Transport Committee on Sept. 20th, 2023

[The Chair, Liberal, Peter Schiefke]

I call this meeting to order.

Welcome to meeting No. 77 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 discuss its study on the high-frequency rail projects for the first part of the meeting and committee business for the second part.

Today's meeting is taking place in a hybrid format, pursuant to the House order of Thursday, June 23, 2022. Members are attending in person in the room and remotely using the Zoom application.

I wish to inform the committee members that all witnesses have been tested for sound and interpretation purposes for today's meeting and have passed the test.

The witnesses appearing before the committee today include Patrick Massicotte, president of the Chambre de commerce et d'industries de Trois-Rivières, who joins our meeting by video conference.

From Transport Action Canada, we have Terence Johnson, president. Welcome.

We also have three representatives of Via HFR: Martin Imbleau, chief executive officer; Marc‑Olivier Ranger, corporate secretary; and Graeme Hampshire, project director.

We will begin with opening remarks from all of our witnesses. We'll start off with Monsieur Imbleau.

The floor is yours for five minutes.

[Martin Imbleau, Chief Executive Officer, VIA HFR – VIA TGF Inc.]

Thank you, Mr. Chair.

Although I have been in my new role for barely two weeks, I have decided to join you this evening, and I will try to answer your questions as best I can. My colleagues are obviously here to support me.

What convinced me to join the team to develop this new modern service to link communities in the Quebec City-Toronto corridor was its next-generation-of-public-service aspect. The success of this project depends on many factors, starting with its social acceptance. As much as I am here to speak, I am also here to listen. Openness and collaboration are key to its timely development. In fact, the project's acceptance requires that we listen to indigenous communities, stakeholders and our future passengers.

As you know, we are a new Crown corporation, almost 10 months old, and our mission is to revolutionize travel by delivering a superior railway service in the Quebec City-Toronto corridor. However, our mission is to bring people closer together and to open doors because that's important. It is to provide an environmentally sustainable, punctual and affordable service to improve the passenger experience, because that's required now, for tomorrow and for generations to come.

We will bring the country's three capital cities closer together, including these two major cities, to strengthen the connection between Canada's two largest economic lungs, and to serve 15 million people in a growing corridor. We will shorten the distance between cities and communities and among friends and families.

Allow me this one personal comment. I've been developing major infrastructure projects for more than 25 years, mainly in the project corridor. I'm not an expert on trains, but, in all that time, I've essentially been driving my car to Quebec City and Ottawa and taking the plane to Toronto. Why? Because the trains don't run frequently enough, aren't on time enough and aren't fast enough. We can't just add extra trains these days. We don't own the railway tracks, unlike the railway companies that carry freight. More congestion has an impact on the transportation of freight, and that's not good for the economy. I learned a little about that in a previous life. Our mandate isn't to keep doing the same thing. Providing an appealing solution is.

This project provides choice by shortening travel times and connecting communities. It's about running twice as many trains faster and on time.

Many people ask about speed—understandably so. We will reach high speeds where it's feasible, safe and affordable. For information on the current procurement process, each team bidding on the project must provide two solutions. First, they must be able to achieve speeds up to 200 kilometres an hour—so faster than current services—but, second, bidders will propose services to go even faster.

Allow me this comment. The objective is not top speed for the sake of speed. It's about saving time. Faster average speed that shortens travel time is the way to go. You all already know how frustrating it is to get to Ottawa by plane or car in crowded airports and on congested highways. Ultimately, this project is about a more flexible, faster and convenient way to travel.

On another front, passenger transportation will remain an important source of GHG emissions as the population grows unless we offer a true, better, sustainable choice that affects behaviour—or the situation won't change. As well, putting passenger trains on dedicated tracks provides more capacity for freight, so oil and grain will then reach ports faster also. In our solution, we benefit people, the economy and the planet.

I know that this project is undesirably complex. It's also ambitious, but with the participation of the private sector, we think we have chosen the right approach, and our project is gathering momentum. The government is leading the procurement process to find a best-in-class team that will work with us. In July, three bidding teams qualified for the government request for proposals. The goal is to pick one of those consortiums by next year.

As I mentioned, since I've only recently taken up my new role, I am mainly spending my time listening to you and to communities, the public and stakeholders. I definitely intend to deliver this project in a fully transparent way, and this committee will regularly be kept informed of our progress.

Thank you for listening to me. My two colleagues and I will be happy to answer your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Imbleau.

Next we have Mr. Johnson.

Mr. Johnson, the floor is yours. You have five minutes for your opening remarks.

[Terence Johnson, President, Transport Action Canada]

Good evening, Mr. Chair and honourable members. I am very glad to be with you in person today to describe high-frequency rail.

My journey from Chatham, Ontario, this morning, took 10 and half hours. If the promises of HFR are kept, that will be six and half—a big difference.

HFR when initially announced was supposed to quickly triage Canada's ability to run trains on time and operate enough trains to meet demand, putting Via Rail Canada back on a sound financial footing and getting it ready to build on that foundation across the country.

Transport Action members and supporters naturally had questions and concerns when this proposal was first unveiled, such as why high-speed trains would not be built as was previously studied. Past governments had balked at those costs, and HFR was supposed to provide most of the benefits.

Would smaller cities face service cuts? Assurances were forthcoming that that wouldn't be the case.

Could the timings be achieved on the proposed Havelock alignment? We later saw data that demonstrated the feasibility.

How would this project compare with upgrading the existing route?

Why diesel when electrification could eliminate all emissions?

Even with dedicated tracks for most of the distance, a passenger rail act was still going to be absolutely vital for the times when there was interaction with freight and to make the rest of the network work.

What about the rest of Canada, such as Calgary to Edmonton, for example?

Finally, would the government study delay and ultimately fail to act as did EcoTrain, ViaFast and every other study in the last 40 years while Canada fell further and further behind its global peers on rail? Eight years later, the last of those fears seems pretty accurate.

Yves Desjardins-Siciliano and his colleagues launched extensive public consultations in 2016. The information provided to Transport Canada included a business plan, ridership and infrastructure studies, all done by Systra. That was checked by international peers and a class 3 estimate was done. HFR was decision-ready by summer of 2018, but our government hesitated. Had it followed its Crown corporation's advice, HFR would already be in the final stages of construction today and would be in service by 2025.

Instead, the JPO was created with the Canada Infrastructure Bank in 2019 with a mandate to de-risk the project and a budget of $71 million. The tasks it was assigned, including further engagement with indigenous communities, do not appear to have been accomplished. Its report wasn't published. Information obtained under an access to information request was in heavily redacted form. What the public has seen wasn't worth $71 million.

In 2021, Minister Alghabra made announcements that indicated HFR was indeed finally going ahead. It looked as though the impact assessment would start that fall. Then we had an election. Things went quiet, and that IA didn't start.

Then on March 9, 2022, came the bombshell. What had been Via Rail Canada's $4-billion project to rebuild about 80 miles of track between Havelock and Glen Tay and to upgrade the rest had been turned into a megaproject with a procurement timeline stretching out towards the end of the decade, in which Via Rail was to be shoved aside and the entire Quebec-Windsor corridor outsourced to a private partner taking on revenue risk over a concession period of 30 or more years. With scope creep potentially driving the cost back to $12 billion, it was more like EcoTrain.

The long-awaited start of procurement should have been cause for celebration. Instead, morale at Via Rail took an absolute body blow from this. Nobody had been warned that it was coming. It is not clear how the rest of Via Rail services across Canada will survive without the corridor as their anchor. Nor is it clear how Via Rail is supposed to grow service to continue meeting demand and fully utilize the new fleet that will be delivered between now and the mid-2030s. The government provided no explanation for this pivot.

The page on procurement models in that JPO report was blacked out. There are some really good reasons I can think of for not doing it. Key factors, the factors that will determine long-term demand in ridership, are completely out of a private partner's control.

Will Canada become a country of 50 million, 60 million or 70 million? What will our immigration policy be in the mid-2060s? Will we get any better at distributing growth across the country, or will we stall as other countries do better than we do at accepting international qualifications? What will our housing policy be?

Cornwall and Brockville, for example, haven't set high targets for new homes, but with the frequent trains to Ottawa and Montreal that they've been promised, they could really grow. Peterborough could become a city of a quarter of a million, but only if other policies make that possible.

With gas tax revenues falling as our cars are electrifying, how are we going to price and subsidize highways? How will other competing modes be regulated? Will European-style competition be brought to the rails as was previously discussed? Asking the private sector to price these unknowable risks rather than the controllable risks of project delivery is illogical. There is a herd of public policy elephants in the room, stomping across the balance sheet. The resulting hefty risk premium will end up being paid by taxpayers and passengers, and if a private partner gets into difficulties, it can leave taxpayers to pick up the bill.

The United Kingdom's experience has been a fiasco, even with shorter time horizons for ridership forecasts. It's also notable that the proponents in the recent phase were only asked to provide a class 5 estimate, so we have gone backwards.

The only justification we've been given for this outsourcing is to import the expertise of Deutsche Bahn or SNCF. We do not need to do that.

[The Chair, Liberal, Peter Schiefke]

I'm sorry, Mr. Johnson. I'm going to have to ask you to wrap up your remarks, please.

[Terence Johnson]

The key to their success as European railways is solid policy and financial backing from their governments. What Transport Action Canada members ask the government to do is to give Via Rail solid policy and financial backing to get the job done.

Thank you.

[The Chair, Liberal, Peter Schiefke]

Perfect. Thank you very much, Mr. Johnson.

Mr. Massicotte, you are our next speaker, and you have five minutes for your opening remarks. The floor is yours.

[Patrick Massicotte, President, Chambre de commerce et d’industries de Trois-Rivières]

Mr. Chair and members of the committee, thank you for the opportunity to speak to you today on the topic of high-frequency rail.

My name is Patrick Massicotte, and I am president of the Chambre de commerce et d'industries de Trois-Rivières. Our organization has 750 members and has been a major player in the city's economy for 141 years.

We are not a recent supporter of high-frequency rail. Since 1982, the Chambre de commerce et d'industries de Trois-Rivières has worked toward the creation of a new mode of rail transport that would run through our city. Over the years, we have prepared two briefs, sent many letters of support for the project to the Department of Transport and hosted conferences for numerous transport ministers, as well as Via Rail, to promote the project to our members. As you can see from all those mobilization efforts, the Chambre de commerce et d'industries de Trois-Rivières has supported this project for more than 40 years. We are still supporting it 40 years later and will continue to do so.

Trois-Rivières is well situated geographically. Our city occupies a strategic position between Quebec City and Montreal and is the economic centre of Mauricie, a growing economic region. With its proximity to the St. Lawrence River, it is a major entry point for goods through the port of Trois-Rivières, which is a highly efficient institution. Then there's our airport, which can accommodate commercial aircraft and recently underwent a $20‑million expansion. So as you can see, rail transport is the missing link that would round out the range of services provided by marine and air transport. This is one of the reasons why the high-frequency rail project is so important for our members and our entire tri‑river community.

Given the current labour shortage and uncertain economic situation, Trois-Rivières and surrounding cities and towns are fortunate to enjoy major investments through the Vallée de la transition énergétique. The Quebec government has announced the creation of this innovation zone, established from Bécancour to Shawinigan, which will help vitalize the industrial sector and provide high-quality, and of course well-paid, employment opportunities. These new labour needs clearly cannot be met by the labour pool in Mauricie and Centre-du-Québec. This is where a foundational transportation project such as the high-frequency rail, or HFR, project comes into play. I should also note that this would make it possible for workers and entrepreneurs from our region to travel quickly and easily to Montreal, Toronto and Quebec City for business development purposes and to expand their businesses. This is one of the HFR project benefits of particular interest to our members.

Trois-Rivières has considerable tourism potential given its high-quality facilities such as the Amphithéâtre Cogeco and the Colisée Vidéotron, its many festivals and its active and dynamic cultural life. The HFR project would facilitate access to this infrastructure and these cultural activities for tourists from here and elsewhere.

I will conclude my remarks by emphasizing how important it is for Canada to have a foundational rail transport service. This kind of project is fundamentally important if we want to promote our regions and reduce congestion in the major centres. A station in Trois-Rivières will promote our city's economic and social development and provide a natural boost to Quebec's development. As I mentioned earlier, the Chambre de commerce et d'industries de Trois-Rivières has been advocating this kind of project for more than 40 years. We may have been visionaries when we discussed a high-frequency passenger train that would stop in Trois-Rivières, but we are convinced now, in 2023, that it has become a necessity. The time has come for us to get this project on the rails and cement Trois-Rivières' place in the economic landscape of Quebec and Canada.

Mr. Chair and members of the committee, thank you for the opportunity to speak with you. I will be pleased to answer your questions.

[The Chair, Liberal, Peter Schiefke]

Thank you very much, Mr. Massicotte.

We'll begin our line of questioning today with Mr. Strahl.

Mr. Strahl, the floor is yours. You have six minutes for your line of questioning.

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

Thank you, Mr. Chair.

Thank you to the witnesses for joining us at the end of the working day. This is a new time slot for us, and I appreciate your being here to participate with us.

It's my understanding that in 2017 the original cost estimate to proceed with this project was about $6 billion. As of the end of March in 2021, the information we've gathered is that the revised cost estimate was about $10 billion to $12 billion. The estimate doubled in cost in five years.

The cost of everything has gone up. We all know the inflationary pressures. The cost of borrowing has skyrocketed.

This question will be for the Via team first. Given those escalating cost estimates prior to the inflation and interest rate crisis, how many billion dollars more do you think it will take to actually get this project built? What is the current estimate to get the project completed?

[Martin Imbleau]

Thank you for the question.

I cannot comment, of course, about the past estimates, but the current situation is the following.

The scope of the project could have been different and the process on which we have embarked is to find a private partner consortium to better define what the scope will be and to, of course, in that process identify and refine what the budget will be. It's difficult today to have precise numbers, or it would probably be imprudent to throw numbers out, because the scope is not defined. The corridor is, but the scope is not defined. The technology is not well defined yet.

I think we absolutely need the support of the expertise in the private corporations to support us. The process in which we are, the procurement process, is to select that partner and work in codevelopment to provide Canadians with the best economical and operational solutions in a few years to come.

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

It would be safe to say that the price has not gone lower and that it would be above the $12-billion estimate that was released in 2021.

[Martin Imbleau]

A thousand kilometres of above-ground facilities, a thousand kilometres of electric line and a thousand kilometres of moving parts to move 15 million people.... I've done linear projects for 25 years. I think it's fair to assume that the estimates you have are probably not adequate anymore, but I won't commit to any further numbers.

One of the things we want is for this process to be competitive. We want the private sector to not only help us but to remain competitive and to compete with one another. We'll be in a position to provide better numbers in a few years' time.

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

Certainly, I think I heard the magic phrase from Mr. Johnson that the federal government was looking to “de-risk” the project, and it cast my mind back to the Trans Mountain pipeline. When that was purchased by the government from the private sector, the cost estimate was $5 billion. We now know that the cost to complete that project is over $30 billion.

Given that you're operating in essentially the same environment—and it will likely be a more expensive environment—and that project is now 572% over budget or over cost estimates, I realize that you don't want to be pinned down on the number, but why wouldn't this project similarly go from $5 billion or $6 billion to over $30 billion? That's the record we have with this government and big infrastructure projects like the pipeline.

I guess I'm trying to get some reassurance from you that this won't turn into another massive cost overrun where taxpayers end up picking up the tab.

[Martin Imbleau]

We're at a fairly early stage in the process. The estimate we would share would be pre-FID. We're not talking about potential cost overruns but about evaluating the best estimate, which we don't have at this point in time. However, the concern is legitimate, considering, of course, that everyone is following what's happening on the construction site.

One of the particular aspects of the process that was suggested to us as a codevelopment is that, instead of having only the private sector or only a Crown corporation isolated to work in defining the scope, the mandate we have is to take adequate time and apply the right resources to pin down the right scope for Canadians and ensure that what we build is at the right cost and is affordable but is also economical for the future.

Cost is one thing, but—

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

I have just another minute here.

I wanted to get an idea of the envisioned per passenger subsidy. What is the current one in the current Windsor to Quebec City corridor, if you can provide that number, and what do you anticipate the current subsidy from the government per passenger to be?

If you don't have that number in terms of what it is now, how you estimate that will change with the new project or what that number will be, could you table that with the committee, if you are able to get that number?

I think it's germane to taxpayers again to know. Is that changing? Will they be expected to subsidize passengers more as these costs go up and as this new project rolls out?

[Martin Imbleau]

We can certainly find the information on the current situation. I don't have it, but if it's public, we'll make it available.

For the future, those numbers don't exist because the economic model is not defined, but one of the mandates we have is to limit, over time and during the operation phase, the subsidy for the operation in the corridor between Quebec and Toronto.

[The Chair, Liberal, Peter Schiefke]

Thank you, Mr. Imbleau.

Thank you very much, Mr. Strahl.

Mr. Iacono, the floor is yours for six minutes.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you, Mr. Chair.

Welcome, gentlemen, to our committee tonight to enlighten us all on HFR.

Mr. Imbleau, congrats on your new position. Thank you for all the good work you accomplished at the port of Montreal.

Indeed, I agree with you. It is an ambitious project. Briefly, why do we need high-frequency rail between Toronto and Quebec City?

[Martin Imbleau]

It's because 15 million people don't have adequate service to move around, which is detrimental to the economy. The team took the train today and it took a very long time, so we're using other options. We're still using our personal cars or we're taking the plane which, in the 21st century, is probably not the right way to go.

I made the joke to someone else before that trains are like sausages. The more we build them, the more they will be used. That's exactly what is happening everywhere in the world for climate purposes. However, for economic purposes, that corridor between three capitals—two of the largest cities—does not have an adequate train service, which is desperately needed.

I think the law of gravity is there to justify it.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Thank you.

I have a question for Mr. Johnson.

We hear lots of voices calling for high-speed rail instead of high-frequency. In your view, how should the extra costs associated with HFR be accounted for? Should they be paid through higher fares? Should the costs be shared by different levels of government?

Answer briefly, please.

[Terence Johnson]

This is one of the questions we get from a lot of our supporters and members, but there is a really good reason HFR originally avoided it, which is that when you go above 110 miles an hour, costs hockey stick. Costs go up a lot because you have to grade separate everything and you have to realign all the curves, etc., and the project takes many more years to build.

If the cost of this project doubles, that means there are other projects that Canada cannot deliver to other parts of the country that don't get a train service. That's where we would say there is a real problem with what's happening here, and the cost and the scope of this are getting further ahead.

Remember that the original idea was that there would no longer be a need for a subsidy in the Quebec-Windsor corridor. In fact, Via Rail Canada would make a small surplus, which could be redirected to the rest of its services across Canada.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Approximately how much more would it cost to deliver an entirely high-speed project as opposed to high-frequency, and what effect would that have on fares and on ridership?

[Martin Imbleau]

We don't have the delta cost to do a full fast train, but allow me to be more precise.

I think we're embarking on a false debate about what is frequent and what is fast. There are many definitions of what a TGV or a fast train is out there. The reality is that the proposal is to build a train that is as frequent, as fast, as reliable and as economical as possible.

Is it 200, 210 or 225? We will define what it is and what is optimal in the corridor to serve what we think will be 17 million passengers in 20 years from now.

[Angelo Iacono, Liberal, Alfred-Pellan, QC]

Would you please explain to us exactly what the role of Via HFR will be and how it will differ from those of Transport Canada and Via Rail?