Transport Committee on Nov. 3rd, 2009

[Lois Brown, Conservative, Newmarket—Aurora, ON]

So the last time high-speed rail study was done in Canada—there was a report done in 1995—did you present to the government of the day at that time?

[William Cruickshank]

No.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Is there a reason why?

[William Cruickshank]

We weren't involved in Ontario. We were in—

[Lois Brown, Conservative, Newmarket—Aurora, ON]

But the high-speed rail was not just going on in Ontario at the time. There was room to discuss this.

Mr. Graves, do you know of any presentation that was done then?

[Frank Graves]

No. I was briefly involved in some work that was done earlier. I think it was in the late 1980s, but I wasn't involved in the mid-nineties work.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Okay.

I have a question for Mr. Cruickshank. You spoke about Norway, Denmark, Sweden, and Finland and there being five and a half million people. They each have about five and a half million people in population, do they not?

[William Cruickshank]

Yes.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

They're sharing. I mean, there's quite a different ridership in Europe from what we have in Canada. What projections do we have for ridership between Edmonton and Calgary? Is it feasible that trains are going to run all day, every day, and be profitable?

Mr. Graves, I represent a riding just north of Toronto, so my interest, obviously, would keenly be the Toronto to Montreal corridor. Have you done any polling, or are there any studies that have been done, about bringing high-speed rail or higher-speed rail into York region? I see the problems in going into the downtown area as significant in terms of land acquisition, whereas we may be able to do something north of the city.

That's a whole ball of wax. And I'm supposed to be sharing this with Mr. Del Mastro. I'm sorry.

[William Cruickshank]

To your question on ridership, the ridership study released by the Government of Alberta is in the public domain. It did a worst case, base case, best case study of ridership in the first years of the project. You're looking at between 2.7 million and 3.5 million passengers a year, which is well above the threshold for us to operate the trains and make money.

I should also point out, as John was saying to me, that when engineers do their engineering talks, if you take a worst-case scenario with them, they add on 50%. So when I say $3 billion, you're still only talking about $4.5 billion. There's a great perception in the press in Alberta that this project's going to cost between $3 billion and $20 billion, and this range is just far too wide. There is not the need.

We have looked at the cost of this line. We've compared it to building a brand new line in Australia. We've met with engineering companies from Finland, and they have done work on high-speed rail in Europe at the 300 kilometre per hour level. Their reports say how much they were spending per kilometre in Europe, and we're still in the ballpark. We have never seen an instance when we are not in the ballpark. These big numbers get out there, and you just can't get them back down to where they really are. All of us are comfortable with these numbers.

When I first saw Ralph Garrett's estimate--being a banker, I saw lots of estimates cross my desk--I phoned up Ralph and said, “Okay, the numbers add up. Tell me why it's right.”

To get 50% of what you have to buy to build a railway, you phone up the manufacturer today and say, “What does it cost to buy 600 kilometres of rail line and 75,000 concrete ties?” Go to the Government of Alberta's web page. You'll find what it costs per square foot to build a reinforced concrete bridge--buying the overhead cables, all the equipment that goes with the electrification, substations. Frank can phone up somebody and ask what the cost of buying the articles is.

You have 50% of your cost based on something you order from the manufacturer at a cost that's known today. The prices vary with exchange rates and the price of base metals, but that's fine. We have contingencies of about 20% in the whole of this estimate. Your basic risk costs are in how much earth you move and in any environmental problems that arise. Finding gravel in the northern half of Alberta is more challenging than it is in the southern half.

Is that basically right, John?

[John Chaput]

That's what I'm told. As we go farther north, the soil conditions get a little more moist, so they will likely be required to have a greater amount of excavation to get a good solid roadbed. Unfortunately, where you need the gravel most is where it gets a little bit more scarce. But again, we've priced all that based on the best information we can get.

Bill's point is that almost half the total cost is material we can go out and price tomorrow. You just multiply by the number of pieces you need. I'm not saying that it's going to be that simple. But the people we're working with know and understand what we're trying to achieve and what kind of equipment we're talking about. They are quite capable of pricing it within plus or minus 20%.

[The Chair, Conservative, Merv Tweed]

I have to interrupt.

Mr. Graves, I know that you have to leave. Did you have a final comment?

[Frank Graves]

I'm good for another five to ten minutes.

[The Chair, Conservative, Merv Tweed]

Be very brief.

[Frank Graves]

I have just a quick comment, if I could, on the question. We did isolate and look at different communities, and obviously our sample sizes get smaller and therefore so does our precision in the estimates. But looking at individuals, we had large samples in Ontario and Quebec. We had large samples that included people from Toronto and Montreal in particular. Let me put it this way. You would probably find that we might have had maybe 400 to 500—400, let's say—out of the 1,600 to 1,700 in the sample in that corridor. You would have found not more than literally 10 or 12 who were opposed to this, even when we mentioned the kinds of numbers involved.

Granted they are not aware of all the technical difficulties, rights of way, getting in and out, but I think they also have some understanding of some of the costs involved and they understand that this would be a massive undertaking.

The levels of support were extraordinarily strong, the strongest, in those parts of the country. Support in those areas was literally in the 90% range. Respondents also were not particularly interested in higher speed and didn't understand this as a higher-speed activity. They thought of this as something that only really clicked in—and this was particularly true in Quebec—when you started getting up into the 200 kilometre per hour and even 300 kilometre per hour ranges.

So definitely before things move forward you'd want to test those more definitively, but this is an overwhelming initial endorsement.

I have one final point. Overall this was representative of the Canadian public, and 60-odd percent said this would make them far more likely to take rail in the future as an alternative or an addition to the rail patterns they were taking already. Of those, half said they would be much more likely to, and this would immediately affect their travel patterns. This was particularly true of the dedicated travelling public who are currently taking air, bus, and rail, because we looked at both behaviour in the past year and intentions for the coming year. Those were the groups that were most attracted to this particular initiative, although there were also a lot of people....

By the way, we have found that the greatest fear the Canadian public has in terms of transportation safety—and this has been a rising fear through time—is of highways and highway congestion and the comingling of transportation for freight purposes on the highway with passenger traffic going for other purposes. This is why some of the benefits were not seen as being produced by just the economic advantages but also significantly the safety advantages and the environmental advantages. Those things were felt most strongly in these parts of the country.

[The Chair, Conservative, Merv Tweed]

Mr. Volpe or Mr. Scarpaleggia.

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

Mr. Scarpaleggia.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

Thank you.

Mr. Graves, this is a hard puzzle to solve when it comes to Alberta. We hear it would be a profitable venture. We hear the population is in favour of this. We hear legislators are in favour of it. Is it possible, in the Alberta context, that the population is in favour of it as long as it doesn't involve public money?

One gets the sense that Albertans are not opposed to large endeavours like the oil sands, for example, but my sense is that they don't like grandiose projects that could involve a loss of public money. We have seen, for example, that whenever there has been an economic downturn, there's a reticence to running a deficit. And then the first reaction will be to cut hospital funding or cut funding for education in order to keep the budget in balance.

So I am thinking maybe people like the concept and would be for it as long as the private sector covers the cost.

[Frank Graves]

I could just add something, because I do have an Alberta sample as well, and Albertans are not that different on this particular question.

The public is fully aware of the fact that governments make their response. They would support it in recognition that government funding would be a precondition for any movement forward, not just in terms of the initial creation but, they believe, in terms of the perpetuation of the system once it was operational. Of the respondents—and Albertans weren't that different—80% said they would endorse this, even recognizing that there would be a need for public funds.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

I can't figure it out, because we have the public for it and we have legislators for it. It's a perfect situation, because as you were saying, Mr. Cruickshank, Alberta has a flat terrain and it's not overbuilt yet. It's probably the most amenable situation to high-speed rail. So what is holding us back? I don't understand.

[William Cruickshank]

The Léger poll that came out about two years ago in Alberta specifically asked Albertans, “Would you have the government invest in this project?” More than 65% said yes, they should.

What's holding it back in Alberta is a fascinating question, but in the ten years I've been doing this, we have had three premiers and one leadership race. As you know, Mr. Stelmach is having his annual conference this weekend, and there's a vote coming up, and I would like to hope that in the interest of keeping continuity they will support him, because we don't need to go into a leadership race again.

What's holding this up? There's an awful lot going on in Alberta all the time, but in the big booms, prices were going up all the time and everybody was getting very rich. Then all of a sudden it came to screeching halt, and being in the banking business, I was out there trying to find all this money I'd given out. We went from feast to famine. The transition in Alberta is very severe between feast and famine. We've gone from having about 3% unemployment, 18 months ago, to having 10,000 fully qualified engineers in Calgary out of work. It's a dramatic change. All this change, of course, suddenly going from a projected $8 billion profit to a $4 billion deficit, causes a legislator's comfort zone to change dramatically.

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

You're essentially proving my point, which is that when times get tough there's no appetite for public spending.

[William Cruickshank]

That is true, but as I said, we're looking at the private sector--

[Francis Scarpaleggia, Liberal, Lac-Saint-Louis, QC]

That actually brings me to another question. I don't mean to interrupt, but I don't have much time.

[The Chair, Conservative, Merv Tweed]

You have 20 seconds.