There was agreement among all businesses that appeared before or made submissions to the committee that if the Highway Investment Strategy is implemented, it will result in hardship and some closures for northern businesses.

All businesses will either have to absorb the cost or pass it on to the customer. Many businesses in the Northwest Territories, especially those in the manufacturing and export sectors, will no longer be viable. The following submission reflects the general sentiment that came before the committee:

The high cost of transportation in the North is perhaps the greatest single impediment to developing the northern economy and increasing business activity and employment opportunities. And that inputs for the production of northern goods and services are expensive to import and finished products are expensive to send to markets. We find it disappointing that the government is seeking to raise the cost of transportation even further.

However, we will not be the only industry to pay for this tax and substantial costs will be passed on to the public as well as to government. (Diavik Diamond Mines, Inc. letter and presentation to the committee, October 17, 2001, page 2)

Regarding the mining exploration activity or industry, Diavik reported that:

At the 2001 Mines Ministers Conference, the Prospectors and Developers Association of Canada has clearly indicated the sad state of the exploration industry in Canada. It has been steadily shrinking for the last four years. Additional costs will further raise the barrier to exploration and discourage junior exploration companies from investing in the Northwest Territories.

These are difficult times. There is a global economic slowdown and the northern economy is not immune from that effect. How long and difficult it will be is still not clear. We do not believe that creating a new tax is wise, nor is it necessary at this time. (Ibid., page 6)

In addition, the manufacturing and export sector will be particularly impacted as these industries have to compete in the national and global marketplace. An example is Fibreglass North. Not only do they have to pay a trip permit fee on raw materials imported to their manufacturing facility, but will be double charged when they export their finished product to market. Fibreglass North can pass these costs on to the customer, but it will most likely lose business to more economical manufacturers in lower cost jurisdictions like Alberta. A $200 tank would cost $1,000 by the time it gets to the Alberta border because of the backhaul charge, which would be $800.

The committee noted that unless businesses can find measures to avoid this tax, such as the use of other modes of transportation that are limited or prohibitively expensive, they will either have to close or relocate south. The proposed Highway Investment Strategy will also discourage people from starting or expanding their own businesses as well as businesses from moving to the Northwest Territories.

A proposed commercial trip permit fee is also difficult and expensive to administer due to the complexity. Unless a toll is based on weight or volume for liquids and bulky items, it will be unfair. RTL, Robinson Enterprises Limited, expressed some of its concerns in a letter to the committee that:

The majority of shipping customers in the Northwest Territories access LTL (less than load) service. The freight shipments of many customers are combined to make up a full load. Therefore, the permit fee associated with this LTL load must be fairly dispersed between the shipping customers.

In a perfect world perhaps, all customers ship to one destination and even more perfectly, the configuration of trailers used for the trip will always weigh in at the maximum legal axle rate. In the real world, however, there are space consuming, but light weight goods to be shipped (baked goods, potato chips, insulation, et cetera) and very likely there will be line drops (destinations along the way where some cargo is to be delivered or perhaps one or two trailers be dropped off).

Freight transportation is akin to assembling a jigsaw puzzle very quickly. Perishable and time sensitive commodities will not wait for a perfect load configuration and often space is maximized before weight is. The transportation industry is not able to absorb shortfalls in toll collections for less than maximum weight loads. The result will be hidden tolls built into rates.

Shippers or consumers must be able to expect consistent and fair applications of their share of the permit fees. Fifty pounds of potatoes hauled to Hay River should trigger the same toll, whether moved in super B vans or a body truck, regardless of which carrier has been hired to move the goods. In analyzing the proposed fee structure, we note that the per pound rate for maximum weight loads varies with the configuration. (RTL, Robinson Enterprises Limited, July 13, 2001, letter to the Standing Committee on Accountability and Oversight and referred to the GED, pages 2 to 3)