Northlander's fate out on hold.

Officials defend economic role of transportation commission

Just days after KPMG's report on the Ontario Northland Transportation Commission was released, Northern Development. Minister Tim Hudak announced plans to sell off the freight and passenger service. Beginning this summer, the Ontario government will explore what options are available to divest itself of the freight operation and determine alternative methods of continuing service of the Northlander, Little Bear and Polar Bear passenger service.

Northeastern Ontario municipal politicians and labour leaders found themselves thrust in a familiar position in December, defending the economic role of the Ontario Northland Transportation Commission in the region. They found themselves covering some new ground, however, as a consultant's report recommended not only ending Northlander passenger train service, a perennial issue, but virtually all other ONTO services in the region as well.

KPMG Consulting of Toronto, in a report ordered by the Ontario government, also recommended selling Ontario Northland's freight operations, as well as the successful and profitable ONTel.

Brian Stevens, president of the Ontario Northland General Chairperson's Association (GCA), an umbrella group representing unionized workers, blasts the report as unsubstantiated and reflecting the consultant's ideology. ONTO employs about 1,100. across the region, including 600 in North Bay, making it one of the city's largest employers. The provincial Crown corporation is also among the largest in other communities such as Cocbrane and Englehart.

The recommendations if followed through "will have a devastating effect on communities and residents of Northeastern Ontario," Stevens says.

North Bay Mayor Jack Burrows says the consultants failed to recognize that government will always have to subsidize some services for the benefit of the economy and citizens.

The Northeastern Ontario Municipal Association and the Northeastern Mayors Action Group held meetings within a week of the report's release to discuss and plan strategies.

Business official were also concerned, but less critical. Former North Bay and District Chamber of Commerce president and city Councillor Al McDonald says he is concerned about the possible loss of jobs.

Peter Minogue, chairman of North Bay's Economic Development Commission, agrees the proposed changes were a cloud on the city's economic forecast.

ONTC spokeswoman Judy Cardoni said the report, although unanimously endorsed by the commission's board of directors, was not a product of Ontario Northland. It had been commissioned last March by Hudak.

A spokesman for Falconbridge Kidd Creek Metallurgical Site in Timmins, a major freight customer for Ontario Northland, says the company was most concerned about maintaining good relations with whomever operates the service.

Timmins business leaders also expressed concern over the possible impact a sale of ONTel might have on a call centre proposed for the community.

One company interested in ONTC selloff is Gateway Telephone of North Bay, the only competitive local access carrier in a secondary market in Canada. Gateway spokesperson, Tim Kuntz, says the company didn't wait long after hearing the news to make inquiries.

"We've made a call to them (KMPG) to let them know we're interested," Kuntz says.

The response was tentative and they indicated they had not fully explored the market for ONTel.

"We're definitely interested in the North if the right opportunity presented itself and we're prepared to act on it," Kuntz says, noting Gateway's interest.

ONTel provides services to a large part of Northeastern Ontario including Timmins, Kirkland Lake and the Tri-towns.

The number of passengers carried by the train has been in steady decline for 10 years. The average cost of transporting a Northlander passenger is $411, the KPMG report said, while the average fare was $55. The situation came to a head in late 1999 with an internal study by the commission urging increased provincial subsidies or replacing the train with express bus service.

Among the recommendations in the report by KPMG Consulting of Toronto, released in early December and unanimously endorsed by the ONTC board of directors were:

* Replacing the Northlander passenger train, which runs from Cochrane to Toronto and back six days a week with an express bus service;

* Selling off the freight division of ONR, but ensuring the Little Bear and Polar Bear Express service from Cochrane to Moosonee are maintained;

* Selling ONTel-com and restructuring corporate services to reflect the future needs of the ONTC;

* Selling to local government passenger, vehicle and freight service between Moosonee and Moose Factory;

* Selling the Cochrane Station Inn; and establishing a new public corporation for marine services to Pelee and Manitoulin Islands.