As president and CEO of the Railway Association of Canada, I welcome the opportunity to appear before the committee today to speak on the subject of high-speed rail in Canada.
Our membership, as you know, includes Canadian class one freight railways, CN and CP; a number of U.S. class one railways that operate in Canada, such as BNSF; and some 40 shortline freight railways. Further, we represent regional railways, such as Ontario Northland; Canada's national passenger railway, VIA; large commuter railways GO, AMT, and West Coast; a number of smaller commuter railways; and a number of tourist railways across the country.
Overall, the RAC fully supports all measures that foster increased use of passenger rail services in Canada, including the development of high-speed rail systems. I cannot recall a time when Canadian public support for high-speed rail has been higher. Polling commissioned by the RAC demonstrates that high-speed rail is supported throughout Canada, even in regions of the country where it is unlikely that high-speed rail service will be available at any foreseeable future time. Support is also strong for public and private involvement in future high-speed rail projects.
Going forward, Canada needs both conventional and high-speed rail passenger services. A high-speed rail system must not operate in isolation; it must be a component of a multimodal transportation system. In terms of system efficiency, good linkages to public transit, airports, conventional intercity passenger rail, buses, and a range of other services are absolutely critical for high-speed rail to optimize its benefit to the country.
Today I'd like to focus my comments on the role of governments and the private sector in developing high-speed rail networks and the associated benefits for the rail system, Canadian industry, technology, and the environment.
First, on the public-private interface, there is clearly a role for both public and private sectors in developing a high-speed rail system. Quite frankly, both parties need to work together for high-speed rail to be realized. No major high-speed rail project in the world has been developed by only one of the parties. It takes two to get these jobs done.
To begin, we are glad to see that governments are currently supporting the feasibility study of high-speed rail in Quebec and Ontario and have supported past studies, such as the one recently completed in Alberta. The Quebec-Ontario study should be completed in a timely manner and should look at a range of economic issues, including industrial and environmental benefits for Canada and the potential for technological development and deployment.
Further, this assessment must consider all aspects of the rail network. Entire system efficiency is critical to the future success of our industry. Governments should avoid trade-offs between one part of the system, such as freight, and another part of the system, such as high-speed rail. Investments in passenger rail can improve the rail system for both freight and passenger rail if properly planned and implemented. The current $407-million program to upgrade VIA services on CN's main line is a very good example of those sorts of synergies.
Further, governments must undertake banking, where necessary, of identified corridors. The RAC is aware that the banking of land is currently taking place in Alberta. Getting the corridors identified and the dedicated high-speed rail rights-of-way in place is a critical step in developing any high-speed rail system. To ensure safety and efficiency, the high-speed rail system cannot share track owned and operated by our freight railways. Simply put, ladies and gentlemen, you cannot operate a train at 150 to 200 miles an hour on the one hand, and a freight train at 40 to 60 miles an hour on the other, on the same track. It just won't work.
We believe that it is incumbent on governments to explore all financing options, including public-private partnerships. Even in this current economic climate, there are large pools of capital available in Canada that would be attracted to investments in infrastructure projects that will provide long-term, reasonably predictable returns. I believe that there's greater public support for a partnership arrangement than there is for governments trying to go it alone.
Let me speak now about other benefits. I would like to make a few points about industry, technology, and the environment.
The government must do a thorough analysis of industrial benefits associated with high-speed rail. Canada currently has the resources and the in-house know-how to develop high-speed rail systems. We have a mature railway-supplier industry, including world-class expertise in engineering, track, signaling, locomotive, and railcar design. Given the relatively small passenger rail service market in Canada, Canadian firms export their products and services globally and have been leaders in developing high-speed-rail systems around the world.
Further, constructing a high-speed-rail system would allow manufacturing that was once done in Canada to re-emerge. An example I like to use is steel track. We have the expertise and the capacity to produce track in Canada, but the market is currently not large enough to justify domestic production. The construction of high-speed-rail systems in Canada would require approximately $4 billion in track over a ten-year period. That may be enough to turn the corner. Overall, the development of high-speed rail is a tremendous opportunity for our suppliers and engineers to showcase their expertise and further develop advanced technologies for the Canadian and global markets.
Going further, the demand for transportation, both passenger transportation services and freight, will continue to grow. The recent growth in passenger services, both inter-city and commuter, reached almost 10% last year in 2008. The RAC is pleased that governments are continuing to make significant investments in passenger rail services that will allow our railways to accommodate current and future demands.
Finally, from an environmental standpoint, passenger rail must capture a greater share of future growth in passenger services. If you look at the growth of greenhouse gases over the last decade in Canada, it has occurred primarily in heavy industries and transportation. Measures taken in other areas of the economy to reduce GHGs will be overshadowed if we do not take meaningful action to curb the growth of GHG emissions in the transportation sector. Given the environmental advantages of rail, high-speed rail can significantly contribute to reducing GHG growth, and act as a sustainable component to our national passenger multi-modal system.
I'd like to end on those remarks, Mr. Chair.
Thank you very much for your attention.
High Speed Rail Canada is a non-profit organization. I just want to let you know right off the top that we are non-partisan. We don't accept any money from the Railway Association of Canada, Bombardier, Siemens, and Alstom. That gives us a lot of credibility when we go out and do public symposiums, and we have our website to educate Canadians. We have just one method, one scope: it is to educate Canadians on the benefits of high-speed rail in Canada. Again, as I mentioned, we do it through our website and through our public symposiums.
As Cliff mentioned, this is an exciting time in high-speed rail. I can't say enough. I get phone calls to have these public symposiums in different cities, and I have to tell them that I have children, I have soccer schedules, and we can't do it this summer. Windsor, Ottawa, Montreal, Calgary, and Vancouver want us to come to their community to give a symposium on high-speed rail. The website regularly gets 200 hits a day. The studies are accessed on the site. So it is an exciting time.
When I talk about the benefits of high-speed rail, or higher-speed rail, I think it's good to do a quick definition. What I mean by high speed is anything over 200 kilometres an hour. Some people argue that's low, and that's true. In Europe the normal speed for a lot of the lines is 325 kilometres an hour, far above the 150 that VIA Rail does. Higher-speed rail is also part of the picture.
I want to go to President Obama for a second. As we all know, he made a visionary statement two weeks ago when he went on American television and said we have to modernize our passenger rail system. When I talk about higher-speed rail, two of the corridors he mentioned are ones that I'm going to mention here for examples of higher-speed rail. He mentioned Vancouver to Seattle. Vancouver to Seattle is a good example. Amtrak runs that now. It's never going to be a 300-kilometre-an-hour area, but it is an area where they can do track improvements, where they can do improvements with freight, and they can get the speeds up to maybe 150 kilometres an hour.
So there are two things we're talking about here: high-speed rail, but we're also talking about higher speeds. And we're not just talking about Calgary and Edmonton, corridor number one for high speed; and the number two corridor, of course, is Windsor to Quebec City. I give the example of Vancouver to Seattle. The President also talked about Montreal to Boston. Again, that would be something over a longer period of time. The studies have been done that they would go up to a higher speed. Right now, they don't even connect; the track has been taken out.
So why high-speed rail in Canada? I'm going to go into the typical reasons, but I want to give you the example of what happened to me today when trying to get here from Kitchener, Ontario. I live about an hour and a half west of Toronto and last Friday I tried to book the flight. I called Bearskin Airlines, which fly from Kitchener to Ottawa. They wanted $750. I told that to the cab driver coming in from the airport today. He said he went to Cuba for a week, all expenses paid, for $750. Something is wrong. So then I thought, okay, I'm going to call VIA. VIA was going to take seven hours to get here from Kitchener. It would take me 14 hours back and forth to give what might be a one-hour presentation. We need to modernize.
One more example. I got Air Canada coming here, but going back to Toronto from Ottawa tonight, I couldn't get Air Canada. Their flights were $525. This is simply not acceptable in a modern G-8 country like we have. So when I say that Canada is the only G-8 country without a high-speed rail system, we're so far behind what is an accepted norm of a viable alternative to taking your car or flying, it's hard to explain how bad it is.
I just gave you three examples, and that's for one flight I booked, for one time I tried to come here.
Let's move on to the benefits. And feel free at the end of this to ask me questions, because I'm not coming at it from anywhere. I'll tell you the good, the bad, and the ugly. It's a movie I like, actually, but that's another question.
Reduced travel time.... A good example is the Calgary-Edmonton corridor. We're talking about going down from three hours to an hour and a half. In the Quebec corridor we're talking about going down from four hours to three hours, or four to two hours, depending on the times. This in itself gives you more time to do other things. This improves your quality of life.
Cliff talked about greenhouse gas emission reduction. The studies have been done. I have two here: one from Calgary in 2004, and another from the Ontario and federal governments in 1995. By 2025 carbon dioxide and carbon monoxide emissions are going to be reduced by up to 24% along the corridor, Ontario to Quebec. There are 17 studies. This is not news. In the Calgary study, we see a reduction of 1.8 million metric tonnes of greenhouse gas emissions. This is from 2004, three years ago. The Alberta government actually has another study from 2007.
With respect to reduced dependency on petroleum, I can give you an example from California. You're going to say that California isn't Canada. There are some similarities—they're new at it, and the Ontario-Quebec corridor and the California corridor cover about the same distance. When they implement the California high-speed line, they're going to save 12.7 billion barrels of oil per year. That's significant, getting off our oil addiction. We all know about that. It's a well-known fact that twin-track railway has a typical capacity 13% greater than a six-lane highway. That's not new. It's been around for decades. And it takes 40% less land. Isn't that good?
We know we have an economic crisis in Canada. Employment is important, no doubt about it. We need to get people back to work. The two high-speed corridors, according to the 2004 Calgary study, would create 25,000 to 52,000 person-years of construction employment and $1 billion to $2 billion in associated employment income. There will be 2,000 to 4,000 direct and indirect jobs produced. Jobs—that's getting people to work! The study is only three years old; it's a current study. The 1995 study says that in Ontario-Quebec, over 25 years, more than 1,700 jobs per year will be created. That's just part of the reason you go high-speed rail. I'm not saying it's going to solve all your economic problems. It's part of a positive puzzle that, once you put it together, gives us an alternative to the road or the air.
My favourite point is public safety. I work in occupational health and safety. I stopped watching the TV news three years ago because it was so depressing. It would often start with the latest car crash in my area. The Ontario-Quebec federal study said 40% of the riders on the high-speed rail line would be former auto users. Wouldn't it be amazing if there was a 40% reduction of traffic on the 401?
Then there's the technology. This is the gold standard in France—the TGV Alstom. They have over 650 high-speed trains a day going. They carry over 900 million passengers a year. Since 1981, they've had zero fatalities. That's what we want to see. You have to put public safety first. It's nothing new. What are we talking about—24, 28 years old now? The proof's there.
For all those reasons, I think we need to move forward on high-speed rail.
I thank you for having me come in today.
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It's difficult to give you a precise answer, but let me try to lay out at least some parameters.
We do have some recent examples of this kind of financing in Canada that have been quite successful. I should say that.
The cost would be driven essentially by two things. The first is the nature of the business relationship between the public and private party. Generally speaking, you would want the private party to take on all the operational obligations, and probably the forward obligations, perhaps not for further expansion of the system, but at least for maintenance of the system.
In a system as big and complex as just one of the corridors.... Let's pick a number of $20 billion, just for argument's sake--
A voice: Windsor-Quebec.
Mr. Cliff Mackay: Okay. That would probably amount to about 20% to 25% of the overall initial costs. You're probably looking at $4 billion to $5 billion there. You're basically looking at a $15 billion financing requirement.
The critical element that will drive that financing requirement is the degree to which you can demonstrate in a financial prospectus reasonable predictability on revenue flows for that particular enterprise—ideally, revenue flows at a level that would pretty much guarantee some reasonable return to the investors. There are two ways to do that. We have done this in Canada quite successfully with our airport model. You basically have to ensure that the entity has some reasonable assurance of market share. The way we do that in the airport model is that we license the airports, and only certain airports can provide services. So it's not a free and open market. You would have to consider the same sorts of things for a high-speed rail operation.
The second thing you would need to look at would obviously be the marketing studies. Can you reasonably satisfy yourselves that you see a traffic base and a traffic growth that would get you there? That's exactly what they're looking at in the updates of the studies that are going on now in the corridor.
I must tell you, frankly, that back in the 1990s that was a difficult proposition. We're in a different world today. Look at traffic patterns today, particularly in the corridor, and compare them to 15 years ago. They've increased dramatically, by factors of two or three. While I certainly am not privy to the financial analysis that's going on at the moment, I would suspect that the numbers would look somewhat different.
The last point I would make is that it has not been unusual, with these sorts of projects or with airport evolution or some of the other projects of a similar nature, for the government to look at some short-term guarantees at the front end to reduce some of the early market risk and to attract further private sector investment into the play.
Those are some of the dynamics that need to be considered.
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Thanks for the question.
Again, for two corridors, it is my opinion that they have the potential for high-speed rail over 200 kilometres: Calgary-Edmonton and Ontario-Quebec. They can choose to go higher speed, which is what Cliff had mentioned with VIA Rail, going a little quicker on the same track as VIA, as the freight trains, but those are the two corridors. And on the Ontario-Quebec corridor, 17 studies said let's go, and we're waiting for number 18.
For Edmonton and Calgary, there are two options. You can go on the existing freight track with CP. Their proposal is there, with a Bombardier jet train and go up to 200 kilometres an hour. Or you go on a complete separate one, you go TGV, high-speed, up to 300 kilometres an hour. Our job, for High Speed Rail Canada, when I go into the community and I do education, is to provide people with the options. Here's what there is. We educate people. We show videos. We have questions and answers. We do not say here's the report from Calgary. We do not say you must go 300 kilometres an hour. We say here are the two options; please, let's move forward. They're viable. The studies say they're viable, and cost-benefit analysis, revenue.... You talked about, Mr. Volpe, what if we had done it in 1995; in 2005, it says here, there would have been $900 million in revenue this year.
So to answer your question, we don't say here's the route, but we educate people on the options. Personally, I am not a fan of having the passenger train high speed and the freight train on the same track, because I put personal safety number one. For high-speed trains there are no level crossings. There is no chance for an accident to happen, and that's what we need, especially in Canada, where we haven't seen high-speed rail. If we had level crossings with high-speed trains, it would be very dangerous, in my opinion. But again, that's not what I promote when I go out and do speeches. We give the options.
Thanks.
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I'm not sure of the degree to which you would like to look forward 10 to 20 years to quote new technologies, but there have certainly been some studies that have looked at intermodal relationships and how everything gets put together and what should happen.
Most of the work that gets done argues very strongly for the following kinds of relationships on the passenger side. In the major urban centres, you need a good, viable, efficient combination of light rail and bus urban transportation system. That needs to be closely linked into major nodes in the major urban centres for rail, air, and bus. And you need to make sure that if you're going to a high-speed system--this is quite routine now in places like Europe--your high-speed system ties directly into those major nodes, directly into the major airports, directly into the major train stations, and those train stations link directly into the subway systems and the bus systems and what not.
With regard to private passenger travel, there are a number of studies that are looking now at what's called intelligent transportation systems or intelligent highway systems, and they're all focusing on what we can do better in two contexts. What can we do better to increase the capacity of the existing system? In other words, allow private vehicles to travel closer to each other and ideally at higher speeds, but how can we do that and at the same time significantly improve the safety margins? There are a number of studies going on today that essentially would have.... Frankly, you would not be in control of your car. Some computer system would be.
Thank you, gentlemen, for coming in.
I'm a member for one of the GTA ridings. I use the train between Toronto and Ottawa as often as I possibly can. I think it's a good stewardship of government money.
I want to carry on with this discussion about the linkages. I think it's really important, particularly for my riding.
Our government has invested significant money in public transit and continues to do so. Toronto and York region particularly have seen a tremendous increase in bus service and GO train service. In my riding we're investing in the bridge that carries the GO train. It's going to make a significant impact on Newmarket—Aurora.
But I would like to carry on this discussion about linkages. I would anticipate that most of the rail going through Union Station right now is at capacity. You're saying that those trains would still exist, we would still have use of those trains, and we're talking about a new corridor. Is there any possibility that a new corridor might include GTA areas rather than the downtown area? I would expect Montreal would have to consider this also, as Toronto does; that is, building a hub in areas where land acquisition may be a little less expensive at this point in time where we could design transit systems that would go into our downtown areas. Has that been part of the discussion?
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There is no technology that would allow you to have a level-grade crossing on a high-speed rail track and be safe. It doesn't exist. No one in the world has come up with that yet.
There are lots of ways, and it's quite routine, that you can bury the rail line somewhat, so that the fencing and other things you need are not as intrusive, and make it cheaper to do the overpasses because you don't have to go up as high. There are lots of those sorts of things that you can do.
On a high-speed rail corridor, it's light rail that you use, and depending what motive structure you use, it doesn't necessarily have to be as wide as a heavy train dual system. You can run the trains closer together, so that you don't have to use as much space.
So there are ways of mitigating some of the costs, but there's no technology that we're aware of that would allow you to maintain level crossings. It just doesn't exist.
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—and on the other side of the border, they are making some improvements. There has been money put forward to put in another track for customs, so that they're not with freight in Vancouver.
I think what we need to do, though, is raise the profile. I've been asked to come with our organization to Vancouver to educate people, to say that this is a viable option. That's a perfect example, just as Windsor is—and I know, Jeff, that you're from Essex, and I'm from Windsor—of how we have this jammed border.
Why aren't we moving people with rail also? It's a slam dunk. The president was right on the money.
Again, we're not talking about 300 kilometres an hour, but maybe 150 kilometres an hour. We're going to have more than one train a day.
The answer in your area is simple, but we need to get the powers to be together, all levels of government. It's a little trickier there, because you're dealing with the United States, Canada, customs on both sides, so it makes it tougher. But get them together. The plan is there; we have to move it forward.
My question may be for both Mr. Mackay and you at the same time, Mr. Langan, because, in the presentation you gave us, you said that 40% of the passengers in high speed trains will be former motorists. That means that you will be looking for 60% of your passengers from elsewhere, whether it be from airlines, buses, or the present rail system. You know that transportation has been deregulated since about 1983 or 1984.
Mr. Mackay, you mentioned the fixation on the deficit. There was a fixation on the deficit and on deregulation. You see it in Air Canada, in VIA Rail, everywhere. What it means for us in the regions is a ever-greater reduction in service. That is what it has meant for us.
If I look at Air Canada's current situation, a company constantly on the brink of bankruptcy, I say to myself that, if you go and get 20% of its customers, you will ground it.
I do not want to be the devil's advocate, because I absolutely support the implementation of high speed rail service. I have already been fighting for intermodal transportation at home, for coastal service along the St. Lawrence. We are not there yet. It is practically impossible to bring all the players together, VIA Rail, the trucking companies and the shipping companies, because they are private companies, because there is no political will, and because the government will never force private companies to sit down together.
You tell us that the government should be investing in HSR. If the government did that, the first to scream would be Air Canada and the bus companies, telling you that the government has no business supporting one form of transportation when it no longer supports already existing ones. That is the problem we are going to have.
How would you go about solving that? If the government invested in Air Canada tomorrow morning, VIA Rail would scream blue murder. Am I right? It is as simple as that. The bus companies would do the same thing. That is the problem. Since the deregulation in the mid-1980s, the government hardly has any clout any more, except in regulating safety. It has practically no connection with transportation left.
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I would make a few observations here.
You're right about deregulation. The ability of government to directly control everything has been reduced, and the marketplace is now much more dominant than it was back in the sixties and seventies.
Having said that, one of the things that I think government still has significant influence over is setting the broad conditions within which all of these private sector players play. One of the things we have not been able to do—and I think this is a challenge for government in the next few years—is make sure that this framework leads to the optimization of the various modes, so that the various modes of transport, whether they're freight or passenger, are playing their most efficient role in the overall system.
One of the prices we're paying because we haven't been able to do this is the massive increase in greenhouse gases because we are not using the right modes to do the right things in the system. We're contributing much more greenhouse gas to the system than we should be.
Through the combination of an environmental policy and policies that are unfolding now, such as gateway policies, concerning which I would argue that the government's leadership on the west coast has made a significant difference—it's certainly not perfect, but it has made a significant difference, and people are now being more rational, in their modal choices out there, than they were in the past—there are ways to move in that direction.
You mentioned air specifically. You're absolutely right: if there were a high-speed rail system between Montreal and Toronto, it is highly likely that people would opt for that service rather than take a cab out to Pearson and fly to Dorval, then take a cab from Dorval to wherever they're going. But that's not Air Canada's long-term future. I'm not a spokesperson for Air Canada, but when I look at the kinds of airplanes they own and the kinds of networks they have around the world, their long-term future is long-haul international or North American air service.
Now, for Porter Airways it's a different matter, and Jazz, in those particular markets, could very well be hurt from a business point of view; I don't argue the point. But in the broader public policy context, companies have to adjust to the reality of the competition they face. And they will adjust. I don't see Canada's bus companies going out of business because of high-speed rail. They will have to serve the nodes, down to wherever you can connect into that system, from all over small-town Canada, in the areas where these kinds of services are going to be available.
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Thank you, Mr. Chair, and thank you to our witnesses.
That is the direction I was going to go in: the consequences for the other modes of travel. The airline industry, many will suggest, is having a difficult go of it. I think one of the effects of moving in this direction would be the change in preference between modes.
I want to make sure we're comparing apples to apples when we consider feasibility. I'm just thinking of some rough numbers. The population of Europe is estimated this year to be 830 million. We're about 35 million. Greater London is 7.5 million, and England is 51 million. Greater Paris is 11.2 million and France 62 million. Madrid is 5.2 million, Spain 40 million. It almost seems like a no-brainer that there would be a strong case not only for the constructability of rail, but for the ongoing operational cost of passenger rail.
If we were to be honest around the table, I don't think there's a lack of desire on the constructability side of it. The question, I think, for feasibility is on the operational side, particularly down in the city of Windsor. Greater Windsor is 350,000 people. I can't even get an on-demand stop from VIA in Belle River, and I've been trying for years for it.
If we're looking at constructing a high-speed rail corridor, are we not, at least essentially in the early stages, talking about the area between Toronto and Ottawa, Toronto and Montreal—somewhere in that triangle? I say that also to suggest, in terms of our latest budgetary moves with respect to trying to bring down the time travel in that particular corridor, that there's probably some sensibility about why we're doing that. There is a case to be made for it there, at least initially.
Do you have any comments on that?
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Yes, but Freud is dead.
I want to put things in perspective. When they announced the money for VIA for that third line to cut down the times, that was a positive thing. But I want to put it into perspective for you to show how bad things are.
They said that they were going to cut a half-hour off their time, and it is now going to be four hours to get from Toronto to Montreal. That is a good thing. But that is the same schedule we had in 1975. That's how bad things are. To everybody here, that's how far we have to improve. Yes, that was a good thing moving forward, but look at how much further we have to go to raise the bar.
I wanted to get to your point about the airports. I fly for government from Hamilton to Ottawa. When WestJet said that they were pulling all their flights out, they didn't ask about the customer. When Air Canada Jazz pulled all their flights out from Hamilton to Ottawa, and then we all had to drive to Toronto, they didn't ask the customer. Will they lose business? Yes. Are they a good airline? Are they a good business? I can tell you that Air France has just bought some of the railroads in France.
Whether Air Canada can modernize, adapt, and buy into the new multimodal strategy the rest of the world has, we'll see.
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I'll give you one example. The CN main line between Montreal and Toronto was running, a year ago--it's less today--when they were operating in a different kind of economy, roughly 85 trains a day, both ways. About a dozen of those trains were VIA trains. They were running roughly 70-plus trains a day.
If you go to a higher-speed model, as it was laid out, you have to anticipate that you're going to try to improve the frequency of the VIA trains. So you may end up with 20 or a few more a day. However, if you look at economic growth over time, and if we achieve some of the things we would like to achieve, with the development of the Port of Montreal and all the other things we want to do, I don't see any scenario in which the number of freight trains on that line is not also going to have to go up. I don't know how much, but it will be significant.
In the days before the recession, our freight traffic was growing at 5% plus per year. When you opt for that option, yes, you save money in the short term, and yes, you may be able to improve service for a period of time. However, you are going to look down the road at an eventual conflict between those traffic patterns. Because sooner or later, you're going to run into a capacity issue of significant degree.
The question is whether you bite the bullet now, put in the separated systems, with the higher speeds, knowing that it's going to have more front-end costs but in the long run will give you a more effective system, or not.
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Let's just say $15 billion is the initial front-end cost. I'm going to talk about the central Canadian corridor, not the Alberta corridor. Frankly, the Alberta corridor would be significantly less than that--significantly less.
The swing factor would be how much land assembly you would have to do and how much you could arrange through existing corridors. I do not know the answer. If you had to do a lot of original land assembly, it would add a lengthy period of time, number one, and number two, it would certainly escalate the costs at the front end quite significantly.
If you make the assumption that you can do a reasonably efficient job of land assembly, I would say that you would devote the first two to three years to land assembly and securing your corridor and doing all the engineering and other studies that would need to be done in order to launch a very aggressive construction phase.
For the construction phase on something like this, I'm assuming that you would go electric if you really want to do high-speed rail. There are two options on electric. Recent technology says you can put it in the ground; the other choice is to put it overhead, which is the current technology used in most places. Putting it overhead is a bit more expensive, I would think, than putting it in the ground, so that you may be able to save yourself some money, but it's going to take you probably two to three years, minimum, to build that line, even between Montreal and Toronto.
Then you're going to have to do tests and everything else, so you're probably looking at five years of fairly intensive outflow. I would say it would be in the order of $10 billion, at maybe a couple of billion dollars a year, before you'd get to a point at which you could actually start thinking about phasing in an operating system.
Obviously during that same period of time you would also be pursuing procurement activities for rolling stock and other things. You have a whole range of other things to worry about with regard to passenger movement, integration in the stations, and all of that sort of thing. Going on at the same time, of course, would be all the oversight. Transport Canada does oversight of rail construction in this country, and they would certainly be a player in that context from a safety point of view and all of those sorts of things.
That's how I would describe the process, sir. Optimistically speaking, I would say that you'd be looking at six to seven years before you would see a revenue flow.
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Mr. Mackay and Mr. Langan, let me be arrogant and say on behalf of the entire committee, thanks for coming. It's been a great conversation and exchange of facts and ideas.
I want to go back again, if I can, Mr. Mackay, to current issues on financing, and then I'll come back to Mr. Langan on future issues.
You just addressed a matter with Mr. Jean about land assembly. When I asked you earlier about the amount of money that governments, if we're going Windsor-Quebec, have to put aside on a yearly basis, I think we struck a figure more or less around $2 billion, and governments wouldn't have to use all of that $2 billion. It wouldn't be all theirs and it might be divided among three separate governments.
One of the things you didn't give an indication of, although you alluded to it now, is that when you're assembling land, you're not giving away that asset. As you're building this line, government, however it's defined, actually acquires a real and material benefit that it does not lose.
So when you're giving the figure--and we picked $15 billion, but we could have picked $20 billion--you haven't discounted that amount with the value of the land that's going to stay with the government. So that's a benefit for down the road, is that what you're saying?
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For the public who may be readers of the blues, I want to set the record straight. We were talking earlier about the incredible cost associated with putting a high-speed rail system into Canada. Someone said that Canadians in 1995 would have been looking at $15 billion, an astronomical figure. But the 1995 study that we were given sets the figure for the Toronto-to-Montreal segment at $5.4 billion.
With respect to assimilation of land and associated issues, the study we were given says that “No high-speed rail system has ever been designed that currently operates at speeds of over 200 kilometres per hour in climatic conditions comparable to those in Canada. Such conditions include freeze-thaw cycles, extremely low temperatures, and wide temperature variations, either daily or seasonally.”
It goes on to give a little bit of a discussion about the weather conditions. It says that “In France there is practically no tolerance for vertical movement of the high-speed rail tracks. This is significantly different from Canadian rail or road conditions. The major challenge remains in the design and construction of stable track structures under the demanding freeze-thaw and geotechnical conditions found in the Quebec-Windsor corridor.”
In Ontario we have significant differences of geography, even between Toronto and Montreal. In Ontario, we now have the protection of the Oak Ridges Moraine legislation of 1998, which is going to affect anything that goes on in this study. Highway 404 goes directly up the east side of my riding, between Aurora and Newmarket. The extension would go north around Lake Simcoe. This is in the planning stages and has been announced several times, but the environmental assessments have been holding it up for years.
When we're looking at total costs, are we considering all of these factors in the $15 billion? Are any environmental assessments that have been done in the past applicable on a go-forward basis?