Public Accounts Committee on June 16th, 2016

[The Vice-Chair (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

Mr. Christopherson, your three minutes are up. I'm sorry. You've had four and a half—

[David Christopherson, NDP, Hamilton Centre, ON]

Can I have some of T.J.'s extra two and a half...?

That's fine, Chair. I understand. Thank you.

[The Vice-Chair (Mrs. Alexandra Mendès), Liberal, Alexandra Mendes]

I'm really sorry.

Monsieur Lefebvre, please.

[Paul Lefebvre, Liberal, Sudbury, ON]

Thank you, Mr. Chair.

I read the Auditor General's report. The VIA Rail representatives here today told us that, in the past, their strategic planning failed to achieve its objectives because the company did not have dedicated tracks and its equipment assets were probably not at the desired level. The obvious reason is that the tracks were in use. VIA Rail is an operator and does not own all the tracks.

Mr. Siciliano-Desjardins, you're now saying that you're looking at the possibility of creating a new strategic plan with a significant investment. Your company may then be profitable. That's your goal. In your 2007-11 report, I can see that the Auditor General said as follows:

The 2007–11 corporate plan included a major capital investment plan that was intended to increase ridership by 40 percent and revenues by 39 percent within that five-year period.

However, VIA did not succeed in meeting these targets. Actually, it went lower at that point in time.

In his opening statement, the assistant auditor general, Mr. Laplante, said as follows:

The Corporation will need to find lasting solutions to those problems if it is to ensure its long-term viability.

You said today that dedicated railway tracks for passenger trains may be created. What capital costs will be required for your project to become profitable?

[Yves Desjardins-Siciliano]

Thank you for the question.

The infrastructure costs for a dedicated segment between Quebec City, Montreal, Ottawa, and Toronto are around $2.5 billion for railway tracks and signals and over $1.25 billion for electrification, if the segment needs to be electrified. Also, the new fleet we plan to acquire will cost about $1.25 billion. Therefore, the project will cost around $5 billion in total.

[Paul Lefebvre, Liberal, Sudbury, ON]

You think a $5-billion investment would make you profitable?

[Yves Desjardins-Siciliano]

Absolutely.

[Paul Lefebvre, Liberal, Sudbury, ON]

In your presentation, you said the following:

Should no modification be made to VIA’s current mandate, the funding needs will be $850 million in operating funding and $650 million in capital funding.

Therefore, by spending $5 billion, VIA Rail could become profitable.

[Yves Desjardins-Siciliano]

Exactly, and we could obtain the $5 billion from sources other than the Government of Canada. That's also an important factor.

[Paul Lefebvre, Liberal, Sudbury, ON]

That's what I wanted to discuss. Explain what you mean.

[Yves Desjardins-Siciliano]

For example, the Caisse de dépôt et placement du Québec and Canadian pension plans—OMERS, Teachers, CPPIB, and PSPIB—have all been investing in passenger railway networks around the world for the past 15 years. They are getting a return on their investments. Therefore, a passenger train network can be operated profitably as long as the infrastructure is adequate, the schedules are arranged based on the clients' needs, and the goal is commercial.

Let's take the example of CN. Until 1995, CN received almost $1 billion a year in grants from the Government of Canada. Today, CN generates $1 billion in profits per quarter. Has the freight transportation industry changed? The freight cars, tracks, and business models are all the same.

[Paul Lefebvre, Liberal, Sudbury, ON]

However, Mr.—

[Yves Desjardins-Siciliano]

It's completely possible to operate the network profitably. It's possible to attract investors looking for a return. Also, currently the interest rates are extremely low. Commercial return opportunities for investors are rare. The infrastructure sector is one that provides a consistent return over a long period. That's why we're confident we'll be able to find 50%, 60%, or 80% of the funding if the government requires it. We can find it through the government procurement process.

[Paul Lefebvre, Liberal, Sudbury, ON]

Okay. Thank you.

[The Chair, Conservative, Kevin Sorenson]

Thank you.

Mr. Poilievre, you have five minutes.

[Pierre Poilievre, Conservative, Carleton, ON]

I'm looking at your key operating statistics by service group. They show that even in the most profitable corridor, or I shouldn't say most profitable, for it's not profitable, but the corridor that loses the least money, your passenger mile subsidy is still 27¢. Do you have any comparisons for what the passenger-mile subsidy is for highway use in the same corridor?

[Yves Desjardins-Siciliano]

No.

[Pierre Poilievre, Conservative, Carleton, ON]

A recent study produced by the governments of Quebec, Ontario, and Canada on the subject of high-speed rail between Windsor and Quebec City showed that the incremental passenger count that would result would actually not come from cars taken off the road but from passengers taken out of the sky. In other words, you'd be reducing air passenger counts by increasing passenger counts on your trains rather than reducing the number of vehicles travelling on our highways between Windsor and Quebec City.

The airline system is not subsidized, although I know that Mr. Christopherson would like to nationalize it again. In fact, it is a net contributor to the Government of Canada. The airlines pay corporate taxes and fuel taxes. They indirectly pay airport rents, and the passenger pays for the cost of security as part of the fees that you pay to get on board an airline.

Why should taxpayers be subsidizing a money-losing mode of transportation at the expense of a money-generating mode of transportation?

[Yves Desjardins-Siciliano]

Mr. Chairman, I believe the honourable member might be quoting from the 2012 eco-train study.

[Pierre Poilievre, Conservative, Carleton, ON]

It's the study that the three governments did on—

[Yves Desjardins-Siciliano]

Exactly, that's the 2012 eco-train study. That is a study for high-speed rail. That is partially why we don't believe in high-speed rail. High-speed rail is a simple direct substitution of air traffic for train traffic. That means three things for the consumer.

One, the price of a high-speed train ticket is equal to or greater than the price a plane ticket. The proof? Europe today. In Europe today, all high-speed train tickets have higher costs than flights.

The second reason that high-speed rail is not a good idea for consumers is that a high-speed train typically does not stop under 300 to 400 kilometres. That means it would do Quebec, Montreal, one stop in Portneuf, and one stop in Drummondville. It would go from Montreal to Toronto, and it wouldn't stop in Cornwall, Belleville, or Kingston. It would go from Ottawa to Toronto, but it wouldn't stop in Peterborough and it wouldn't stop in Markham. It would go from Toronto to Windsor, and it wouldn't stop at Aldershot or—

[Pierre Poilievre, Conservative, Carleton, ON]

Excuse me, Mr. Chair. We're short on time.

I do appreciate your candour on the subject, though, because I think you're absolutely right, and I'm glad to hear you say it. The point I was making is that the study also demonstrates that rail often does not compete with highway traffic. It competes with airline traffic, even when it's not high-speed rail, so we are subsidizing a mode of transportation that loses money at the expense of one that makes money. That's just the reality.

I point to an example. The Winnipeg-Churchill per passenger subsidy is $1,000. That's just the subsidy. That doesn't include the fare. What is the cost of a plane ticket from Winnipeg to Churchill?

[Yves Desjardins-Siciliano]

There are no planes. Between the 42 stops between Winnipeg and Churchill, there are no planes. That is why the Government of Canada provides a service. It is the same thing on the Canadian from Toronto to Vancouver. On the over 200 stops on that line, there are no planes. At some of those stops, there are no roads. That is why the Government of Canada provides rail service. But that is not my preoccupation. It's my duty to do that as long as the government asks me to do it.

My preoccupation is the Quebec-Windsor impression being given that the traffic growth would come from planes. As I was trying to demonstrate.... What I just said applies there too. If you're in Drummondville, Cobourg, Belleville, or Aldershot, you do not have a plane alternative.

The high-frequency train project we have demonstrates that it will eliminate five million car trips. How many car trips are there between Montreal, Ottawa, and Toronto per year? Thirty-eight million, and they have no substitution, because there is no plane, obviously.

That's where that traffic is coming from. There will be some coming from planes, but on the total corridor there are 45 million trips: 8% by plane, 6% by train, and the rest on the road. This is where we have to come up with an alternative to get people out of those cars, killing our children and our future with carbon gas emissions.... It's by putting them on trains, where they can be not only safer and faster in getting into the cities, but more productive while they're doing it. That's the approach here. I make that correction.

[The Chair, Conservative, Kevin Sorenson]

Thank you very much, Mr. Desjardins-Siciliano.

Mr. Christopherson, you have the floor for five minutes.

[David Christopherson, NDP, Hamilton Centre, ON]

Thank you, Chair.

First off, Mr. Desjardins-Siciliano, we hear from a lot of executive officers and presidents here, and I just wanted to say that I am impressed with your command of your file. I am very impressed, and I'm not easily impressed. That doesn't necessarily mean I agree with everything, but I have to tell you that your command of your file is noteworthy. Really, it is.