Ottawa now risks throwing good taxpayer money after bad on Via’s non-core operations when cheaper options exist, Konrad Yakabuski writes.Sammy Kogan/The Globe and Mail
Prime Minister Mark Carney last week announced his government’s plan to spend $4.7-billion on new Canadian-built rail cars for the country’s chronically money-losing passenger train service, touting the move as “the biggest investment in Via Rail’s history.”
The announcement came on the heels of Ottawa’s July decision to spend $1.9-billion on new locomotives for Via trains that provide service on its long-distance, regional and remote routes. In all, the federal government is shelling out $6.6-billion for rail cars and locomotives outside Via’s core Quebec City-Windsor operations.
The 313 rail cars will be built at French-based Alstom’s plants in Thunder Bay, Ont., and La Pocatière, Que., with engineering work done at Alstom’s Canadian head office near Montreal. Most of the 45 locomotives built by Swiss-based Stadler will be assembled at a new plant in Montreal, where Via will build a new $350-million maintenance facility.
“For too long, we bought from abroad what we were more than capable of building right here at home,” Mr. Carney insisted at a news conference announcing the Alstom contract. “We’re bringing that work back, and we’re turbocharging it.”
That is one way of looking at it. But while the two contracts are good news for hundreds of current and future Alstom and Stadler workers, there is good reason to question whether it is wise to invest $6.6-billion in new rail cars and locomotives on routes that account for less than 5 per cent of Via’s total ridership and which already lose more than $150-millon a year.
More than 300 Via Rail cars will be built in Canada in shift to domestic production, Carney says
To be sure, inaction by previous governments left Via depending on antiquated equipment outside the Quebec City-Windsor corridor, where new U.S.-built train sets have been introduced in recent years.
However, Ottawa now risks throwing good taxpayer money after bad on Via’s non-core operations when cheaper options exist, such as buying used rail cars and locomotives or privatizing The Canadian line between Toronto and Vancouver that caters mostly to well-heeled tourists. Ottawa already subsidizes each ticket on that line to the tune of $685, more than 10 times the per-passenger subsidy in Quebec City-Windsor corridor, which accounts for 95 per cent of traffic.
Most of the recent debate about passenger rail service in Canada has centred on Alto, the Crown corporation set up by Ottawa to oversee the construction of a proposed 1,000-kilometre high-speed rail line in Quebec City-Toronto that would cut travel times in half.
And debate there has been.
Rural communities along the proposed route have lined up against the potential expropriation or carving up of agricultural lands to accommodate the dedicated electrified tracks needed for Alto trains to reach a top speed of 300 km/h. Progressive Conservative MPPs, upset at Mr. Carney’s refusal to allow jets at Toronto’s Billy Bishop Airport, have jumped on the anti-Alto bandwagon for mostly political reasons. Other critics have pounced on the eye-popping price tag – $60-billion and $90-billion based on Alto’s current estimate – and the potential for large cost overruns.
Toronto-Quebec high-speed rail project could cost $150-billion over 40 years, document shows
Yet, the economic case for high-speed rail is much stronger than Alto’s detractors appear willing to concede. While the upfront capital cost of the project appears daunting, the overall economic benefits could easily justify the investment.
Of course, realizing those benefits would hinge on smooth execution during the construction phase and ensuring seamless access to downtown rail stations, airports and other business hubs.
With ever-worsening airport and road congestion in the Toronto and Montreal areas, the question has become whether Canada can afford not to invest in high-speed rail. Via’s on-time performance has sunk to a miserable 35 per cent, and while its new train sets are a huge improvement, they still plod along tracks shared with freight trains.
Alto estimates the productivity gains from high-speed rail would total $21-billion annually. What’s more, while most of the capital costs would be borne by taxpayers, Alto insists that, unlike Via Rail, its project would not become a financial sinkhole. “Once in service, operating revenues are expected to cover operating and maintenance costs, transitioning passenger rail from a subsidized service to commercially viable operation.”
That would be a welcome change from the $376-million Canadian taxpayers forked out to cover Via’s operating losses in 2025 alone, bringing total operating subsidies to almost $1.9-billion since 2021.
Investing in a self-sustaining publicly owned, but privately operated, high-speed rail network could save Canadian taxpayers money. Ottawa could eventually recoup its capital costs by selling part of the line to investors, such as pension funds.
Right now, no private investor would inject a cent into a substandard Via Rail, which is why taxpayers will be on the hook for another $6.6-billion to put new train sets on the tracks outside the Quebec City-Windsor corridor. That, no matter how hard Mr. Carney tries, is nothing to brag about.