Advocates of privatization often say that the private sector is more efficient than government and can therefore provide better service under the same conditions for less money because of the motivation of the profit factor.
And while this may sometimes be true, the tale of the Hudson Bay Railway and the Port of Churchill over the last quarter century shows that, in at least some cases, relying on private companies to properly run and maintain facilities and services that benefit the public may indeed be more efficient, though that efficiency may come at the cost of actually ensuring that people who rely on a given service derive any benefit at all from it.
When the Hudson Bay Railway and Port of Churchill were sold off to American company OmniTrax in the late 1990s for literally a handful of dollars, if you’ve got small hands, the new owners could have perhaps used some of the money they saved by paying very little for the railway, port and associated assets to invest in upgrades. Instead, they pinched pennies and tried to scrimp and save on necessary maintenance in an effort to squeeze as much profit as possible out of the port and railway, the latter of which is the only land transportation link for several Northern Manitoba communities, including Churchill, which can’t even count on having a winter road for a month or two every winter like some other places in the north without year-round road access. This strategy worked for a while, until unusually severe flooding eroded parts of the rail bed under the track between Churchill and Gillam and cut off the Northern Manitoba port town from the rest of the province, except by air, for more than a year, beginning in the spring of 2017.
For OmniTrax, the only consequence of its neglectful attitude toward the rail line was an inability to make any money off it while it was inoperable, during which time the company admitted that it didn’t have enough money to make the repairs.
For people in Churchill and other communities that rely on the Hudson Bay Railway to connect them to the rest of the province, the consequences were far harsher: worries about running out of fuel, everything costing more because it had to be flown in, not being able to leave for extended periods of time because they couldn’t afford airfare. Few aspects of their life would have been unaffected. Eventually, the federal government had to provide money for a consortium of First Nations and northern communities that rely on the railway to buy it and the port. This week, the provincial and federal governments announced that they would be spending over $147 million in the span of two years to support railway operations, maintenance and upgrades.
To some observers, spending tax dollars on something that a private-sector company couldn’t operate profitably may seem foolish, an economic black hole of sorts. But, of course, governments do that all the time. Are social services profitable? Are highways? Are parks?
Deciding to spend money on the Hudson Bay Railway is, effectively, an admission that it was a mistake to sell it and the port off in the first place and to put the fate of entire communities and their citizens in the hands of owners who don’t live in the region and whose only stake in it was the money they could make, when they could make money. That decision basically caused the crisis that occurred when the railway stopped operations in 2017. It might have actually been cheaper overall to have maintained the Hudson Bay Railway and Port of Churchill as essentially government-owned and operated assets rather than engaging in an experiment with private ownership that went hopelessly and literally off the rails.