Transport Committee on May 12th, 2009

[Helena Borges]

There has not been at this point, because we don't in fact have a corridor yet. Again, it's part of what we're asking the consultants to look at for us. In the study, they're going to look at possible corridor alignments. Until we get to that point, it's difficult to consult, because we don't know what we're consulting on exactly. But I can assure you that VIA Rail reports to us, and the consultations that go on with the communities about service—about the quality of the service, stops, hours of operation, schedules—are intense. I think VIA has pretty good relationships with most of the communities it serves, of which I think there are about 450. So that will be a very important part to us, as, beyond the communities, the transit operators will be, the other operators who would provide complementary services to something like this.

[Colin Mayes, Conservative, Okanagan—Shuswap, BC]

Thank you very much.

[The Chair, Conservative, Merv Tweed]

Is there anyone else? There remain two minutes.

Ms. Hoeppner.

[Candice Bergen, Conservative, Portage—Lisgar, MB]

Thank you.

I have to be honest. I'm very torn on this whole issue, because I come from a rural area where we have VIA services in part of the riding, but for the most part we use our vehicles. We have to drive into our city to use the airport.

I look at this idea and I recognize that it works very well in Europe. Are we wanting to adopt this plan in Canada because we see that it works in Europe and we think, what a great idea it is, and we should do it here in Canada? Or are we doing this because it truly is good economic policy, because it would help a large number of Canadians?

That's right now where my conflict comes in. I'm wondering whether you can tell me.... The report from 1995 says: “...HSR by itself has no significant implications for productivity and there are no permanent effects on growth potential.” I'm just wondering, is this a good plan for Canada as a whole, or are we looking at something that works in Europe and saying, if they have it, we want it too?

[Helena Borges]

As I mentioned before, your issues are our issues. We're looking at those. I mentioned that in section 8 we're looking at the policies that exist in other countries and here, and trying to determine if there are comparable rationales for this. We understand, given the population density we have, that we will never have as strong a business case as they do in the European scenario or, for that matter, in Japan, which probably has an even higher density.

We think it's important to look at those elements. The environmental justification for something like this has evolved considerably. The pressures we're facing today were not there 15 years ago. We've never before looked at the economic opportunities that can be realized with something like this, and we want to look at them now.

So this is part of what we're looking at. I guess we're digging in and asking if we are missing something or whether this is just a good idea we'd like to have but is so expensive or unaffordable that the benefits don't justify the costs. We want to look at it. We think it's important to look at all those elements to provide informed information for decision-making, basically.

[The Chair, Conservative, Merv Tweed]

Mr. Volpe.

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

Mrs. Borges, when we last talked about an hour ago, I wanted to follow the process of regulatory changes that might be required, especially as they emanate from Transport Canada. I think you made some allusions to those, but I'm going to eschew that opportunity and perhaps have a more detailed discussion down the road.

I'm tempted--and I hope you'll forgive me if I lapse into temptation here--to address a couple of the issues that come forward, in part because I'd like you to finish off my soliloquy with your responses, so forgive me; it's the most efficient way of getting points across.

During the course of various types of governments in this country, Transport Canada has aided in expanding the airport transportation system. There has been a substantial amount of investment in the construction of airports for the purpose of facilitating air transport, whether for goods or for people. We've made enormous investments. In fact, we've devolved the sum of the usual authorities that were vested in Transport Canada to local airport authorities.

Second, I think you said that in terms of railways or highways, we would still have to have that infrastructure in place because of the nature of the country, so that asset has to be maintained, no matter what. I think you said that in the context of answering some observations that related to whether this was a more strategic decision or whether it was a regionally based decision. However, since that study in 1995, an additional two million people have moved into what is generally conceded to be the corridor, i.e., Windsor to Quebec City. That accounts for about 55% of the population of Canada.

Keeping in mind that we have a population that's spread out over a huge expanse--and nobody will ever have me contest that--I'm wondering whether we put out some of these facts in order to discourage a decision or to have a more informed decision, because in terms of population density, along that corridor the population density rivals the population densities in Europe and even in Japan.

I'm concerned that some of the things we are asking our consultants to determine are really outside the parameters of making a decision. When I hear some of my colleagues asking if we are taking passenger capacity away from one particular mode and putting it onto another, it becomes interesting for me, and I am wondering if you can address this.

Most of the studies that show where that passenger capacity comes from.... I thought it was you who said that 44% of the short haul is lost to airlines. I suppose that's the example in Europe, primarily. That may well be true, but that's only in the case where you have high-speed transport that rivals the efficiency of air travel.

For example, if you're looking at Toronto-Ottawa or Toronto-Montreal, you're looking at roughly an hour or an hour and fifteen minutes, and if you have high-speed transport that comes within half an hour of that, then you prompt a decision. In Europe, you eliminate rapid air service. You don't eliminate anything else, and a rapid air service will only be impacted in places like Toronto-Ottawa, Toronto-Montreal, or maybe even Quebec-Montreal. It certainly won't have any effect on all that service that's already been eliminated from Toronto to London to Windsor. That's gone. It just doesn't exist anymore. You know that. Over the course of the time that I've been here, we've been slashing away that service. The airlines have done the very best they could to consolidate service, which means you don't get any.

I'm wondering whether we've done an appropriate assessment on that, because as I said when I started off, what's been holding us back? It hasn't been that we want to copy somebody else. The Spaniards watched our example and then said, “Well, we don't want to do what the Canadians are doing”, so they spent close to $600 billion in industrial strategy based on high-speed rail. They have a population the size of ours, but a country the size of New Brunswick. Why do they want to get from point A to point B any faster than maybe the roadrunner can get there? And he doesn't need to get there.

I'm wondering whether we're putting up straw men or women in order not to make a decision. How long will it take us to put the money out? I go back to the $1.8 billion per year. Taking the federal government component of that—and I don't know how much it will be, but let's be generous and say it's 50%—the Department of Transport would be asked to go to cabinet for $900 million a year for the next 10 years in order to achieve an industrial plan.

[Helena Borges]

I can't answer the last part of your question, but I think it's important for us, as officials who have to make recommendations and are making them.... There are three governments—the two provinces are working hand in hand with us on this—and we have stakeholders. As you are aware, Mr. Volpe, when you get into environmental assessments and into making decisions, those who are perceived to be affected negatively will want to understand what the evidence is behind those decisions. It's important for us to have that information.

As you mentioned, the population growth in the corridor has been extensive, but a lot of that growth has been in the two conglomerates: in the Greater Toronto Area and the Golden Horseshoe, and then in the Montreal area. Some of the other communities, even places such as Windsor, where I originate, have lost population, and so it's not even across the corridor. There are pockets of the corridor where that growth has happened.

We need to have that information. I think it's important for us to be able to make the proper assessment and document what the benefits and some of the impacts would be on the other modes. I'll tell you, having been around the Department of Transport for a little while, that even when you make investments in VIA Rail, you get the other modes expressing concern about it, because first, you're paying for capital, and second, you're paying for operating. A high-speed rail system likely will require significant operating subsidies as well, not just capital. Most of the systems around the world are government-subsidized systems, and we expect this one will require subsidies as well.

It is a big investment for both camps, and you want to make sure you have the information and can justify why you would be recommending whatever direction ultimately is recommended.

[The Chair, Conservative, Merv Tweed]

Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair. As a visitor to the committee, I appreciate the opportunity to ask a couple of questions.

It's good to see you again, Ms. Borges.

I've had a chance as well to travel to Japan, and the Shinkansen, the bullet train, is phenomenal technology. Obviously the density of population that Mr. Volpe alluded to—the corridor, the demographic, and the geographic area—is what we're studying. I grew up in Alberta, and the Edmonton-Calgary corridor has been studied, but nobody has come up with a viable economic or business case to date, even with that kind of concentrated population.

So I have a couple of questions. One is that we're looking at the ridership of rail versus all the other modes of transportation and at the expediency demanded by society: we need to get from point A to point B quickly. Is rail ridership on the increase?

[Helena Borges]

Ridership has increased in the past year for VIA. I forget the exact amount, but it's by close to 1%. As you may recall, VIA's network was significantly reduced back in 1990, and since then, every year VIA has recorded small but definite improvements.

We have seen important growth in some of the commuter rail systems across the country, whether on West Coast Express in British Columbia, GO in Toronto, or AMT in Montreal. I think what that's telling us is that people are prepared to shift to those modes and are travelling longer distances on those modes. Most of the commuter rail services are travelling quite a distance. They're not short-haul; they're a significant distance apart. And people seem more amenable to taking it.

I guess we want to see whether that trend can be applied to this, and whether this service is provided in a timely trip time that starts to rival air or can provide a time duration equivalent to air. I think, as many people notice, that it's much more convenient to travel by rail. As you know, we don't have to sit stuffed together in an airplane and don't have to do the same kind of check-in as early as possible. People may be more amenable to taking rail than they were 10 or 15 years ago.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Obviously that's why niche airlines such as WestJet—or Porter, specifically to Toronto—even this week sat on the tarmac for a while in Toronto. You could probably be back and forth from downtown Ottawa to Toronto within that waiting time, sometimes.

The supplementary question, then, as we look at this study—and some of the previous speakers alluded to it—is that I want to know whether, in the business model out of this study, they will be looking at other options, such as a P3 model.

[Helena Borges]

They will, definitely. We've asked them, in fact, to look at that.

We think this is an opportunity in two ways: one, to attract other investment in a service like this, but also as a model whereby we could share some of the risk with the private sector, and some of the opportunity too. So a P3 model is something we definitely want to look at.

They looked at it in the 1992-1995 study. Back then, P3s were not really well known, but now they're used highly across the country and they're practised across the world. We think there might be opportunities here.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

I have one last question with regard to a cost-benefit analysis. I know that from an environmental perspective it's one of the elements. If you take the multi-billions of dollars that are being invested in this and look at investing in other modes of transportation and at green technology, it's growing at an accelerating speed--where we are today and with what's out there; for example, a lithium battery for the automobile and working towards other modes of transportation. Is this going to be part of the study as well: looking at the economics of this project versus investing in other green-friendly technology?

[Helena Borges]

We're looking at it in terms of the impact on the environment of using high-speed versus.... For example, as we all know, the automobile has become very efficient. The emissions it now emits, compared with those from automobiles 15 years ago, are very different.

This has been a challenge every time we look at passenger rail. Passenger rail is very environmentally friendly when you have large numbers of people, because rail is more environmentally friendly than the other modes, but you need the people on it. When we're looking at this, we need to keep in mind what kind of energy would be used for this service. If it's electricity, does it exist? Do we have it? What's the impact of the emissions from that versus continuing to use the automobile, versus continuing to use more planes, or even buses? That is part of the benefit-cost analysis of the impact on the environment.

As well, there is the physical environment, because depending on the routing, we again could be impacting the physical environment through the location of the service.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

We may need a solar-powered train. Thank you.

[The Chair, Conservative, Merv Tweed]

That concludes the rounds, but I think we're going to open up the floor and allow some individual questions. I have Mr. Dhaliwal, and then we'll just keep making up the list.

Mr. Dhaliwal.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Thank you, Mr. Chair.

Ms. Borges, I was going through the cost-benefit analysis you have done, and I see that you have assumed a discount rate of 8%. With a 1% change, there is quite a bit of change. You can achieve a lot if you go to 7%, or if you go to 10%.

So what is the discount rate you foresee in today's market, and how would it impact the cost-benefit analysis that we have?

[Helena Borges]

That was for the previous study. We're going to be redoing all of it.

At this point we haven't discussed yet with consultants what discount rates to use. It's usually an average of what the provinces use and what the federal government uses. Treasury Board has a discount rate that it uses, but each of the provinces tends to use something different. We'll probably look at what market discount rate would be suggested in terms of a project of probably a 30-year lifespan or so and then try to normalize that with what the treasury boards of the three governments would impose.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Do you see it as higher or lower than 8% now?

[Helena Borges]

I wouldn't want to speculate at this point. We'll wait to see.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Okay, thank you.

[The Chair, Conservative, Merv Tweed]

Monsieur Laframboise.

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

Ms. Borges, the request for proposal, for which the Government of Canada paid $1 million of the $3 million, is dated August 14, 2008. Since then, though, the Americans have launched an initiative. Do you think it would be a good idea to ask that the consultant take the American policy into account?

I do not know the results of our study. I do not know whether the study will recommend development at the stations in Montreal and so on. Perhaps one day there will be a link with the Americans. It might be a good idea to anticipate that. The consultant may say it is too early to do so. Don't you think that might be worthwhile, even if it means sending a request to Quebec and Ontario as well, indicating that the committee is concerned about what is happening in the United States and would like that to be taken into account?

[Helena Borges]

We have already included that in section 8, which refers to a review of transportation policies in other countries with HSR. The Americans are the closest example for us. We want to look at that, and I think that the study will be completed by January or perhaps February.

As for the American program, according to the schedule, the invitation to the first round of proposals is not extended to later this year. It concerns projects that are ready to go. The second round, which involves high speed rail corridors, may not take place before next year. We do not know the date. It is not included in the report. However, I think we will have time to look at that and see whether it has an impact on the results of our study. Our study will be at a higher level. The idea is to make recommendations and see what we should do. Should we go ahead or not? I think we will be able to take all those considerations into account when we decide what should be done and what the next step might be.