A BRIDGE TOO FAR
Plans for new Detroit-windsor bridge put billions at risk as border traffic stalls
The public-policy con job for a new Detroit-windsor crossing.
During the June 15 photoop at the Detroit-Windsor border, where Prime Minister Stephen Harper announced an agreement to put $1.5-billion into a new bridge across the Rouge River, the Prime Minister strolled boldly down the boardwalk. Was that a glint in his eye as he looked out over the river that will be crossed by the new bridge — the glint of a conqueror who had extracted a formal surrender from a foreign power, in this case the governor of the state of Michigan?
Mr. Harper’s language certainly made it sound like building a new span across the river, named the Detroit River International Crossing (DRIC), would be a hard-fought challenge of almost military proportions. In official comments he harked back to the War of 1812. He told reporters: “We are prepared to do whatever it takes. Make no mistake: Whatever battles lie ahead, this bridge is going to get done.”
The announcement was hailed far and wide as a great victory for Mr. Harper. Editorial writers and columnists sang of the merits of the bridge and Canada’s role. The new bridge “transcends its North American role and becomes a global hub for international trade,” said one columnist. The Detroit Free Press praised Mr. Harper, in part for putting up $550million in funds that the state of Michigan cannot or will not. At least three Canadian columnists portrayed Canada’s funding of the bridge as a triumph of Canadian principles and political integrity over the narrow special interests and crass corruption of the United States political system.
In this view, Mr. Harper as Captain Canada had vanquished not only the state of Michigan and its governor, Rick Snyder. He had also declared war on the real battle target, the private corporation that controls the other Detroit-to-Windsor crossing, the Ambassador Bridge owned and controlled by the Moroun family, headed by 83-year-old billionaire Manuel Moroun.
Mr. Moroun, whose family has owned the bridge since the late 1970s — maintaining it and collecting all tolls — is portrayed as an influencebuying Tea Party capitalist who seeks tax breaks to prosper, a monopolist who wants to keep out competition, a symbol of all that is wrong with America’s special-interest dominated governments. Mr. Harper and Canada stand as principled, influencefree promoters of international trade, commerce and the public good.
It takes a lot of ideological twisting to reach that conclusion, especially for Conservatives who portray Mr. Harper as the economic good guy — despite all evidence to the contrary that Mr. Harper is the heavy-handed statist attempting to cripple a private entrepreneur. What Mr. Harper is really doing is using government power to do what Canadian governments have wanted to do for at least five decades: thwart the private ownership — and if possible take control — of the Ambassador Bridge.
The existing Ambassador Bridge has been a thorn in the nationalist hide of Ottawa almost since it was built in 1929. It became something of an obsession during the 1970s under Pierre Trudeau, whose governments mounted campaigns and legal efforts to force the bridge into Canadian government hands.
In 1973, Trudeau’s minister of state for foreign affairs, Mitchell Sharp, issued a declaration that if private ownership of the bridge were to change hands, “The Canadian portion of the bridge shall be conveyed to Canadian or Ontario authorities at no cost within 25 years of the date of acquisition from the vendor.” Canadians would be installed on the board, lands associated with the bridge were to be conveyed “at no cost” to the government. The policy was amended in 1977 to require that control of the Canadian portion of the bridge would be “conveyed immediately” to Canada, with a 25-year leaseback.
When private ownership of the bridge did change hands, despite Mr. Sharp’s declaration, Ottawa tried to invoke the Foreign Investment Review Act, claiming the takeover failed to bring “significant benefit” to Canada. The Moroun family fought back, successfully winning a court battle during which they accused Ottawa of attempting to expropriate their property.
So Mr. Harper, by moving in to fund a competing bridge using taxpayers’ dollars, is re-enacting the
Trudeau policy, using more direct methods. Ottawa will pay to build a second bridge, potentially driving the Moroun family out of business.
Being a billionaire, Manuel Moroun isn’t a sympathetic figure. He is described, among other things, as being a fake capitalist, a rent-seeking monopolist who does not want to face competition. It’s a charge that belittles Mr. Moroun and elevates the dubious intentions of the government. When a foreign national government shows up on your door, with the support of the governor of your state and likely the president of the United States, to announce that “We’re from the government and were here to compete with you,” Mr. Moroun has good reason to run to the courts and the political process.
For doing so, Mr. Moroun has been described as litigious, a wealthy manipulator and a purchaser of political favours. When it comes to manipulation, however, it’s hard to beat Ottawa and the massed forces of special-interest industries, unions and government bureaucrats who have joined to promote and build a new bridge at government expense.
After successfully beating back Ottawa over two decades, Mr. Moroun and the government began to work together. Plans were put in place to build a twin to the Ambassador Bridge, with the co-operation of Canadian and U.S. governments. Traffic along the Detroit-Windsor crossing had doubled through the 1990s, reaching more than 32 million crossings in 1999 — including more than 12 million on the Ambassador Bridge and another 8.6 million through the Detroit-Windsor Tunnel. The cost of the new Ambassador toll bridge, to be built adjacent to the existing toll bridge, was estimated at $500-million, all privately funded at no risk to taxpayers.
Ottawa, Ontario, Michigan and U.S. federal authorities appeared prepared to participate in the Ambassador twin project. Recently, however, Ottawa suddenly began to look at alternatives to the Ambassador expansion. The Harper government also became enthusiastic proponents of a new version of the Sharp doctrine. New legislation, the 2007 International Bridges and Tunnels Act, which gave Ottawa the power to take over a private bridge if it were to change hands. “The government is interested in who owns and operates these structures,” said the government during debate over the act. “That is why the bill proposes that government approval must be sought each and every time there is a change of ownership. That way the government at all times will know who ultimately owns, operates and controls these critical structures that belong to Canada. That way the government will be satisfied that these persons are not only qualified, but have the structure’s long-term viability in mind in the best interests of Canadians.”
References to international security issues and terrorist threats were frequently cited. Since the Ambassador Bridge is the only significant privately owned bridge across the Canada-U.S. border, the new act is essentially a direct hit at the Morouns. Since the act, moreover, Ottawa has been backing a competing bridge, a $1.5-billion project that Ottawa would fund.
Mr. Harper appears to have strong views. In April, when asked about the need for a new bridge, he said: “This is the biggest single corridor of trade in the world and the concept that somebody could claim that he privately owns it all is, to me, ludicrous, but to some degree that is the situation we’re dealing with.”
What’s ludicrous about a private bridge that does the job — and a bridge the government had been willing to allow to expand at no cost to taxpayers and at no risk? Private companies own airports, essentially border crossings. And rail lines.
If there’s anything ludicrous taking place here, it’s the great public-policy con job around the need for a brand new bridge that in the end will require U.S. and Canadian government spending of $4-billion — all to build a bridge for which there is no market.
The traffic studies and projections backing the new bridge show that traffic volumes across the WindsorDetroit crossings have plummeted since 1999. Across the Ambassador Bridge and the Detroit-Windsor tunnel, the falloff in traffic has been dramatic. Traffic at the bridge is down 42%, and down 60% at the tunnel — a function of numerous trends. Due to the rise of the Canadian dollar, rising gas prices, declining auto trade, economic slowdown, chan- ging demographics, the opening of the Detroit casino and other factors, there is little reason to believe traffic levels will soon return to 1999 levels, let alone reach levels proponents of the new bridge are forecasting.
A typical misguided forecast is an original 2004 planning document assessing the Detroit-Windsor border. It took 2002 as a base and assumed growth in traffic would resume, then continue through the next three decades (see graphic). Today, that forecast is wildly off the mark. Ambassador Bridge traffic was forecast to jump to 14 million crossings by 2010 — the year actual crossings stalled at 7.2 million.
Talk about ludicrous. Later forecasts are just as far off the mark. There’s no way to start with border traffic at such low levels and reach traffic volumes to justify an expensive new bridge at taxpayer expense that will double the bridge capacity. A Sierra Club-funded review of the latest traffic forecasts used by the proponents of the new bridge says the optimism is not warranted by current economic trends.
If there is insufficient traffic, there will be insufficient toll collections to pay for the new bridge. In which case, the Harper government and U.S. governments will have to kick in hundreds of millions in subsidies — unless, of course, the new bridge sucks traffic from the Ambassador Bridge and drives it out of business.
So far, Ottawa has released no financial projections on how its $1.5billion investment — and the other billions needed to cover the whole project on both sides of the border — will be paid for. Where are the cost and revenue projections that show how the bridge will pay for itself, and allow Canada to recoup the $550-million it is lending to Michigan — which refused to pay its share of the costs.
The new bridge is the F-35 of landtransport infrastructure, a giant mega-scheme backed by a million pages of propaganda at the official website of the Detroit River International Crossing project and at a website called the New International Trade Crossing (buildthedricnow. com), an industry-union-funded agitprop operation that makes anything the Morouns do look like a tea party.
To drum up support for a new bridge, the union-backed promoters are talking about all the jobs construction will bring to an economically devastated area. But that’s no argument.
Mr. Moroun is accused of funding local politicians — as if that were a crime — and of trying to protect his duty-free gasoline operation at the bridge. In reality, the gas profits are a tiny part of the business of operating the bridge and a fraction of the $50million to $60-million in annual toll revenues.
Mr. Moroun says he has a private plan, to be funded by investment bankers and at no cost to taxpayers, to use his toll revenues to build a twin span adjacent to the existing Ambassador Bridge. The Harper plan puts Canadian and U.S. taxpayers at risk. And all for — what? To expand the role of government at the expense of private industry. Is this the good government Mr. Harper’s media backers support?