Selling off ONTC could cost up to $820 million and possibly more: auditor

TORONTO - Ontario's auditor general says the cost of selling off the Ontario Northland Transportation Commission could soar as high as $820 million, far more than what the governing Liberals had claimed.

Bonnie Lysyk says that figure could go even higher because not all the costs are known, such as the environmental cleanup of ONTC properties and consultations with First Nations.

In a special report, she says the Liberals didn't "clearly or fairly communicate" the full impact of selling the northern rail and bus transportation service.

When they announced the divestment in 2012 as a money-saving measure, the Liberals said it would save taxpayers $265.9 million over three years.

But Lysyk says they didn't mention "significant" revenues and expenses or clearly identify $325 million in the budget they'd earmarked to cover some divestment costs.

She says the government now says it will take 10 years or longer to reduce or recoup the costs.

ONTC was a money-losing operation, as its subsidies and revenues from operations weren't enough to cover improvements to its aging infrastructure over the last 20 years, Lysyk said Tuesday in her report.

The government knew just a few months after announcing it was selling off ONTC that it would cost more than double what they'd socked away in the budget to cover it, the report said.

By March 2013, it knew that the figure had climbed to $820 million, it said. But it's hard to estimate what the actual costs or savings will be until serious negotiations with potential buyers are underway.

Lysyk said selling it off "continues to present significant positive financial impacts to the province when compared with a status-quo situation of the ONTC continuing to operate as it has in the past."

However, "the ministry is currently controlling the ONTC's financial operations and, in the ONTC's view, has limited the agency's ability to consider new business opportunities," it noted.

The Liberals shut down the Northlander passenger train service last year, saying its annual subsidy had grown from $27 million to $100 million in 10 years. But ONTC still operates passenger bus lines, rail freight services and the Ontera telecommunications network.

The government said it has recently changed its position on ONTC to talk about 'transformation' and not just 'divestment.'

The ONTC has more than 940 employees and serves 53 communities in northern Ontario.