Consideration of Schedule Reductions – Trent-Severn Waterway
Draft Report on Consultations – June, July, August 2012
The TSW is a vital part of the communities along its 386 km span. While there is a diversity of opinion in the communities of our respective ridings, there is a clear consensus that the proposal to reduce the hours/days of operation on the TSW, to save $1.0 million in annual operating budget, is ill-advised because it would diminish the rural economy in our region by an order of magnitude well beyond any savings realized.
Of the roughly 5% reduction, $29.2 million per year, being reduced from Parks Canada’s global operating budget, $3.0 million is being taken from the TSW’s $16.0 annual operating budget – about a 17% reduction. Of the $3.0 million in savings, TSW is looking to the shorter operating schedule and season for about 1/3 of that savings, or $1.0 million per year.
Of the $16.0 million annual operating budget, approximately $5.0 million per year is needed for the operation of the navigational assets – operating bridges, locks and maintaining facilities. The remaining $11.0 million is for watershed management and operations.
The proposed cuts to the operating schedule would occur during off-peak usage – mid-weeks in the spring and fall; all days after mid-September; two-hours from each day in the summer. This represents a reduction of 40% of the existing hours of operation. It is noted that 90% of the lockages on the system occur on days the system would remain open (presuming the schedule cuts were implemented).
The TSW has experienced a 30% drop in lockages in the last decade, while the cost of staffing has increased by 45% over that same period.
Approximately $850,000 is raised in lock fee revenue each season – only 17% of the cost of providing navigation services. Put another way – navigation is currently subsidized by 83%. Another $750,000 is raised in land rents and realty fees; $1.2 million from hydro-electric power generation.
The responsibility for operating the waterway rests entirely with the Government of Canada.
What We Heard:
Contiguous operations between mid-May and Thanksgiving Weekend, provide businesses, cruise operators, shoreline works contractors, marinas and the multitude of related businesses with essential access to the waterway. If that schedule were disrupted as proposed, a cascading of economic activity would be lost.
We did not hear any objections to the federal government's overarching plan to reduce spending in order to rebalance the budget. Their concerns are broadly that the TSW is being asked to do more than its share.
There was a strong conviction to the belief that negative economic impacts from a shorter schedule will ultimately cost the government much more than the $1.0 million it is seeking to save; lower lockage fees, less employment, lower tax revenues from marine fuel and the businesses that rely on the TSW for their livelihood.
The reductions in schedule, and the overall cuts to TSW operations, would put additional stress on the system resulting in even poorer water management and more boat congestion/traffic on during peak periods.
New/Additional Sources of Revenue:
We sought suggestions on new opportunities to grow revenues for the TSW. The most common suggestion is to expand the amenities and services offered at the locks and locations. It was believed that providing water, ice, and food services at appropriate lock stations would bring in new revenue and improve the visitor experience. Similarly, offering services such as waste removal, electricity and showers for boaters going through the locks – could add revenue and attract higher volumes.
Note: Others pointed out that we must be careful when it comes to offering goods such as water and ice at the lock stations, as we do not want to put the TSW in competition with smaller businesses that rely on boaters for revenue. However, it was believed an appropriate balance could be found.
We heard suggestions to assess users of the system – powerboats, commercial operators, and land owners who derive a direct benefit from the system. Of these suggestions, it became clear early into the consultation period that there is no appetite for any additional fee that would be imposed merely on the basis of owning a property that fronts on the system.
Conversely, the suggestion of mirroring the regime used in New York State, whereby revenues from annual power boating permits are used to fund the operations of the waterway, received tentative support. This would be similar to the system already in place for snowmobiling in Ontario (though at a considerably higher fee than would be feasible on the waterway). Questions were raised as to how such a permit system would be enforced or administered. Would the fees collected be sufficient to cover the cost of administering an annual permit system and have sufficient net proceeds towards operating the waterway?
Additional submissions proposed:
- Leasing surplus land along the system to businesses
- Leasing commercial space at the locks to vendors (e.g. food services vendors)
- Increase the number of renewable energy (hydro-electric generation) projects – and consider a water management regime to optimize these revenues.
- Sell advertising and promotion at lock stations
- Increase lockage fees (which have not increased in the last 4 years)
- Increase lockage fees for longer boats as they reduce the capacity of each lockage
- Dedicate a portion of the federal excise tax on fuel sold at marinas to the waterways, similar to the gas tax transfer for municipalities.
- Ask the province and municipalities contribute to the operation of the waterway, as they derive money from tourism and waterfront property taxes
- Some municipalities, such as Kawartha Lakes, have already indicated a willingness to pick up some of the costs related to marketing the TSW, but they want to see an overarching plan and have their role/responsibilities clearly laid out.
- Institute a lottery and sell tickets at businesses along the TSW (sell 500,000 tickets for $5 each with a chance to win $1,000,000
Opportunities for Cost Savings:
A number of opportunities for the TSW to realize savings were identified. Some were straightforward – such as the common comment that the TSW should place less emphasis on the heritage/aesthetic aspect of the infrastructure when it is replaced. Many indicated that the focus for infrastructure should be on cost and effectiveness, rather than on constructing replacements that adhere to the original historical integrity of the structure. It was believed the TSW might rather focus on several key historical features along the system for that purpose – and maintain the rest for its efficiency, reasonable cost, functionality and source of economic activity i.e. navigable waterway.
Moving the responsibility for issuing, inspecting and enforcing permits for shoreline works to waterway municipalities received unqualified support from residents. This could save considerable operating cost the TSW. Municipal officials already administer other provincial statues (Building and Fire code) and they customarily are in contact with the subject landowners for other building permit scrutiny. It was felt this would be more efficient and better service that what can be offered by the central office of the TSW.
Finally, again borrowing from the example of New York State, it was suggested that Parks Canada/TSW explore opportunities for automating the locks where appropriate, which would reduce staffing costs. Of course, this would require significant up-front investment in order that savings be realized in the medium- to long-term.
What Is Needed to Reinvigorate the TSW:
A common suggestion from members of the public, as well as TSW staff and municipal representatives, is that the TSW needs to do more to promote itself. Some noted that the practice of sending Parks Canada/TSW staff to boat shows around the province and in the U.S. to promote the TSW as a tourist destination has stopped in recent years, and this may go some way towards explaining why traffic on the system is down.
While the staff at Parks Canada is widely recognized as professional and a tremendous asset to the TSW, there is concern, even among TSW staff, that Parks Canada doesn't fully comprehend how different the TSW is from other parks, and as a result, does not employ measures to promote it as the world-class tourism destination that it is. In this respect, a number of submissions called for the TSW to be put back under the responsibility of Transport Canada, or even Heritage Canada, given the rich history of the waterway dating back to the early 1800’s.
We began this process by posing two key questions:
- Is reducing the hours of operation of the navigation system of the TSW along the lines proposed by Parks Canada a viable option?
- If not, where can Parks Canada/TSW realize cost savings, or find new sources of revenue, to maintain the 2012 operating season in future years?
In our consultations, we heard loud and clear that a reduction in the hours of operation would have a devastating impact on the people, organizations, businesses and communities that rely on the TSW for their livelihood.
The integration of this waterway into our local rural economy is significant. Shortening the schedule would diminish economic activity, resulting in reduced employment and tax revenues, and costing the federal government more than the $1.0 million per year it would save by a shortened schedule. Indeed, many submissions argued that, if anything, the hours and services should be increased.
It is unfortunate that we are at this juncture; given the additional $83.0 million the federal government has invested in the TSW since 2007. We recognize the high costs and complexities that come with operating and maintaining this system, but it truly is the crown jewel of the federal government in our region, and is critically important to the over one million people who reside in communities along it.
It is clear that the economic vitality of the TSW is the only means of offsetting its costs. Withdrawing service would serve only to increase the TSW’s fiscal weight on the government, not decrease it.
Given its high cost of operations and asset replacement, a long-term view toward increasing economic, revenue generating activities that can be supported by market demand for the kind of services and experiences the TSW offers, is the preferred course.
The challenge, in the short-term, is to find cost savings, and/or immediate new sources of revenue to offset at least $1.0 million per year in federal spending on the TSW. We are committed to our government’s overall deficit reduction targets.
While the opportunities for savings that were identified in our consultations are promising, none offer sufficient savings in the short-term to make up this difference.
- We nevertheless believe downplaying the emphasis on the historical integrity of the structures on the TSW is an idea that Parks Canada should consider, as it would allow greater reach with limited capital dollars.
- We also believe there are opportunities to save administration costs by shifting shoreline works approvals, inspections and enforcement to the municipalities. A transfer of funds to the municipalities may be needed initially – but to ratepayers, such a move would be welcomed. Again, this measure would provide no short-term savings.
Consequently, we must conclude that the preferred way to offset the cost of maintaining a full schedule is to introduce new sources of revenue. In our consultations, we heard estimates the annual revenue generated just by boaters and visitors to the TSW to lie between $300 and $400 million. The report of the Panel on the Future of the Trent-Severn Waterway, in 2007, noted that, “Seasonal and permanent waterfront residents generate more than $1.0 billion in economic activity and $240 million in property taxes each year. The waterway alone supports a $300 million [annual] recreational fishery, Ontario’s largest”.
With the size and scope of the economy created by the waterway’s operation, new, market-based, revenue options should be tapped. Since businesses and users are profiting from the waterway, they would attach a value to that use that could be collected and used to sustain a more vibrant waterway over the medium to long term.
- Parks Canada commits to maintain at least the same hours and days of operation as the Trent-Severn Waterway offers currently.
- Parks Canada embarks on a three-year transition plan to move the waterway to a sustainable business model that builds on the recommendations in the “It’s All About the Water” report of 2007; to realize the full economic, heritage, recreational and renewable power potential of the waterway; and that attracts revenue from the market the waterway serves.