provincial and then to municipal governments.

Big-city mayors, at a recent meeting, asked for a slice of federal gasoline tax revenues that would total about $10 billion over the next five years—about twice what Ottawa has promised.

As part of the mayors’ plan, Ottawa would rebate two cents a litre next year, increasing to five cents by 2007. Ottawa has already said it would ultimately reach that level, but not until 2009.

Returning to the sale of the federally owned Petro-Canada shares, Ferguson suggested that the money be put into the national highway system, which, “like municipal infrastructure, has been victim of years of neglect.”

“Highways are key trade and economic engines,” he said, but “congestion in most major cities is at the point of being intolerable.”

It’s also a “green” issue, since cars and trucks sitting in long lines of traffic with their engines idling are key sources of pollution, he said.

In response to a question from the audience, Ferguson said he agreed that Canada needs something similar to the highway trust that operates in the United States, and is the major force behind that country’s system of inter-state highways.

“Canada doesn’t have a national highway program,” he said, “and we’re the only G7 country without one.”

Ferguson said he would support the construction of toll roads in Ontario, even though the Highway 407 toll highway in the Toronto area “has not been a great experience.”

As a result of an agreement with the owners of the road, the revenues from it are essentially “gone for 100 years—well, 96 years now—before the road reverts to public ownership, so you could call it a great learning experience.

“It may be tough, politically, to impose tolls on existing highways, but on new highways, yes, we’d support toll roads.

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