How Highway 407 makes $2B a year
Kevin O'Leary is building a Utah data centre, every brand needs a smoothie.
Good evening everyone.
Over the weekend, food stylist, chef, and TV personality Michelle Rabin hosted her annual charity bake sale in the west end. I’ve never seen so much baking starpower under one roof: Julia Gallay from Gallz Provisions and Matthew Faust from Brodflour were among the line up of 20 bakers from across the city.
I picked up rugelach from Bonnie Stern, crispy balaclavas from the great Dylan Muñoz, and savoury picks from Noctua Bakery. “There’s a lot of waste in film and TV, and though lots of sets bring leftovers to food banks and soup kitchens, this is a way I can give back to the community every year,” Michelle told me.
I highly recommend marking it in your calendar for next year.
Milk Bag covers the business stories you won’t find on Apple News. If you have a story tip or want to work together, email me.
Every day, the 407 sees more than 387,000 trips across its 108 kilometre network of roads connecting Burlington in the west and Pickering in the east.
Last year, those trips brought in more than $2 billion in revenue, an 18% jump from 2024. And as of January, price hikes have brought the cost of driving across certain stretches of the 407 to more than a dollar per kilometre during peak times.
That makes the highway even more profitable, but it also means people in Ontario now paying some of the highest tolls bills in the world:
Last week, one woman who drives between Georgetown and Richmond Hill told CTV her February toll bill had topped $1,760.
Another driver who commutes into the city from Uxbridge told me he gave up toll roads after spending more than $8,000 last year.
Comparably priced toll roads in the U.S. tend to cover much shorter distances, while roads in France or Spain will set you back about $0.15 a kilometre.
Why it’s happening
Just two years after the highway’s completion in 1999, the Ontario government, in need of cash, leased it to a group of investors for 99 years that today include CPP Investments, PSP Investments, and Spanish infrastructure company Ferrovial.
It was a technological feat, and a money printer: no toll booths or attendants, just sensors at entry and exit points calculating dynamic pricing in real time.
At the time, it was the largest privatization of a public asset in Canadian history. The highway sold for $3.1 billion, with little oversight worked into the agreement around toll increases. A 2019 share sale valued the 407 at more than $30 billion.
The big picture
Taking toll roads have always been a luxury for those with deep pockets or expense accounts, but as congestion worsens and prices rise to more than $200 for some round trips, I think we’re going to see more people asking questions.
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