Mark Bunting

(As published in the Financial Post, December 5, 1998)

If a Canadian consortium has its way, Canada's first high-speed train will pull out of a station in Toronto or Quebec City early in the 21st century. Travelling at speeds of up to 320 kilometres per hour, Montreal-Toronto would take only two hours and 20 minutes, compared with four hours, at best, today. Rail travellers may welcome this development, as may those wanting a fast and less expensive alternative to short-haul air service from congested airports. But do these benefits merit a $7.5 billion taxpayer contribution to an $11 billion railway? Does Canada even have the capacity to manage such a complex rail project?

The initial costs may seem modest. The Lynx consortium - which includes SNC-Lavalin, AGRA Monenco, Bombardier, and GEC Alsthom - wants the federal government, Ontario and Quebec to put up much of the $120 million it needs for preparatory studies. However, this is not just a study effort, but a preparation for actual construction. The project will be aggressively promoted to elected officials and bureaucrats, and to the general public. Once this train leaves the station, it may not be easy to stop.

A high-speed rail link will encourage less car and airline travel along its 854 kilometres, save time and cost for some passengers, and reduce transport emissions. Promoters will undoubtedly translate these benefits into impressive-sounding economic and environmental numbers. But isolated numbers mean little unless seen in context. Rail now serves less than 1% of Canada's intercity travel market. Even if high-speed rail increases that figure to 3%, neither Ontario, Quebec, the national economy, nor the environment would much benefit. Why should our governments pull so much of the load?

Since most intercity journeys are short, and since fast trains would cost more than conventional rail, high-speed rail would attract a limited market. Air travellers making onward air connections will not take trains unless they directly serve major airports. And for many people the inconvenience, time and expense involved in getting to and from local rail stations makes driving even quite long distances a better option.

High speed rail construction might create (directly and indirectly) some 175,000 person-years of work - expensive job-creation, at $60,000 per person-year. If more jobs is the object, better look elsewhere. These numbers don't count the jobs lost in spending $11 billion on high speed rail instead of on other economic activities.

Some may see this train link as a unity project, another national dream which, among other things, might keep Quebec in the fold. But national identification comes only from projects offering large and widespread public benefits. A costly railway serving a limited constituency while absorbing funds needed for other social and economic programs can only create a backlash and cause division.

Even if studies show this train's benefits to exceed its construction and operating costs, what looks good on paper may not turn out well in practice. While governments can commission studies to assure themselves that Lynx's financial and other aspects are as presented, even qualified consultants may not be able to judge market and commercial figures as well as a local operator with direct practical experience in the Canadian transport market. The Lynx consortium of engineers and equipment suppliers has the know-how to build and equip a new railway, but not necessarily the know-how to operate and market it successfully.

Canada has no commercially astute transport operator with direct experience in the high-speed rail market. With civil works and equipment suppliers deciding what to supply, and the public sector absorbing the financial liability, there is little incentive to ensure commercial success.

VIA's conventional rail experience may not be relevant to the market and technical needs of high-speed rail, and VIA's dependence on government subsidy inevitably orients its management to political needs - a distinct liability for a project whose success hinges on a rigorously commercial approach.

Canada could ask foreign companies with direct experience in high-speed rail to participate. Yet, without knowing Canada's transport environment, these companies, no matter how strong at home, would be at a disadvantage.

Instead of proceeding with high-speed rail now, Canada should involve the private sector in our under-performing existing railway services. With time, new operators would gain practical knowledge of Canada's rail market, allowing them - not civil works and equipment suppliers - to develop and justify high-speed rail proposals. Only then might the public feel assured that its money was directed to a useful public purpose.

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