(The Canadian Press distributed the following article by Dirk Meissner on November 25.)
VICTORIA, B.C. — Premier Gordon Campbell said a $1-billion railway deal Tuesday will fire up northern B.C.’s economic engine, but the Opposition New Democrats called it a sell-out of a valuable public asset.
Canadian National will pay the government $1 billion to hold a lease of up to 90 years on Crown-owned B.C. Rail, which runs from North Vancouver to northern B.C., Campbell said. Under the deal, 430 jobs will be lost – about a third of the current workforce – but another 575 jobs will be created when other elements of the deal are factored in, according to the news releases issued with the deal.
The future of B.C. Rail has been the focus of intense public debate in recent months as communities, unions and politicians debated the best route for the railway.
B.C. Rail is $500 million in debt, but provides a vital transportation and economic lifeline for many northern communities.
Critics predicted the privatization or sale of B.C. Rail could result in service cuts and jobs lost.
CN president Hunter Harrison said of the 430 job cut over the next three years, up to 250 of those would be lost through early retirement and the other 180 jobs would be lost through attrition or severance.
“Our objectives here are to grow the franchise,” he said. “We think we know how to railroad. We’ve been in the expansion mode.”
Three private companies – Canadian Pacific, OmniTRAX and CN, a former federal Crown corporation – bid for the right to operate and maintain publicly-owned B.C. Rail, the third largest railway in Canada.
The deal has been controversial because the B.C. Liberals promised not to sell the railway during the 2001 election campaign. The government maintains it is not selling it – the rail bed, tracks and rights-of-way will remain in public hands.
“It’s an investment that responds to the call of the North,” Campbell said.
Prince George, the largest city in northern B.C., will become a continental gateway, with improvements to its airport and railway infrastructure, Campbell said.
Prince Rupert, located on B.C.’s northwest coast, will benefit from a port expansion and improved railway access from Prince George, he said.
Up to 500 jobs are expected to be created in Prince Rupert where the province will provide $17.2 million to support an expansion of the local port, including development of container terminal facilities.
CN will invest up to $15 million in new rail infrastructure to help support the port expansion.
Improvements to the Prince George airport are expected to create another 75 jobs.
Harrison said CN will locate a division office in Prince George and invest $1 million into the city’s B.C. Rail shop complex.
The announcement received mixed reaction in Prince George, where the municipal council – except the mayor – supported a two-year moratorium on any privatization or lease deal for the railway.
“People are going to need more than words to reassure them that this will be economically advantageous. They need to see actions,” said Paul Bowles, an economist at the University of Northern B.C. in Prince George.
Carole James, the newly elected NDP leader, called the deal a sell-out of a profitable public asset.
“The government tried to sugar-coat this one,” she said. “But it’s a lousy deal for British Columbia.”
B.C. Rail is currently operating at a profit and the government could have continued to reap the rewards rather than sell to CN, she said.
Campbell said the government will use the $1 billion from CN to pay off B.C. Rail’s $500 million debt, invest in Prince George and Prince Rupert and fund other government endeavors.
The government introduced legislation allowing it to proceed with the CN deal, which is expected to close within the first three months of the new year.
Labour leaders condemned the deal, while business leaders applauded it.
Jim Sinclair, B.C. Federation of Labour president, in a bitter speech at a Vancouver protest, called Campbell a liar.
“I thought we elected a government. Instead we elected a real estate company. Instead we elected people who have no vision for this province except to sell it.”
Sinclair warned CN British Columbians won’t stand for the deal and will force Campbell to back down like he did on the sale of the Coquihalla toll Highway.
“Liar!” the crowd screamed repeatedly.
Lance Yearley, vice chairman of the council of trade unions for B.C. Rail, said workers can’t trust Campbell now when he says only a few hundred jobs will be lost.
He said he is just as suspicious of promises that freight shippers will have lower rates, even though CN will have a monopoly, and that northern communities will be well-served by CN Rail.
“We believe the sale of B.C. Rail will cost most of our members their jobs,” said Yearley. “It will cost B.C. hundreds of millions of dollars.”
But a spokesman for one of the largest forest companies in B.C. supported the deal.
“We don’t think B.C. Rail can be competitive for us long-term,” said David Emerson, Canfor’s chief executive officer. “So we’re quite comfortable to work with CN going forward and build a truly integrated supply chain partnership.”
Prince Rupert Mayor Herb Pond said people will finally have a chance to analyze the details of the deal after months of speculation.
“I think the bulk of northern British Columbians are going to find it’s a very positive move,” he said. “That it is a move that’s going to put families back to work sooner rather than later.”
Campbell said the government will seek a partner to provide passenger service on the railway.
Other highlights under the deal include:
– A rate reduction of seven per cent for interline shippers.
– Thirty per cent faster transit times from Prince George to Vancouver.
– Introduction of a Chicago Express in the first quarter of 2004 that will transport freight from Prince George to Chicago two days faster.
– CN will pay a forecast $8.3 million in municipal taxes, based on current assessment values – over four and a half times the $1.8 million paid by B.C. Rail in lieu of taxes.
– A $15-million B.C. Rail First Nations Benefits Trust.