Open this photo in the gallery:
Rendering of the Alto High Speed Rail project.Delivered
Federal Transport Minister Stephen MacKinnon announced Monday that he would like to make changes to the proposed Toronto-Quebec high-speed rail route. He ordered to drive around Kingston and enter it.
This will only add a few minutes to the journey, he told The Globe and Mail.
The chief executive of Alto, the Crown corporation planning the line, backed his political mentor. “It might add a couple of minutes,” Martin Imblo told the Ottawa Citizen. “It would be marginal.”
Marginal? How many additional billions of dollars will this cost? How many riders will this attract? How much will he lose?
It is not yet known how much high-speed rail will cost. Alto puts the price at $60 billion to $90 billion, but cautions that the figure is “for planning purposes only and should not be considered a project budget.”
No matter; The Ottawa wind is blowing behind this train. Its publicity as the most expensive megaproject in modern Canadian history has only given it more momentum.
Opinion: High-speed rail is the right idea, but done wrong
The Goldman government—sorry, I mean the Carney government—doesn’t need to update the investment valuation framework. But apparently that’s the way it is. So here it is:
In the private sector, where money is tight, risk-averse and picky, you cannot make an investment decision based on a cost-benefit analysis consisting solely of multiple benefits. You have to measure the costs.
Sorry, let me rephrase: You should obsessed above costs. Obsessed. You have to build a cost obsession into every project.
If this is not done, the project moves from profitability to loss, and its sponsors from solvency to insolvency.
In the public sector, projects are always at risk of failure, both due to the distraction of political gains and, often, due to a failure to ask basic questions about the project’s objectives. The nightmare scenario that should be front and center in Ottawa is high-speed rail in California.
In 2008, voters said yes to fast train service between Los Angeles and San Francisco. Eighteen years later, just a tiny part of the journey has already been laid and most of the line is still in the planning stage. But at least US$13.8 billion has already been spent.
The current goal is to complete a small portion of the $36.8 billion project connecting the cities of Merced and Bakersfield by 2032.
Opinion: Canada’s 50-year-old high-speed train has lessons for today
Where is it? Imagine Alto announcing in 2040 that the national dream of fast travel between Peterborough and Napanee is just a few years and a few billion dollars away.
Construction in Los Angeles and San Francisco will cost tens of billions of dollars more, and the state does not have this money.
California has reached this impasse due to a combination of crushing environmental problems, poor management and “it’ll only add a few minutes” political interference.
The positive for Canada is that the barriers are here are not technologically advanced. High speed rail is an old technology.
The distance between Paris and Lyon is slightly shorter than between Toronto and Montreal, but you can travel between the two French cities by high-speed train in exactly two hours. The train between Beijing and Shanghai, covering more than 1,300 kilometers, can cover the distance in just over four hours.
Wouldn’t it be great to have this in Canada? Certainly. But that won’t happen until we figure out how to do the opposite of California.
However, even with the most competent project management, Canadian high-speed rail will almost certainly require extremely large government subsidies for construction and ongoing subsidies for its operation.
The Alto could be priced between $60 billion and $90 billion even if all goes well.
This should make you wonder: If you have $90 billion worth of taxpayer money to spend on infrastructure, is this the best place to spend it?
Currently, millions of travelers fly between cities using high-speed rail routes. How many government dollars subsidize their flights? Nobody. Our airlines, airports and air traffic control systems operate on user fees. Airports even pay rent to Ottawa.
How many taxpayer dollars must we spend to get some of these travelers onto trains? This is not a rhetorical question.
Via Rail carried 4.4 million passengers last year. Is the benefit of moving faster and attracting a few million more people to intercity train travel worth $90 billion?
Every weekday in Toronto, the Toronto Transit Commission handles 2.5 million trips. Montreal’s main transit agency handles 1.7 million rides per day. In Greater Vancouver, Translink provides 1.2 million trips per day.
If we want to bring the most benefit to the greatest number of people, wouldn’t urban public transport be the best place for a $90 billion investment? The economic return will undoubtedly be higher. It’s the same with political returns.