Transport Committee on Feb. 13th, 2024

[The Chair, Liberal, Peter Schiefke]

This meeting is called to order.

Welcome to meeting number 100 of the House of Commons Standing Committee on Transport, Infrastructure and Communities.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, March 7, 2023, the committee is meeting to study high frequency rail projects.

Today's meeting is taking place in hybrid format, pursuant to the Standing Orders of the House of Commons. The members may attend in person in the room or remotely using the Zoom application.

Colleagues, although this room is equipped with a very powerful audio system, feedback events can occur. These can be extremely harmful to interpreters and can cause serious injuries. The most common cause of sound feedback is an earpiece worn too close to a microphone. We are therefore asking all participants to exercise a high degree of caution when handling the earpieces, especially when your microphone or your neighbour's microphone is turned on.

In order to prevent incidents and safeguard the hearing health of our interpreters, I invite participants to ensure that they speak into the microphone into which their headset is plugged and to avoid manipulating the earbuds by placing them on the table away from the microphone when they are not in use.

Members of the committee, appearing before us today as witness for the first part, from 11 to noon, we have Mr. Friedemann Brockmeyer from Civity Management Consultants joining us from Germany.

Wie geht es dir? Welcome, and thank you for joining us today.

We also welcome by videoconference Mr. Steeve Lavoie, president and CEO of the Chambre de commerce et d'industrie de Québec, or CCIQ, which is Quebec City's chamber of commerce and industry.

Welcome, Mr. Lavoie. We will begin with opening remarks. You have the floor for five minutes.

[Steeve Lavoie, President and Chief Executive Officer, Chambre de commerce et d'industrie de Québec]

Hello and thank you, Mr. Chair.

I want to thank the committee for inviting me here today.

To begin, let me say a bit about the organization I represent. The CCIQ has 4,200 members. Our role is to raise awareness, mobilize and take action to promote economic development for our members and the community. The CCIQ is the largest group of business people in Eastern Quebec, which I am representing today.

Committee members, I am here to say that the people of Quebec City—a million people in the region—have been waiting a long time for a proper rail link with the metropolis of Quebec, the federal capital, and the metropolis of Ontario. We want high-speed, high-frequency and reliable service. This is especially true for business people.

Such a link is vital to the economic development of the greater region of Quebec's national capital, because Quebec City, our national capital, is isolated from other metropolitan areas. In an era of interconnection, this is a significant problem for its economy and for public mobility.

Quebec City is the national capital and home to the National Assembly, Laval University and various other postsecondary institutions, a world-class technology park, manufacturing, insurance and other sectors that are thriving, not to mention our expertise in video game development and a growing tourism sector.

So the Quebec City region has a lot of potential and talented business people. To fully realize that potential, however, Quebec City cannot be an island unto itself. People in business and the public in general need proper transportation to other centres. We need 21st century infrastructure that is strong, reliable and supports business operations.

Right now, there are 33 trains leaving Quebec City every week, with about seven of those leaving daily for Montreal, but no evening departures. The service is limited. Moreover, although the departure time is known, the arrival time is uncertain, in part because there are no dedicated lines. This uncertainly makes it extremely difficult to plan business meetings and limits our ability to conduct business.

The regular delays make it difficult if not impossible to rely on the train as a good way to travel between Quebec City and Montreal, so people choose to drive. That has to change. The people of Quebec City need reliable and efficient service. They need high-speed rail. The line between Quebec City and Montreal clearly needs to be high-speed.

While we are all in favour of high-frequency rail, we also have to consider speed. Right now, the trip from the Quebec City station to Montreal central station takes three hours and ten minutes on average, and that is when Via Rail is not behind schedule. That travel time needs to be cut down significantly. That is the only way to change the habits of people who currently travel by car because they claim it is more convenient for them.

Studies, including one conducted by France's national rail company, conclude that the smallest metropolitan regions benefit more from high-speed rail that links them to larger cities and catchment areas. So Quebec City would derive greater benefits for its economy.

Improving the rail service will of course bring consumers together, including tourists, and will make it easier to attract and retain workers in all sectors of the economy. With full employment in the Quebec City region, improving access will make job opportunities more attractive.

This project will be a real boost for recruiting the best talent in all sectors, including universities and the science and cultural sectors. High-speed and high-frequency rail would also be a strong asset when it comes to attracting and retaining company headquarters in Quebec City, which in turn would have major economic spinoffs. If rail service helps attract people here, it will also open the door to metropolitan areas and the world of business.

When it comes to transportation, we know that demand is influenced by supply. The better the availability, the more people will use it. This project must come to fruition. We have to be rigorous as well as ambitious. A lack of vision and action would have major repercussions for decades to come. Action is needed.

The time has come to improve the link between Quebec City, Montreal and Toronto with high-speed, high-frequency and reliable rail service.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Lavoie.

Next, we have Mr. Brockmeyer.

Mr. Brockmeyer, you have five minutes for your opening remarks.

[Friedemann Brockmeyer, Director, Civity Management Consultants GmbH & Co. KG]

Thank you very much for inviting me, members of the transport committee of the Canadian Parliament. It's a pleasure.

Let me introduce myself first. My name is Friedemann Brockmeyer. I am a director of Civity Management Consultants. Civity is a management boutique from Berlin, Germany, that is entirely focused on the mobility and infrastructure sector. We are working with all clients in the rail and public transport ecosystem in Europe. That means infrastructure management, ministries, railway undertakings, industrial players and all the important actors.

I presently have a very long track record of more than a decade in analyzing high-speed projects and newbuild projects, especially regarding capex and total cost of ownership. We've worked for several infrastructure managers in Europe: smaller ones like Bane NOR in Norway, but also larger ones like Network Rail, Deutsche Bahn and High Speed Two.

We have a lot of experience from several projects in Europe. I cannot share any experience from Asia. I think it's always worth looking into, but today I can share with you some highlights, findings and lessons learned from the European perspective on this.

First of all, I think it's a great chance for Canada to think about rail, because you have a very large country but are still very fortunate that the vast share of your population is in a very small corridor from Quebec to Windsor. It's always good to have a lot of people in the same area if you want to connect them by rail. In the end, we have to compare all the solutions by rail with other modes of transport, and you always have to be very sure that it's the best solution for transport and connecting these urban centres.

What I can share from the experience from Europe is that there are, let's say, two different kinds of high-speed rail systems. One is more the French style, let's say, so it's a little like wires connecting Paris to the rest of the country. There are long stretches and very high speeds. You can find the same in Spain, for example, connecting Madrid, the capital, to other cities, with longer distances.

Then we have other systems. If you're looking to Germany, Belgium, the Netherlands, Switzerland and Austria, we have more intercity services, metro-like services, and that means where we have densely populated areas and where we are connecting major urban population centres directly. There's a linear line layout. That means that if you have all the cities.... Let's say it's a string of pearls. For example, if you're looking into the whole corridor, it's coming down from Amsterdam like a wire to Brussels, Cologne, Frankfurt, Stuttgart, Munich and Vienna. This is a very long line, where we'll have maybe in the future one service, for example. It's a different approach.

The first lesson I would like to share with you from what I have learned so far from the Canadian plans is that it would be to your advantage to think about a linear line layout connecting Toronto via Ottawa to Montreal and Quebec. Don't have those direct connections: Have a linear line layout so that all the cities are on the same string of pearls. Then have very high frequency—30 or 60 minutes.

The second point is really to think about speed. As far as I know, you're calling this project high frequency rail because you're not planning a very high speed, or a high speed, let's say, of up to 200 kilometres per hour. High speed is a very useful instrument if the topography is easy.

As far as I know—and I've been looking at your maps—you have a very flat terrain in the corridor. If you have a flat terrain, that means you don't have to build a lot of viaducts and tunnels. If you have to build a lot of viaducts and tunnels, then it very easily becomes very expensive to build high-speed rail. If you're looking into your terrain, then I would assume that it's not that complicated to build high-speed rail for, let's say, a very reasonable price, and to improve the overall effectiveness of your commercial operations.

Another point is to look into capacity constraints. That's also something we learned bitterly in Europe. Often, we build high-speed rail from outskirts to outskirts and there's still the use of a legacy network in the metropolitan area. These urban stretches define the capacity of a high-speed or high-frequency rail network. This means that, if you want to have a successful business case and motion on the inter-corridor, you have to address this. You have to think about how you can use innovative methods, such as longer platforms and bi-level terrains, to increase the capacity and thus the overall economic benefits of the system.

The last point is also something that's very important. We often look into these projects from a capex perspective or a speed perspective. However, in the end it's all about customer satisfaction. What do I mean by customer satisfaction? Customer satisfaction means having a reliable service that is on time and at frequent intervals. This means you need long-term planning. First of all, you should start from the timetable. Which timetable do you want to offer, and what journey times? When you have this timetable, it's then about the infrastructure, rolling stock and speed you need in order to be competitive against other modes of transport, and also to be competitive against the existing system. These are the advantages.

It's also very worth—

[The Chair, Liberal, Peter Schiefke]

Mr. Brockmeyer, thank you.

Unfortunately, we have run out of time for opening remarks. It's very interesting and I know colleagues are going to dive into technical questions with you, because you bring a lot of expertise to the table.

Before we start the questioning, I want to let our members know that, unfortunately, we have lost one of our witnesses temporarily. We're trying to get him back on.

Unfortunately, Mr. Lavoie is no longer on line, but we are trying to reach him by telephone.

We're going to begin with our lines of questioning. The only witness we'll be able to question at the moment is Mr. Brockmeyer.

I'll turn the floor over to you, Mr. Strahl, for six minutes. The floor is yours.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

My question is for Mr. Brockmeyer.

I listened to your remarks. I appreciate them.

There's a bit of a debate in our country—you might have seen it as you prepared your remarks—between high-frequency rail and high-speed rail.

You spoke of high-speed rail and the need for a flat terrain, etc. Do you have any comments specifically about high-frequency rail—which is on dedicated tracks but perhaps doesn't have the top-end speed of high-speed rail—versus a purely high-speed rail system? Are there examples in Europe of where that has worked well? Do you have an opinion on the value of one versus the other in terms of ridership?

You said this can be done at a “very reasonable price” if the terrain is right. We're talking about billions of dollars here. We have heard that it's perhaps double to go from high-frequency rail to high-speed rail. If you can, I'd like you to address the difference between the two and what the very reasonable price is.

Can both be built for a very reasonable price in your view, and what does that actually constitute?

[Friedemann Brockmeyer]

Both can be built for a reasonable price. It really depends on the topography.

The problem, to make a long story short, is the curve radius. If you want to drive a train at a very high speed, you cannot have a very close curve radius. If you're in a more hilly or mountainous area, you have to build a lot of tunnels and wide bridges. This really drives the prices for building high-speed rail. If you're on flat terrain, then it's much easier, because there are no mountains. You can build the curves as you want to.

You have a lot of urban area. You need all of this urban enabling, to have space in the cities and so on. It's more suburban, as far as I know, so I don't think it's a big issue.

The cost driver for high-speed rail—to make it very short—is how many tunnels and bridges you need. In Europe, we have started with the easy stretches. The French started in the 1970s to build very cheap, high-speed rail lines between Paris and Lyon. The Spanish have done the same. The Germans started differently.

What remains in Europe today and the reason it's so impressively expensive today.... Right now, we're building high-speed rail lines that are more like undergrounds. For example, in Germany we have a new high-speed line between Stuttgart and Munich. This is almost completely in tunnels.

There is another factor that you may also know in Canada. This is crazy stuff from the U.K., where you have a lot of this urban enabling. That's something you have to do a deep dive into. There are reasons and lots of lessons learned from the U.K.

As far as I know, it's more about the complexity of the project organization. It's not driven by high-speed rail. That's very important.

[Mark Strahl, Conservative, Chilliwack—Hope, BC]

I'll ask you the question I was going to ask Mr. Lavoie. Perhaps you have some experience as well as a consultant on these issues.

We've been told that the high-frequency rail is designed to compete with airlines between big cities. Between Quebec and Montreal, the cost per passenger—I just looked—is about, if you book in advance, $450 return. The cost on the slow-moving train is about $175 return.

In Europe, what price point are passengers willing to pay? What price premium are they willing to pay to go up from the slow train to the high-frequency, high-speed train? Is there a point of diminishing returns? If fares get too high, do passenger loads reduce?

What is the experience in...? I don't know if you have some examples of the level of subsidy that's provided per passenger in the markets you are familiar with.

[Friedemann Brockmeyer]

Neither question is very easy to address.

First of all, on the question of the fare box revenues, we have very sophisticated ticket management systems in place for all high-speed operators in Europe. You can say that the mark-up for high-speed rail is between 50% and 100% on slow trains. It really depends, because it's a very sophisticated unit revenue system. It's not very easy, but it's there.

That really depends, again, on the travel time advantages. If you have travel time between two major centres that is below four hours, then you are highly competitive. It would make no sense to go to the airport and take a plane. Then you have a lot of willingness to pay on the part of the customers.

On the second question, around the subsidies, all the high-speed train services around Europe are commercial. The reason for that is we have a different organization in the rail industry. We have independent infrastructure managers, and then we have open access operators on the infrastructure, which operate commercially.

That means all of the subsidies are in the infrastructure. It's not that easy to calculate the subsidies, but you can say they are.... I have to recalculate, but it should be definitely below $10 Canadian per passenger. Let's say so; that's very roughly.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Brockmeyer.

Thank you, Mr. Strahl.

Next we have Ms. Murray.

Ms. Murray, I'll turn the floor over to you. You have six minutes for your questioning, please.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you very much.

Mr. Brockmeyer, thanks for your presentation. I have a couple of questions.

You mentioned something about Britain's “urban enabling”. It made me think about how, in Canada, it's quite complex to do projects that require co-operation and involvement at the national level and the regional, provincial and local levels, because there are different powers invested in each level. How is that dealt with in Europe? Do you think it's similar to Canada's challenges?

[Friedemann Brockmeyer]

To be very honest, I don't know the challenges in Canada very well. Today I can say of Europe that it really depends. For most of the countries building rail it is really the job of the national level. In some countries, like France, it's highly centralized. In other countries, like Germany, for example, they are federal states. Canada is as well. However, you have to organize. You have to organize municipalities, states and the federal level, but it's manageable. This is not the issue.

In the U.K., it's completely different. The problem in the U.K., in my opinion, is that they have not spent enough time on building up the capacity to build rail. They haven't built railways for more than 70 years in the U.K., so they have no experience in building new lines—obviously there are very few exceptions. In all other countries, we have a lot of experience. They have to buy all the knowledge from outside the U.K., and they've used lots of domestic consultants for that as well, and that is really increasing the costs.

We've worked for High Speed Two people. They were never able to understand why they were so expensive. In all asset categories, they are very expensive—

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Excuse me for interrupting, but I have a couple more questions. It ties into what you were just saying, actually.

Is there evidence that there is actually economic growth that results in the communities around high-frequency rail?

[Friedemann Brockmeyer]

Yes. If we're building new railways, there is of course a positive macroeconomic multiplier. High-speed rail or new railway lines increase the mobility of labour or human capital, and this is the most important driver. When mobility is high, then you have a better allocation of labour or human capital, and this increases GDP. There's a lot of economic research on that.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

That's great.

I think it's key that everything is really done well in preparing for the program, so it doesn't end up with amendments and stoppages and so on. What are the key success factors, from your experience, in the preparation phase?

[Friedemann Brockmeyer]

It starts, really, with the design phase—to have a long-term plan. As I was saying, which one is the most successful? Switzerland and Austria are the most successful, because they have a long-term timetable. They have a clear view of what the timetable will look like in 2070, so they can say at which stage and on which day of the week, in the year 2071, a freight train or high-speed train will go from Zurich to Geneva. Then they focused all their industry capabilities on this plan. That's really the plan. You need a long-term plan, and then each change request will increase the costs.

You need a clear vision, and then you will also have a very effective and productive mission to it.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

On that, what are the key success factors to getting a clear vision? I like the idea of a very long-term view as being one of them. How do you find the balance between including everyone but actually getting things moving along? What's the key there?

[Friedemann Brockmeyer]

Yes, it's difficult. You need long-term planning for the settlement structure, for regional planning, and this needs to be aligned. That's very important. Then, in the end, you need compromise, and you cannot renegotiate each compromise after five or six years. That's really the idea. If you have one set of compromises, we will build with compromise. That's about it. Each change request, again, will increase the costs.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

Thank you.

To what degree do you think it is important? What kinds of organizations need to be included in that preparation? Obviously it would be the city government, the regional government, the business community, and so on. Are there others that would surprise us that you think are key players to involve in the planning?

[Friedemann Brockmeyer]

In the planning, you need each institution that has a right to decide about planning. That means construction but also operations. You also have to include each major institution that has to spend for it.

[Joyce Murray, Liberal, Vancouver Quadra, BC]

The funder is most important.

[Friedemann Brockmeyer]

Yes.

[The Chair, Liberal, Peter Schiefke]

Thank you, Ms. Murray, and thank you, Mr. Brockmeyer.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Thank you, Mr. Chair. I want to mention that I would really have liked to ask Mr. Lavoie some questions, but I am happy to ask Mr. Brockenmeyer some.

Mr. Brockenmeyer, welcome to the Standing Committee on Transportation, Infrastructure and Communities.

To begin, I would like to know more about the expertise developed in Europe, namely, their model for this kind of service. People in Canada wonder about the difference between high-speed and high-frequency rail. They also wonder about the model that will be implemented. They wonder whether it will be built and operated by the private sector, or rather built in partnership with the private sector.

The private sector will obviously be involved in building the infrastructure, but once it is built, the service will be publicly managed and operated. Right now, Via Rail, a Crown corporation, is responsible for passenger service. Yet the project we are discussing will be managed by the private sector.

I would like to know if you can share any success stories from Europe where a different approach was used. What model is used most often?

[Friedemann Brockmeyer]

As I've said already, the model is different. The infrastructure is owned by so-called infrastructure managers. They are state-owned—these are public institutions—and they are subsidized. All the operators are so-called commercial operators, so they don't get subsidies for operations.

We have very few pure private players in Europe, like NTV in Italy, and they are very successful from a commercial perspective as well as from an operational perspective, which means performance and customer success. All other major operators in Europe are state-owned, but they are competing. They are Italian-owned or French-owned, or whatever, but they are competing and they are successful from this perspective.

If you are looking into public-private partnership models for the infrastructure, as you have, it's always important to know.... I really like it in the English language, because you decide between financing and funding.

Even if you have PPP models, you need funding from a public budget. If you procure PPP, you will not do it because you will get money from the private sector. They may give you money up front, but in the end, if you want to go for a PPP, you will do that because you will want to buy the capabilities. If you don't have the capabilities in your country, then a PPP could be a good solution. If it's about organizing funding, it's still a matter for a public budget because, in the end, private operators may be more efficient, but we are not able to operate the infrastructure commercially.