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CN and Feds knew about rail funding cuts since November

Tuesday, January 28, 2014   by: Bob Mihell

Both the Federal Conservative government and the CN Railway Company have kept a mid-November 2013 decision by Transport Canada to cancel its annual subsidy of about $2.2 million toward the operation of passenger rail service between Sault Ste. Marie and Hearst a secret for over two months. 

CN officials announced Friday Jan. 24 to municipal leaders and CN employees in both the Sault and Hearst that they would end the three times a week north and southbound passenger service along the 476 kilometre wilderness route at the end of March 2014.

Sault MP, Bryan Hayes, said Tuesday (Jan. 28) from Ottawa that CN was told in early November that the Conservative government was canceling it financial support for the passenger rail service effective March 14.

That information was backed by a draft brief prepared by the Sault Ste. Marie Economic Development Corporation.

The brief says that emails were sent by SSMEDC’s chief executive officer, Tom Dodds, to “key Transport Canada officials” on Jan. 26 where background information provided in a CN statement was confirmed.

Transport Canada’s response to the EDC inquiry included a Nov. 18, 2013 date when CN officials first were told of the funding cancelation. 

Transport Canada said the decision to cancel the subsidy was based on a 2010 review of its funding program to remote passenger rail services that redefined its definition of a remote community.

Under the policy change that did not evaluate potential economic impacts, according to the EDC brief, the ACR was disqualified from federal assistance because the towns along the rail route have year-round road access. 

Regarding the Transport Canada policy shift formally approved in 2013, Hayes said,“It was up to CN to determine the implications of the loss of the subsidy. I don’t know if this ties in with the cancelation of the snow train. That is a question you have to put to CN officials.”  

He added, “I just know that CN was informed in early November, and we (the government) didn’t really know what CN’s response would be until they went public to the mayors of Hearst and the Sault on Friday.”

Hayes, who said he has not consulted with CN officials since November, criticized the company’s recent decision to end the passenger service March 31.

“They have decided as a business decision that they are going to eliminate the service because it doesn’t make economic sense for them to continue it,” he said. “It’s unfortunate, because they are a multibillion dollar corporation, and CN’s management have decided 
ACR isn’t important enough to them, because without a government subsidy they would operate at a loss.”

CN officials, however, have decided to remain tight lipped. Apart from confirming that it will discontinue passenger rail service April 1, CN spokespersons are declining to answer any questions regarding their decision.  

One of the unanswered questions is why CN has taken over two months to make public their decision to cancel the rail service, if they were notified Nov. 18 as reported by Hayes and the EDC.

The EDC brief also raises a number of key points for consideration following the CN announcement Jan. 24.

One, the brief asserts that other than communicating its decision with CN, the Federal government does not appear to have consulted “with any stakeholders in the region, particularly those who rely on the ACR passenger services for their livelihood”.

Similarly, the EDC point out that although CN was made aware of the Transport Canada decision Nov. 18, the company had not shared that information with regional stakeholders until just recently.

“Stakeholders have not been fully informed of all the facts by the government or CN.” The EDC brief also stressed that the significant economic impact and related implications of the cancellation of the rail service were ignored by both the government and CN.

Hayes said, however, he is aware of the potential economic harm to tourism in Algoma and Northern Ontario if the Sault to Hearst passenger service ends March 31.

“My hope is to ask the government to reverse their decision, even on a temporary basis, to look for solutions to keep this operation going,” Hayes said. “I think we need to look at alternative funding mechanisms, and we need to hear from the stakeholders. The challenge is the funding is gone March 14, so it doesn’t allow a lot of time.”

While Hayes defended his government’s action as an attempt to save tax dollars, he said it seemed obvious to him that CN was not interested in maintaining the passenger service at a loss despite huge profits derived from its core freight operations. 

Hayes said government officials were “well aware” of  his concerns.

He said his next step would be to talk to stakeholders, gather data, and then try to convince the government that to allow the rail service to die, would not “bode well” for the region. “We need to look at some alternative solutions or partnerships,” he said. “This is not a fait accompli yet.”

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Skierguy 1/28/2014 10:50:29 PM Report

Mr. Hayes, did you hear that? It's the sound of a camel's back breaking. But thank you for your continued ads.
christmas 1/28/2014 10:52:15 PM Report

Nice try Bryan, a little late and are you feeling the heat.
sparks7 1/28/2014 10:58:45 PM Report

All this over a lousy 2.2 million annual subsidy??I am not buying it.A "solution" will be found.Hayes will be seen by many as actually having done something for SSM and have a chance of reelection.With Harper trailing in the polls a seat up here is important to him.Paint me cynical if you want but this smells.
soowat 1/28/2014 11:01:06 PM Report

Hayes is quoted as saying, "he has not consulted with CN officials since November, criticized the company’s recent decision to end the passenger service March 31.

He goes on to state,“They have decided as a business decision that they are going to eliminate the service because it doesn’t make economic sense for them to continue it,”

This apologist for the private sector seems surprised that a private sector business would stop doing something that causes them to lose money. I guess his "surprise" is also his excuse for doing nothing to keep the subsidy until he gets exposed as useless.

" Hayes defended his government’s action as an attempt to save tax dollars" This saving is miniscule compared to the money spent for Harper to go on tour to Israel. What really irks me is that I voted for this guy last time. Tony Martin, my most sincere apology.


honda1984 1/28/2014 11:37:01 PM Report

if harper would have left a few people home on his last trip it would more than paid the 2.2 million
dadal 1/29/2014 12:33:04 AM Report

As I have said over and over and over, CN does NOT want passenger service on their line heading North. They were tight lipped because they KNEW the reaction. And as I have said over and over and over again, the Agawa Canyon Train is next. Won't matter how much the city paid for revamping the train, CN doesn't want it. They don't want to pay the train staff, Canyon staff or maintain the tracks. I find it interesting how the study carefully ignored any possible financial impact on the region and never addressed how the many many people with property that can only be accessed by rail can reach their properties. There are access roads up to Montreal River but if not logging roads, they are private CN roads that you have to have permission to use. Does anyone else see in the future CN refusing private citizens access then offering to buy the properties back at only pennies on the dollar?
dadal 1/29/2014 12:59:33 AM Report

And the Soo isn't the only places CN is destroying financially:

http://thechronicleherald.ca/business/1182639-cn-track-in-nb-for-sale

And here CN is refusing to have the mandatory personnel needed for hazardous cargo:

http://www.calgaryherald.com/news/Rail+balked+having+staff+hazardous+trains+round+clock/9375958/story.html

And read how CN responded to concerns on their train schedules in Edmonton:

http://www.edmontonjournal.com/news/Railways+change+schedules+avoid+snarling+Edmonton+traffic/9414149/story.html

sportsfan17 1/29/2014 2:22:59 AM Report

Has Hayes actually done ANYTHING of value during his term? What a useless twat. At least Tony wrote letters. Ineffective letters but he still wrote em!!
sparks7 1/29/2014 2:25:46 AM Report

Steelworker

When it hits home it is a son of a bitch isin't it,
no matter your political stripes.
ford2 1/29/2014 6:17:13 AM Report

The Conservative Government and CN knew of the funding cancellation since early November and CN has just announced discontinuation of passenger service.
It should have been obvious at the time of the decision to cut funding there would be an impact. Did Mr Hayes or anyone else in government do any fact finding about the value of passenger service to the area? What is the ridership, what is the impact on tourism, what about property owners, cottagers and tourist outfitters?
It is apparent Mr Hayes and the Conservative Government did not do their homework.
As for CN, how inconsiderate and arrogant to announce this cancellation with such little notice and no consultation.
Lets get some facts about passenger usage and regional economic impact very quickly Mr Hayes. Maybe it is a redundant service but we don't have the facts.
If this service is discontinued as planned without farther investigation I expect Mr Hayes will be discontinued in the next election.
ford2 1/29/2014 6:19:47 AM Report

The Conservative Government and CN knew of the funding cancellation since early November and CN has just announced discontinuation of passenger service.
It should have been obvious at the time of the decision to cut funding there would be an impact. Did Mr Hayes or anyone else in government do any fact finding about the value of passenger service to the area? What is the ridership, what is the impact on tourism, what about property owners, cottagers and tourist outfitters?
It is apparent Mr Hayes and the Conservative Government did not do their homework.
As for CN, how inconsiderate and arrogant to announce this cancellation with such little notice and no consultation.
Lets get some facts about passenger usage and regional economic impact very quickly Mr Hayes. Maybe it is a redundant service but we don't have the facts.
If this service is discontinued as planned without farther investigation I expect Mr Hayes will be discontinued in the next election.
Kanada 1/29/2014 6:27:11 AM Report

Governments spends more than this in a few hours subsidizing roads.
Sam The Dog 1/29/2014 7:06:27 AM Report

How much is the Polar Express subsidise out of Cochrane?
I dare the Feds to cut funding to it?
soosurfer 1/29/2014 7:33:05 AM Report

This is actually a political decision for PC's to try to get CN on its side. CN is a freight rail company. The passenger service was the adopted step-sister that they didn't know they were getting when they purchased the rails from Wisconsin Central. Once the agreements that CN has with the federal and provincial governments to pay off the loans that were given to purchase the upgraded Agawa Canyon Train the train will shut down. In fact, it might be to their advantage to pay off the debts then they are not accountable to any agreements then the tour train train will shut down.

The passenger train never made money. This is why it was subsidized. The lodge owners, cabin owners won't even have a chance to get anything off their properties. Everything is snowed in and shut down for the winter. If they had given notice back when they knew the subsidy was going to be cut at least the land owners wouldn't be landlocked. How are they going to get their boats, atv's camps out of there with no train?

My heart goes out to all those business owners who have lost their business over night because of decisions made in Ottawa. I wonder how we can give another country 66 million dollars? 2.2 million is from ACR's Passenger Service?
GrampaF 1/29/2014 8:24:04 AM Report

The city advertises a slogan that says Sault Ste Marie Naturally Gifted. We need that to say Sault Ste Marie Naturally Gifted but no longer accessable thanks to Bryan Hayes and David Orazietti (our MNR Minister that refuses to keep up road access to Algoma Headwaters Park area). Ridership has decreased drastically since CN introduced Zone fares and put a 20% increase on any ride starting from anywhere other than a main terminal. Searchmount was once busy with people waiting for the train to take to their cottages for a fair price. If you want to have a passenger train service that people will use you have to have fair ticket prices. I guess that come election time we need to keep Mr Hayes and Mr Orazietti in mind and cast our vote for someone who will support the Algoma District properly.
Javaman 1/29/2014 8:26:49 AM Report

Hayes acts surprised by the actions of CN. He and his party take no responsibility for this. This would not be happening if the COns had kept the subsidy. True Hayes...follow the party line at all cost and then when caught wiggle like a fish on a line. Are we better off for electing a member of the ruling party? I think not.
Aerobow 1/29/2014 8:45:40 AM Report

Not good! Talk about a sucker punch to those that rely on that train to access their properties/camps/business! Way to go Mr Hayes and CN! Give away 66 million to another country but won't look after your own.
Dixiepup 1/29/2014 8:59:04 AM Report

Even if they ran 2 or 3 times a week would be better than nothing, at least we could plan for that .
Ski-Dude 1/29/2014 9:03:47 AM Report

Fight fire with fire....threaten to tax the s@it out of CN for land usage, start new regulations that cost a lot of money, etc. (endangered turtles can cross the tracks and get hit.....require a 1 foot high fence along the length of the tracks!) 2.2M will seem like nothing quite quick!

It appears that the last couple months was vacation time for the Hayes office? Shows how critical this loss is to him. Time to save your asp and hit the pavement!
Javaman 1/29/2014 9:04:55 AM Report

The old Algoma Central Railway is looking good now.Hayes cannot run again...please. If he does he must be defeated.
Phaedrus 1/29/2014 9:13:29 AM Report

The argument that a subsidized transportation service is not sustainable or viable is nonsense. The TTC in Toronto gets more than $25 million a year from the City, in subsidies. Do you see anyone declaring that the TTC should cut services?

Many transportation services in Ontario are subsidized by government. So, the argument that any service losing money should die a natural death, is a lie. Those business owners up North, and the people who depend on rail service are taxpayers who pay money into the federal coffers for essential services. Having access to your business or property is an essential service.
RC-Kev1 1/29/2014 9:16:44 AM Report

C'mon everyone, CN really needs to save their pennies right now, give the poor guys a break... http://ca.reuters.com/article/businessNews/idCABREA0S11W20140129
RC-Kev1 1/29/2014 9:18:05 AM Report

Sorry wrong rail corp, my bad, but CN is making big profits too so my point and sarcasm still stand...
Mark E. 1/29/2014 9:23:11 AM Report

Someone write a letter to Bill Gates the richest man in the world. He is a 12% stakeholder in CN.
Kevin5069 1/29/2014 9:38:39 AM Report

Gotta love Hayes for blaming the company for a bone-headed decision to save 2.2 million by his own government. Harper and his merry band of fraudsters expense more than that every day.
Skierguy 1/29/2014 10:16:34 AM Report

Doesn't the fact that we are giving $150 million to the Middle-East make us feel warm confirming that the Tories are throwing our tax dollars to where we'll never anything good from, no economic benefit there. Why are we cutting payments to needed services in Canada for some not so cheap global PR?
dicks 1/29/2014 10:26:22 AM Report

to brian hayes. i hope you have another job to fall back on that has pension and benifets as i dont see you around long enough to collect from the tax payers GOOD BYE
learningaswego 1/29/2014 10:47:35 AM Report

wow, not only are people now "starving in the streets" with this decision, but Sault Ste. Marie is now no longer accessible if somebody wants to come here!

The evil the Great and Powerful Mr Harper can inflict upon us poor dweebs knows no bounds, eh?
Skierguy 1/29/2014 11:01:29 AM Report

It's not nice beening in the middle of a two way with a pair liars...
"(Reuters) - Canadian Pacific Railway Canada's second largest railway, reported a five-fold jump in fourth-quarter profit, as freight revenue rose 7 percent."
So whose telling the truth?
Justin Tetreault 1/29/2014 11:02:13 AM Report

Is anybody really shocked that Bryan Hayes is a trained party seal who wouldn't dare stand up to Harper to support his community?
Skierguy 1/29/2014 11:04:24 AM Report

Sorry, being not beening, before some jerk flames me.
learningaswego 1/29/2014 11:37:54 AM Report

Instead of all the over-the-top hyperbole and frothing at the mouth about people starving in the streets now; how about some facts, some hard data? How about:
- what is the annual subsidy?
- how many passenger rides were taken each year over the past 5 years?
- how much for each passenger ride, does it cost Canadian taxpayers?
- Hayes says that all the stops are already accessible by roads. If this is so, what is the rationale for ALSO subsidizing rail service, when it is already accessible?
learningaswego 1/29/2014 11:46:14 AM Report

If people want to fish for a few days or couple of weeks every once in a while up there, shouldn't we provide individualized taxi service? What about the rest of Canada? I'm sure this isn't the only rail line that goes in to hunting and fishing areas - shouldn't all Canadian taxpayers be providing transportation for ALL those across Canada that want to fish and hunt in remote areas? Why not? Why should all those other people have to buy trucks, and boats and such? How do people get to their camp after they get off the train, because if they have to hike or walk or boat, that is a grave injustice of the worst kind!
C'mon Mr Hayes, equal transportation for all!!!
tcowen 1/29/2014 2:59:04 PM Report

When a privately owned corporation pulls in 2.9 billion dollars in profit we should be furious that they would dare demand 2.2 million in subsidies..

The age of 'Corporate Welfare' is over.. gravy train or fail-train. It's their decision.

The Federal Government is not holding passengers like proverbial hostages..

2.2 million is probably a performance bonus for the executives at CN.

Some of the outrage here is totally.. maybe even purposely 'misdirected'.

This decision is unfortunate.. but it's not the Federal Government's fault that CN-Rail made too much profit to qualify for subsidies.

jake02 1/29/2014 10:58:10 PM Report

what one should really stop and look at is what this really does for every one concerned . yes it will hurt a lot of people and lodges. re-install the bear hunt and then cut the trains off. great thinking ? If this was part of Syria and Harper thought the he could get some votes in the next election ,2 million dollars would be on the next train in a heart beat. Wait until we see the cost of Harper's entorage going to syria etc last week and then add the gifts of hundreds of millions he gave away like a drunken sailor. and then to add insult to injury he cancels a subsidy of 2 million dollars. he will pay that out in unemployment costs . what are the conservatives thinking ? e the people in the north are not totaly stupid . I think it is time some one gave mr Hayes a message get off your a-- and start looking after your area like u were elected to do because if u dont some one else will .totally disgusting .where is all the northern mayors hibernating??? wake up its time to band together and get these trains back on track
jake02 1/29/2014 10:59:47 PM Report

what one should really stop and look at is what this really does for every one concerned . yes it will hurt a lot of people and lodges. re-install the bear hunt and then cut the trains off. great thinking ? If this was part of Syria and Harper thought the he could get some votes in the next election ,2 million dollars would be on the next train in a heart beat. Wait until we see the cost of Harper's entorage going to syria etc last week and then add the gifts of hundreds of millions he gave away like a drunken sailor. and then to add insult to injury he cancels a subsidy of 2 million dollars. he will pay that out in unemployment costs . what are the conservatives thinking ? e the people in the north are not totaly stupid . I think it is time some one gave mr Hayes a message get off your a-- and start looking after your area like u were elected to do because if u dont some one else will .totally disgusting .where is all the northern mayors hibernating??? wake up its time to band together and get these trains back on track
wanger 1/30/2014 9:00:33 PM Report

I find it absolutely amazing how Hayes and Harper can piss away our tax dollars over in the middle east and screw hard working Canadians out of their jobs and their recreational properties. CN you will wait till HELL freezes over to get my lease money come this May. People of Canada and Ontario remember this when you vote.
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