Prairie Alliance for the Future is making one more pitch to the Saskatchewan government for seed money for its proposed grain collection and transportation network.
The grassroots organization was to meet with agriculture minister Clay Serby and highways and transportation minister Mark Wartman Dec. 12. Premier Lorne Calvert has also been invited.
But a senior government official made it clear in an interview last week that while the government hasn’t rejected the proposal, PAFF might have a tough time prying money out of provincial coffers.
“It would require a fundamental change in provincial policy to take that next step to subsidizing railway operations, if that’s what’s being asked for,” said Harvey Brooks, deputy minister of transportation. “The government really has to do a due diligence as to what obligations it’s taking on.”
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PAFF has asked government for $2 million a year for the next five years to defray start-up costs. It says the government will still come out ahead financially, claiming its project will reduce provincial road maintenance costs by $8.3 million a year.
The province has a program in place to provide loans to short-line rail companies. It made an equity investment in West Central Road and Rail Ltd. through the Saskatchewan Grain Car Corp. It has also provided technical assistance and advice to short-line companies and others wanting to set up local grain collection facilities.
“It’s a big leap to actually invest money … to cover an operational shortfall, in some sense, of a railway,” said Brooks.
The government is also concerned that giving money to PAFF would open the floodgates and prompt every short-line rail or grain collection facility in the province to demand equal treatment.
PAFF chair Kyle Korneychuk rejected the idea that financial assistance would represent a fundamental shift in policy for the province, citing the precedents of West Central and provincial investment in the potato industry.
As for fears that it would bring more requests, he said the alliance project isn’t analogous to a privately owned short line. PAFF would be a non-profit locally owned and controlled co-operative designed to generate savings for grain farmers and the provincial government.
“It’s time for the province to think outside the box,” he said. “They asked for new initiatives and we’ve come up with one.”
Brooks said the province has questions about the estimated $8.3 million in annual savings, but Korneychuk said that number is based on a formula devised by the province. While it’s true the formula didn’t include the specific lines involved in the PAFF project, the province did use the formula in its submissions to the Estey transportation review and the Canadian Transportation Agency.
Brooks said even if that number is correct, it doesn’t mean the highways department would have an extra $8.3 million sitting around, since the demand for road repair money far outstrips the supply.
Brooks said the government also has questions about PAFF’s business plan. For example, it wants more detail on the organization’s structure, what type of business the alliance is after, who owns the invested capital and exactly what obligations the government would have.
Korneychuk said the government has had the detailed business plan since June 4 and the alliance has on three separate occasions provided additional information.
PAFF has signed an agreement with Canadian National Railway to take over operations on 1,600 kilometres of CN branch lines in Saskatchewan and Alberta beginning in January. The alliance, which includes unionized rail workers, will lease the lines from the railway and provide equipment and crews to haul grain from collection points set up by local groups.
