Groups are eagerly lining up to spend the infrastructure cash promised by Justin Trudeau and the Liberals.
One of the first out of the gate is Via Rail Canada Inc., the government-owned passenger rail provider. The company said last week that it plans to ask the incoming government to back its $4-billion plan to build a new dedicated track in the Montreal-Ottawa-Toronto corridor.
Via Rail says the project would pay for itself by attracting up to five million new passengers a year and improving the speed of trains, which must now share tracks with freight traffic. It argues a dedicated track could cut travel time between Montreal and Toronto to three and a half hours from more than five now, and improve its poor on-time record.
Could a pitch for a much pricier high-speed rail project be far behind? Via Rail has shown interest in the past, but has since backed off the idea, saying it would be too costly and take too long.
If the Liberal government is serious about kick-starting sluggish economic growth with new infrastructure spending, high-speed rail in Canada’s busiest travel corridor offers some tantalizing benefits.
Ottawa will also be facing renewed pressure from Ontario. On Friday, the Ontario government named former federal cabinet minister David Collenette as a special adviser on high-speed rail, with a mandate to make a business case for building a rail link between Toronto, Kitchener-Waterloo, London and Windsor.
High-speed rail would address a number of chronic challenges facing the country, including the weak economy, a poor record on innovation and rising greenhouse gas emissions. As a bonus, investing billions in rail could aid ailing transportation giant Bombardier Inc., which has cutting-edge high-speed rail technology, but a struggling aircraft business.
Last week, the Quebec government announced that it’s investing $1-billion (U.S.) to help Montreal-based Bombardier get its C Series commercial jet into production. Quebec Economy Minister Jacques Daoust told Bloomberg on Friday he wants Ottawa to match its investment in Bombardier.
High-speed rail, like new aircraft models, isn’t for the faint of heart, or light of wallet.
A project in the Quebec City-to-Windsor, Ont., corridor would cost roughly $19-billion to $21-billion to build, and as much as $520-million a year to operate, according to a joint federal, Ontario and Quebec government study done in 2011.
Ottawa need not limit its vision to Quebec and Ontario. In a nod to nation-building, the federal government could also endorse high-speed rail in Alberta.
Last week, the Alberta government said it is exploring a possible high-speed rail link between Calgary and Edmonton. Infrastructure Minister Brian Mason said “he’s beginning to ask” about a high-speed train as it ponders solutions to traffic congestion on the QE II Highway, which links the two cities.
Not all of the money would need to come out of federal coffers. The typical model for large infrastructure projects is to do a public-private partnership, where governments share the cost and the risks with investors, such as pension funds. These kinds of projects could prove attractive to major pension funds, such as the Canada Pension Plan Investment Board, which invests the Canada Pension Plan.
The Ontario, Quebec and Alberta governments might also be willing to commit funds.
Make no mistake: This is risky business for governments. Quebec and Ontario are already heavily indebted and continue to run budget deficits. The incoming Liberal government has said it’s willing to run deficits for up to three years to help fund an extra $5-billion a year in infrastructure spending.
Rail systems in many countries rely on hefty government subsidies.
Via Rail, for example, insists that faster service is the key to profitability. But the company has consistently been unable to make money running a much more modest passenger rail service. Since 2010, the federal government has covered losses at the company ranging from $400-million to $536-million a year.
High-speed rail networks would likely require continuing subsidies, particularly in the early years. A 2014 feasibility study of a Calgary-Edmonton line suggested it would cost $2.6-billion to $7-billion to build and $130-million a year to operate.
But there are substantial multiplier benefits to infrastructure spending. The federal Finance Department estimates that every dollar spent on infrastructure boosts economic output by $1.60. A $20-billion investment in high-speed rail would generate $32-billion in additional gross domestic product and create up to 500,000 person-years of employment, according to a 2013 study by Unifor, a labour union that represents Via workers.
Getting Canadians out of their cars and onto trains would also help the country curb carbon emissions – another key Liberal promise.
At the very least, high-speed rail should be part of the infrastructure conversation.Report Typo/Error