When Quebec’s giant pension-fund manager first proposed its out-of-the-box plan to build, own and operate a light-rail transit system in the Greater Montreal Area, it aimed to draw the attention of governments everywhere looking for a new model to finance infrastructure.
In the two years since it unveiled its proposed Réseau express métropolitain (REM), however, all Caisse de dépôt et placement du Québec seems to be creating is a model for how not to win friends and influence people with its steamroller tactics and the lack of transparency surrounding the REM.
The Caisse will need to change its approach if it hopes to neutralize mounting opposition to the $6.3-billion project. It won’t be easy, as the pension-fund manager navigates the dicey shoals of election-year Quebec politics all while trying to stay above the political fray.
The initial enthusiasm generated by the 2016 announcement of the REM has given way to increasing recrimination on the part of regional mayors and provincial politicians who fear taxpayers will pay heavily for the current Liberal government’s move to turn over responsibility for Quebec’s biggest public-transit project in 50 years to a profit-seeking entity.
To ensure it earns a competitive return on the REM, the Caisse has reportedly secured guarantees that it can raise as needed the fees the REM charges local governments to provide transit services. The pension-fund manager has also obtained non-compete clauses that would give the REM a renewable 99-year monopoly in certain geographical areas, requiring municipal public-transit agencies to cancel some existing services and refrain from launching new ones.
The terms of the deal worked out between the Caisse and the Autorité régionale de transport métropolitain (ARTM), the agency charged with co-ordinating transit projects in the Greater Montreal Area, were contained in a document obtained last week by the Canadian Press.
Montreal Mayor Valérie Plante, whose Projet Montréal party was cool to the REM while in opposition, responded by calling for more transparency from the Caisse and saying the implications of the agreement between the Caisse and the ARTM were not made clear when it was presented to regional mayors.
Her comments came only a few days after the Parti Québécois said it would scrap the REM if it wins the October provincial election. The PQ would opt instead for a traditionally funded $7.4-billion proposal that would extend existing commuter rail lines, introduce new tramways and add more dedicated bus lanes under a plan it calls The Great Unclogging. If the idea gains traction with regional mayors, it could derail the REM whether or not the PQ wins in October.
The biggest threat to the Caisse’s grand plan, however, could come from the poll-leading Coalition Avenir Québec (CAQ). It wants to reopen contracts already awarded to ensure a minimum of local content, raising the spectre of direct political interference in the Caisse’s handling oversight of the REM.
The Caisse had scrupulously sought to avoid that by naming an external committee that included a former member of the Supreme Court of Canada to oversee the bidding process for contracts to build the REM and provide rolling stock for the 67-kilometre, automated LRT network. A consortium led by Montreal-based SNC-Lavalin was chosen to oversee construction of the rail lines and REM stations, which account for the bulk of the project’s cost. But the Caisse selected European-based Alstom to build trains for the REM, bypassing locally based Bombardier.
The Caisse owns 27.5 per cent of Bombardier Transportation, whose La Pocatière, Que. plant soon faces an empty order book, threatening more than 600 jobs. The CAQ, seeking to win the currently Liberal riding in which La Pocatière is located, is making a promise that it can only uphold at a significant cost to both the Caisse’s independence and investor confidence in Quebec should it form the next government.
Premier Philippe Couillard has hinted the La Pocatière plant’s future could be saved by moving up plans to acquire new Montreal Métro cars that were not due to be replaced until 2036. So, the CAQ’s political opportunism could backfire on it in more ways than one.
Still, the Caisse cannot afford to alienate any more people it needs to win over if it wants to get the REM built “on time and on budget,” as Caisse head Michael Sabia has repeatedly promised. The project is already more than six months behind schedule and the Caisse has only limited cost overruns to a modest $300-million by scrapping plans for an underground station and rail line in the bowels of Montreal. That part of the route will be moved above ground, instead.
Still, the Caisse has yet to plant a shovel in the ground for an LRT that is supposed to welcome its first passengers in mid-2021. So far, it’s been hoping for the best. It needs to do more planning for the worst if it wants to keep its REM dream from turning into a nightmare.