Transport Committee on May 14th, 2009

[The Chair, Conservative, Merv Tweed]

Good afternoon, everyone.

Welcome to the Standing Committee on Transport, Infrastructure and Communities, meeting number 19. On the orders of the day, pursuant to Standing Order 108(2), this is a study of high-speed rail in Canada.

Joining us today, from High Speed Rail Canada, is Mr. Paul Langan, founder. And from the Railway Association of Canada--and I don't think he is any stranger to us here--we welcome Cliff Mackay, president and chief executive officer.

Everybody knows the rules. I don't know if you have flipped a coin as to....

Cliff, please proceed.

[Cliff Mackay, President and Chief Executive Officer, Railway Association of Canada]

Thank you, Mr. Chair.

As president and CEO of the Railway Association of Canada, I welcome the opportunity to appear before the committee today to speak on the subject of high-speed rail in Canada.

Our membership, as you know, includes Canadian class one freight railways, CN and CP; a number of U.S. class one railways that operate in Canada, such as BNSF; and some 40 shortline freight railways. Further, we represent regional railways, such as Ontario Northland; Canada's national passenger railway, VIA; large commuter railways GO, AMT, and West Coast; a number of smaller commuter railways; and a number of tourist railways across the country.

Overall, the RAC fully supports all measures that foster increased use of passenger rail services in Canada, including the development of high-speed rail systems. I cannot recall a time when Canadian public support for high-speed rail has been higher. Polling commissioned by the RAC demonstrates that high-speed rail is supported throughout Canada, even in regions of the country where it is unlikely that high-speed rail service will be available at any foreseeable future time. Support is also strong for public and private involvement in future high-speed rail projects.

Going forward, Canada needs both conventional and high-speed rail passenger services. A high-speed rail system must not operate in isolation; it must be a component of a multimodal transportation system. In terms of system efficiency, good linkages to public transit, airports, conventional intercity passenger rail, buses, and a range of other services are absolutely critical for high-speed rail to optimize its benefit to the country.

Today I'd like to focus my comments on the role of governments and the private sector in developing high-speed rail networks and the associated benefits for the rail system, Canadian industry, technology, and the environment.

First, on the public-private interface, there is clearly a role for both public and private sectors in developing a high-speed rail system. Quite frankly, both parties need to work together for high-speed rail to be realized. No major high-speed rail project in the world has been developed by only one of the parties. It takes two to get these jobs done.

To begin, we are glad to see that governments are currently supporting the feasibility study of high-speed rail in Quebec and Ontario and have supported past studies, such as the one recently completed in Alberta. The Quebec-Ontario study should be completed in a timely manner and should look at a range of economic issues, including industrial and environmental benefits for Canada and the potential for technological development and deployment.

Further, this assessment must consider all aspects of the rail network. Entire system efficiency is critical to the future success of our industry. Governments should avoid trade-offs between one part of the system, such as freight, and another part of the system, such as high-speed rail. Investments in passenger rail can improve the rail system for both freight and passenger rail if properly planned and implemented. The current $407-million program to upgrade VIA services on CN's main line is a very good example of those sorts of synergies.

Further, governments must undertake banking, where necessary, of identified corridors. The RAC is aware that the banking of land is currently taking place in Alberta. Getting the corridors identified and the dedicated high-speed rail rights-of-way in place is a critical step in developing any high-speed rail system. To ensure safety and efficiency, the high-speed rail system cannot share track owned and operated by our freight railways. Simply put, ladies and gentlemen, you cannot operate a train at 150 to 200 miles an hour on the one hand, and a freight train at 40 to 60 miles an hour on the other, on the same track. It just won't work.

We believe that it is incumbent on governments to explore all financing options, including public-private partnerships. Even in this current economic climate, there are large pools of capital available in Canada that would be attracted to investments in infrastructure projects that will provide long-term, reasonably predictable returns. I believe that there's greater public support for a partnership arrangement than there is for governments trying to go it alone.

Let me speak now about other benefits. I would like to make a few points about industry, technology, and the environment.

The government must do a thorough analysis of industrial benefits associated with high-speed rail. Canada currently has the resources and the in-house know-how to develop high-speed rail systems. We have a mature railway-supplier industry, including world-class expertise in engineering, track, signaling, locomotive, and railcar design. Given the relatively small passenger rail service market in Canada, Canadian firms export their products and services globally and have been leaders in developing high-speed-rail systems around the world.

Further, constructing a high-speed-rail system would allow manufacturing that was once done in Canada to re-emerge. An example I like to use is steel track. We have the expertise and the capacity to produce track in Canada, but the market is currently not large enough to justify domestic production. The construction of high-speed-rail systems in Canada would require approximately $4 billion in track over a ten-year period. That may be enough to turn the corner. Overall, the development of high-speed rail is a tremendous opportunity for our suppliers and engineers to showcase their expertise and further develop advanced technologies for the Canadian and global markets.

Going further, the demand for transportation, both passenger transportation services and freight, will continue to grow. The recent growth in passenger services, both inter-city and commuter, reached almost 10% last year in 2008. The RAC is pleased that governments are continuing to make significant investments in passenger rail services that will allow our railways to accommodate current and future demands.

Finally, from an environmental standpoint, passenger rail must capture a greater share of future growth in passenger services. If you look at the growth of greenhouse gases over the last decade in Canada, it has occurred primarily in heavy industries and transportation. Measures taken in other areas of the economy to reduce GHGs will be overshadowed if we do not take meaningful action to curb the growth of GHG emissions in the transportation sector. Given the environmental advantages of rail, high-speed rail can significantly contribute to reducing GHG growth, and act as a sustainable component to our national passenger multi-modal system.

I'd like to end on those remarks, Mr. Chair.

Thank you very much for your attention.

[The Chair, Conservative, Merv Tweed]

Thank you very much.

Paul.

[Paul Langan, Founder, High Speed Rail Canada]

Thanks a lot.

High Speed Rail Canada is a non-profit organization. I just want to let you know right off the top that we are non-partisan. We don't accept any money from the Railway Association of Canada, Bombardier, Siemens, and Alstom. That gives us a lot of credibility when we go out and do public symposiums, and we have our website to educate Canadians. We have just one method, one scope: it is to educate Canadians on the benefits of high-speed rail in Canada. Again, as I mentioned, we do it through our website and through our public symposiums.

As Cliff mentioned, this is an exciting time in high-speed rail. I can't say enough. I get phone calls to have these public symposiums in different cities, and I have to tell them that I have children, I have soccer schedules, and we can't do it this summer. Windsor, Ottawa, Montreal, Calgary, and Vancouver want us to come to their community to give a symposium on high-speed rail. The website regularly gets 200 hits a day. The studies are accessed on the site. So it is an exciting time.

When I talk about the benefits of high-speed rail, or higher-speed rail, I think it's good to do a quick definition. What I mean by high speed is anything over 200 kilometres an hour. Some people argue that's low, and that's true. In Europe the normal speed for a lot of the lines is 325 kilometres an hour, far above the 150 that VIA Rail does. Higher-speed rail is also part of the picture.

I want to go to President Obama for a second. As we all know, he made a visionary statement two weeks ago when he went on American television and said we have to modernize our passenger rail system. When I talk about higher-speed rail, two of the corridors he mentioned are ones that I'm going to mention here for examples of higher-speed rail. He mentioned Vancouver to Seattle. Vancouver to Seattle is a good example. Amtrak runs that now. It's never going to be a 300-kilometre-an-hour area, but it is an area where they can do track improvements, where they can do improvements with freight, and they can get the speeds up to maybe 150 kilometres an hour.

So there are two things we're talking about here: high-speed rail, but we're also talking about higher speeds. And we're not just talking about Calgary and Edmonton, corridor number one for high speed; and the number two corridor, of course, is Windsor to Quebec City. I give the example of Vancouver to Seattle. The President also talked about Montreal to Boston. Again, that would be something over a longer period of time. The studies have been done that they would go up to a higher speed. Right now, they don't even connect; the track has been taken out.

So why high-speed rail in Canada? I'm going to go into the typical reasons, but I want to give you the example of what happened to me today when trying to get here from Kitchener, Ontario. I live about an hour and a half west of Toronto and last Friday I tried to book the flight. I called Bearskin Airlines, which fly from Kitchener to Ottawa. They wanted $750. I told that to the cab driver coming in from the airport today. He said he went to Cuba for a week, all expenses paid, for $750. Something is wrong. So then I thought, okay, I'm going to call VIA. VIA was going to take seven hours to get here from Kitchener. It would take me 14 hours back and forth to give what might be a one-hour presentation. We need to modernize.

One more example. I got Air Canada coming here, but going back to Toronto from Ottawa tonight, I couldn't get Air Canada. Their flights were $525. This is simply not acceptable in a modern G-8 country like we have. So when I say that Canada is the only G-8 country without a high-speed rail system, we're so far behind what is an accepted norm of a viable alternative to taking your car or flying, it's hard to explain how bad it is.

I just gave you three examples, and that's for one flight I booked, for one time I tried to come here.

Let's move on to the benefits. And feel free at the end of this to ask me questions, because I'm not coming at it from anywhere. I'll tell you the good, the bad, and the ugly. It's a movie I like, actually, but that's another question.

Reduced travel time.... A good example is the Calgary-Edmonton corridor. We're talking about going down from three hours to an hour and a half. In the Quebec corridor we're talking about going down from four hours to three hours, or four to two hours, depending on the times. This in itself gives you more time to do other things. This improves your quality of life.

Cliff talked about greenhouse gas emission reduction. The studies have been done. I have two here: one from Calgary in 2004, and another from the Ontario and federal governments in 1995. By 2025 carbon dioxide and carbon monoxide emissions are going to be reduced by up to 24% along the corridor, Ontario to Quebec. There are 17 studies. This is not news. In the Calgary study, we see a reduction of 1.8 million metric tonnes of greenhouse gas emissions. This is from 2004, three years ago. The Alberta government actually has another study from 2007.

With respect to reduced dependency on petroleum, I can give you an example from California. You're going to say that California isn't Canada. There are some similarities—they're new at it, and the Ontario-Quebec corridor and the California corridor cover about the same distance. When they implement the California high-speed line, they're going to save 12.7 billion barrels of oil per year. That's significant, getting off our oil addiction. We all know about that. It's a well-known fact that twin-track railway has a typical capacity 13% greater than a six-lane highway. That's not new. It's been around for decades. And it takes 40% less land. Isn't that good?

We know we have an economic crisis in Canada. Employment is important, no doubt about it. We need to get people back to work. The two high-speed corridors, according to the 2004 Calgary study, would create 25,000 to 52,000 person-years of construction employment and $1 billion to $2 billion in associated employment income. There will be 2,000 to 4,000 direct and indirect jobs produced. Jobs—that's getting people to work! The study is only three years old; it's a current study. The 1995 study says that in Ontario-Quebec, over 25 years, more than 1,700 jobs per year will be created. That's just part of the reason you go high-speed rail. I'm not saying it's going to solve all your economic problems. It's part of a positive puzzle that, once you put it together, gives us an alternative to the road or the air.

My favourite point is public safety. I work in occupational health and safety. I stopped watching the TV news three years ago because it was so depressing. It would often start with the latest car crash in my area. The Ontario-Quebec federal study said 40% of the riders on the high-speed rail line would be former auto users. Wouldn't it be amazing if there was a 40% reduction of traffic on the 401?

Then there's the technology. This is the gold standard in France—the TGV Alstom. They have over 650 high-speed trains a day going. They carry over 900 million passengers a year. Since 1981, they've had zero fatalities. That's what we want to see. You have to put public safety first. It's nothing new. What are we talking about—24, 28 years old now? The proof's there.

For all those reasons, I think we need to move forward on high-speed rail.

I thank you for having me come in today.

[The Chair, Conservative, Merv Tweed]

Mr. Volpe.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Mackay, Mr. Langan, thank you for joining us and sharing with us your views.

Let me begin by saying that you'll find many receptive ears around the table, but you'll also find some rather skeptical and cynical ears. The committee is in the process of trying to determine whether we can move from skepticism to planning and realization.

Mr. Mackay, one of the things that would help us has to do with financing. One of the statements in your brief referred specifically to the amount of money that would have to be expended over a ten-year period for rail itself. Some people think that's a cost; others might think it's an investment. I think you were a part of the initial study, in the 1990s, that Mr. Langan referred to, so you have an intimate view of the financing associated with this. People are talking about $20 billion to $30 billion for high-speed, including Calgary-Edmonton, so we're not talking about just one corridor. In that study, which looked at the financing, what was the cost per year in round terms, for the federal government in a partnership situation, up to and including the first year of operation?

[Cliff Mackay]

It's difficult to give you a precise answer, but let me try to lay out at least some parameters.

We do have some recent examples of this kind of financing in Canada that have been quite successful. I should say that.

The cost would be driven essentially by two things. The first is the nature of the business relationship between the public and private party. Generally speaking, you would want the private party to take on all the operational obligations, and probably the forward obligations, perhaps not for further expansion of the system, but at least for maintenance of the system.

In a system as big and complex as just one of the corridors.... Let's pick a number of $20 billion, just for argument's sake--

[A voice]

Windsor-Quebec.

[Cliff Mackay]

Okay. That would probably amount to about 20% to 25% of the overall initial costs. You're probably looking at $4 billion to $5 billion there. You're basically looking at a $15 billion financing requirement.

The critical element that will drive that financing requirement is the degree to which you can demonstrate in a financial prospectus reasonable predictability on revenue flows for that particular enterprise—ideally, revenue flows at a level that would pretty much guarantee some reasonable return to the investors. There are two ways to do that. We have done this in Canada quite successfully with our airport model. You basically have to ensure that the entity has some reasonable assurance of market share. The way we do that in the airport model is that we license the airports, and only certain airports can provide services. So it's not a free and open market. You would have to consider the same sorts of things for a high-speed rail operation.

The second thing you would need to look at would obviously be the marketing studies. Can you reasonably satisfy yourselves that you see a traffic base and a traffic growth that would get you there? That's exactly what they're looking at in the updates of the studies that are going on now in the corridor.

I must tell you, frankly, that back in the 1990s that was a difficult proposition. We're in a different world today. Look at traffic patterns today, particularly in the corridor, and compare them to 15 years ago. They've increased dramatically, by factors of two or three. While I certainly am not privy to the financial analysis that's going on at the moment, I would suspect that the numbers would look somewhat different.

The last point I would make is that it has not been unusual, with these sorts of projects or with airport evolution or some of the other projects of a similar nature, for the government to look at some short-term guarantees at the front end to reduce some of the early market risk and to attract further private sector investment into the play.

Those are some of the dynamics that need to be considered.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Unless I'm mistaken, the study to which we've both referred gives an indication that had they gone ahead with the project back in the early 1990s, by this year they would be anticipating a ridership of already about ten million just along the Toronto-Montreal corridor. They felt that eight million would have been more than sufficient to justify financing, both by the private sector and the public sector. If I recall again, they felt that by next year that figure would have gone up to twelve million.

So we're already in that range where the amount of traffic or capacity that would have been filled and would therefore have maintained an operation far exceeds the figures anticipated, with the population growth that nobody anticipated 15 years ago.

What is it, in your mind, that's been holding things up?

[Cliff Mackay]

I think it's a combination of things. First, there clearly needs to be political leadership on something like this. These sorts of activities have never happened anywhere in the world, including Canada--you can talk about the seaway, you can talk about the pipelines, you can talk about the Trans-Canada Highway, you can talk about the CPR back in its day--without some clear political leadership and direction. Only governments can provide that. That's critical.

The second thing is I think there has been a lack of focus on the studies. You absolutely must come to some general understanding of where these corridors are going to go. If you don't do that, and either assemble the land or make whatever arrangements need to be made with current corridors, you just don't have a basis upon which to begin any kind of business consideration.

Those are the two most critical things--political will to say we're going to do this; and the definition of the physical corridors, because without it, there is so much uncertainty that it's impossible to proceed.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Mackay, I'm hoping I'll get a chance to get to Mr. Langan, but since your members, particularly two of them, are already great proprietors, landowners, along the potential corridors, is there enough land already assembled just by your major members to satisfy a quick assessment of at least the most likely corridors? I say most likely because you're already occupying them.

[Cliff Mackay]

I think the answer is somewhat. The problem is that you have bottlenecks in various parts of the system. The other major problem with using those existing corridors is grade crossings. There are literally thousands of grade crossings on those main-line corridors. You absolutely cannot have grade crossings with high-speed rail. It would be a public safety disaster.

It may not be feasible from a cost point of view to look at those corridors. You may have to look at other corridors where you do not have that issue, at least not to the same degree.

[The Chair, Conservative, Merv Tweed]

Thank you.

Monsieur Laframboise.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Mackay, you say that the government must send a clear message. But industry must send a clear message too.

In your presentation, you mentioned the $4 billion needed to modernize or update the railways over ten years. You also mentioned the $407 million provided to VIA Rail. But we are still operating on a network that is partially used by passenger traffic, but mostly by freight trains.

Have we not just come to a junction? Do we not really need a passenger rail network that is completely separated from the freight trains? That is the clear message that the industry has to send to us. Are we there yet? This is important for the future. We are in an economic recession at the moment, but, before the recession, there was phenomenal growth in rail freight. That is good, but we cannot develop passenger transportation and freight transportation on the same network.

[Cliff Mackay]

You're absolutely correct. If you're going to develop high-speed rail, as Mr. Langan defined it, you need a separate rail system. You cannot operate both of them safely at those speeds.

When I was referring to the current VIA project, what's going on there, is that we're producing longer high-speed sidings and whatnot so that we're allowing more efficiency in the use of the existing tracks for both passenger and freight. That is certainly a part of the system, and it will certainly be required no matter what we do with high-speed rail, because you have to have feeder systems.

I only made that observation to demonstrate that there are ways to benefit both parts of the system, and they don't necessarily have to be in pure conflict. But you're absolutely right, sir: if you want to really develop a high-speed rail system it must be separate.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

My question is for you, Mr. Langan. We have the customer potential to be able to develop an independent network. You have analyzed different types of networks. When Transport Canada representatives appeared here, they gave us the definitions of conventional trains, higher speed trains and high speed trains. You seem to be telling us that we need high speed trains.

Would another technology be acceptable or feasible? I would like to hear your opinion about that, Mr. Langan.

[Paul Langan]

Thanks for the question.

Again, for two corridors, it is my opinion that they have the potential for high-speed rail over 200 kilometres: Calgary-Edmonton and Ontario-Quebec. They can choose to go higher speed, which is what Cliff had mentioned with VIA Rail, going a little quicker on the same track as VIA, as the freight trains, but those are the two corridors. And on the Ontario-Quebec corridor, 17 studies said let's go, and we're waiting for number 18.

For Edmonton and Calgary, there are two options. You can go on the existing freight track with CP. Their proposal is there, with a Bombardier jet train and go up to 200 kilometres an hour. Or you go on a complete separate one, you go TGV, high-speed, up to 300 kilometres an hour. Our job, for High Speed Rail Canada, when I go into the community and I do education, is to provide people with the options. Here's what there is. We educate people. We show videos. We have questions and answers. We do not say here's the report from Calgary. We do not say you must go 300 kilometres an hour. We say here are the two options; please, let's move forward. They're viable. The studies say they're viable, and cost-benefit analysis, revenue.... You talked about, Mr. Volpe, what if we had done it in 1995; in 2005, it says here, there would have been $900 million in revenue this year.

So to answer your question, we don't say here's the route, but we educate people on the options. Personally, I am not a fan of having the passenger train high speed and the freight train on the same track, because I put personal safety number one. For high-speed trains there are no level crossings. There is no chance for an accident to happen, and that's what we need, especially in Canada, where we haven't seen high-speed rail. If we had level crossings with high-speed trains, it would be very dangerous, in my opinion. But again, that's not what I promote when I go out and do speeches. We give the options.

Thanks.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Langan, in your research, have you looked at what is happening in Europe? Can you summarize for us the kind of analysis that you have done?

[Paul Langan]

It's depressing in Canada when I look at the rest of the modern world. People always ask me to give them an example in Europe or Asia, and I just name off the countries. I had a reporter a couple of weeks ago saying to me the technology is there now. I said the technology was there 30 years ago. So in Canada, you ask why we haven't had it before. One of the problems is we've never seen it. We don't know what it is. When I was young I never got my car till I was 30. People always asked how I could live without a car. I never knew. With high-speed trains, we don't know what a modern passenger rail service looks like. We've never had it.

How many times do I answer questions about VIA Rail? I try to tell people to think outside the box.

Sorry for rambling.

[The Chair, Conservative, Merv Tweed]

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thanks, Mr. Chair.

Mr. Mackay, you made a point here that it must be a component of a multi-modal passenger transportation system, and I think that's one of the tracks that we should be on here, so to speak.

Let me conduct my question here. I've noticed that the Chinese now have come out with a 400-kilometre electric car. We see that there are different things happening in the transportation industry. We have to make choices, but to make a choice about high-speed rail in absence of the other choices being presented, the systems that could be in place.... In the Quebec-Windsor corridor, have there been any studies that identify the options?

[Cliff Mackay]

I'm not sure of the degree to which you would like to look forward 10 to 20 years to quote new technologies, but there have certainly been some studies that have looked at intermodal relationships and how everything gets put together and what should happen.

Most of the work that gets done argues very strongly for the following kinds of relationships on the passenger side. In the major urban centres, you need a good, viable, efficient combination of light rail and bus urban transportation system. That needs to be closely linked into major nodes in the major urban centres for rail, air, and bus. And you need to make sure that if you're going to a high-speed system--this is quite routine now in places like Europe--your high-speed system ties directly into those major nodes, directly into the major airports, directly into the major train stations, and those train stations link directly into the subway systems and the bus systems and what not.

With regard to private passenger travel, there are a number of studies that are looking now at what's called intelligent transportation systems or intelligent highway systems, and they're all focusing on what we can do better in two contexts. What can we do better to increase the capacity of the existing system? In other words, allow private vehicles to travel closer to each other and ideally at higher speeds, but how can we do that and at the same time significantly improve the safety margins? There are a number of studies going on today that essentially would have.... Frankly, you would not be in control of your car. Some computer system would be.

[Dennis Bevington, NDP, Western Arctic, NT]

To go from there, if we'd instituted a fast rail system in this corridor when it was proposed in 1995, what would have been the difference in the expansion of other transportation services at the same time? What would have happened with the airports? What would have happened with the highway system?

[Cliff Mackay]

I think there would have been two substantial differences, and Mr. Langan mentioned one of them right off the top. You would have seen the congestion that you now see on the 401 develop much more slowly than it did develop, because a large number of those people would probably have opted to take the train rather than to take the car.

The second thing is you probably would have seen less short-haul regional air travel. By short haul, I mean quick flips to Ottawa and that sort of stuff. At the same time, if you'd configured it correctly, you probably would have seen more traffic through Dorval and through Pearson, because it would have had a much greater catchment area because of the distance of high-speed rail.