Sydney rail subsidy extended

The Nova Scotia government is spending $3.5 million to ensure rail service to Cape Breton continues for another year.

The province has extended a subsidy to RailAmerica, the company that runs the Cape Breton and Central Nova Scotia Railway.

The subsidy is retroactive to March 31 and expires next Sept. 30. An extra $500,000 is available if a transition period is needed.

Sean Burke, who runs Polysteel Atlantic Inc. and East Coast Rope, said news of the extension is a relief to users of the rail line.

"It's tremendously important to us because we import all of our raw material by rail, so if we lost the rail service we'd be forced to use trucks instead at an added cost," Burke told CBC News.

"We're probably looking at a $250,000 a year in additional costs."

Percy Paris, minister of economic and rural development, said a working group will look at the viability of the service beyond next year.

About 1,500 railcars were transported last year, but about 10,000 are needed every year for the company to break even, according to the province.

Ken Jardine, the chair of the Cape Breton Railway Victims Association, said landowners along the railway are not happy with the deal.

He said he is disappointed the government continues to subsidize a company that charges landowners to cross the tracks on their own property.

The agreement sets a maximum crossing fee of $300 a year.

"It's been our contention all along that there should be no crossing fees, because the railway crosses our land," Jardine said Thursday.

"It still represents an increase from the $25 per year that people were paying in most cases previous to RailAmerica taking over, so that's a huge increase."

The previous five-year subsidy was for $10 million. The railway company had been pushing for an extension.