High Speed Rail launch is the triumph of Hope over Experience
"As someone who has had the pleasure of participating in a few ground-breaking ceremonies over the years, I understand the excitement that Transport Minister Steven MacKinnon was feeling when he referred to the launch of a high-speed rail (HSR) link between Ottawa and Montreal as an “‘historic day’ for Canada.” With Canada’s back against an economic wall, largely for reasons of our own stupidity, there’s no better political window than December 2025 for a Minority government to announce truly “generational investments.”
No matter what the project might cost, or how large the passenger fare subsidy might need to be, it would seem. Details that only a killjoy who might prefer an income tax cut, stronger borders or more Family Doctors would fuss about.
Despite the absence of a business plan, the HSR project has strong support from many in the business and tech community. A lacuna they’d never tolerate at their own firms or Family Offices, even if their staff were working on something involving 0.1% of the capital required for any version of the grand HSR project.
I get it — if you’re frustrated by Canada’s dependence on the U.S. economy, or you and your family have just enjoyed the Japanese or Spanish rail systems while on holiday — it’s only natural for Central Canadians to ask “why not us? If not now, when?”
There’s also a natural expectation on the part of HSR supporters that sane, prudent people will be tasked with executing this evergreen “Big Idea.” Again, I get it: in your lived experience, sheer force of will eventually wins the day.
Unfortunately, even if we could attract (straightforward) and retain (harder) the right leadership team, leaving aside finding enough “trades” to tackle all that’s involved over the next two decades, there’s still the challenge of getting the math to work.
Assuming that the math matters, that is.
In an earlier blog, I wrestled with a question that now seems increasingly irrelevant to most elected officials: When it comes to ‘key’ infrastructure projects, should price matter?” (Feb. 21-25)...
Then-PM Justin Trudeau announced a $3.9 billion envelope of taxpayer funding to work-up the HSR idea.
To put that $4B pile of cash in perspective, the construction cost of the entire Gordie Howe International Bridge will wind-up being somewhere between $6-7 billion. While that final figure is almost three times the original construction budget back when I was Chairman of the WDBA, at least we’re about to get a P3 bridge for our $6B+.
As my successor Dwight Duncan came to find, as scooped by The Windsor Star’s Dave Battagello in 2016 (“Gordie Howe International Bridge project stalled”), these mega-projects don’t manage themselves. Unlike being a Provincial Cabinet Minister who gives interviews, attends endless stakeholder meetings, presents BIG cheques, and occasionally bugs the DM on how things are going with whatever important legislation was currently being drafted in a dark corner of your current Department, if you as Chair (or CEO) of the public authority don’t drive the project yourself, you’ll be lucky if it takes just twice as long to get everything done.
And that ignores the disingenuous HSR construction timelines currently being thrown around...
Even if you’re indifferent about timelines, the TTC’s new Finch West LRT ran “just” $3.5B and is expected to handle 12 million riders/year by 2031. $4B gets you transit, not just a stack of paper about what transit could look like if it were built. If there’s any doubt, the reason why taxpayers are funding these essential HSR studies is simply because the private sector doesn’t yet have confidence in either the construction cost projections nor the notional business case.
The point being that the consulting, legal and Aboriginal consultation fees associated with this design project aren’t chump change, even in the infrastructure world...
You might find it perplexing that so many seem prepared to throw caution to the wind with deficit-financed infrastructure projects, but it’s not that complicated.
When the HSR price tag is billions over budget and years past due fifteen or twenty years from now, few, if any of the politicians involved to date will still be in elected office. For certain, none will be in their current roles, avoiding accountability for all that will follow, post whichever press conference they participate in. And there’ll be plenty of cheerful press conferences between now and the moment that the media figures out that things are wildly off-track.
Mr. Trudeau flushed (Ed. note: “invested,” surely!) the first $4 billion with his own launch announcement and then exited stage left, leaving incoming PM Mark Carney in a difficult political bind given that most of his own Cabinet had already signed off on the idea prior to his arrival.
Although the new PM promised to make “difficult choices” in the recent Federal budget, cancelling a “generational” project that counted Montreal-based Air Canada (a known expert at building / operating a high speed train corridor), SNC-Lavalin (Liberal corporate darling) and CDPQ (I’m a fan of their business savvy) as partners was a too-bitter pill to swallow. With this latest news, it became clear that the PMO eventually figured out how to adroitly thread the needle: be seen to advance the HSR project (Ottawa-Montreal) without having to sign-up to a $100B+ price tag (Toronto-Quebec City)...
The Carney government deserves credit for turning an unwieldy 1,000 kilometre project into something more digestible: a tidy, far shorter and somewhat less complicated passage between Ottawa and Montreal, two stops that just happen to be deeply loyal Liberal boroughs. One can respect that move, even if the MSM ignores the self-serving political virtue of the initial route choice:
The decision to start with the 200-kilometre stretch between Montreal and Ottawa comes down to geography, with it being the shortest and flattest section of the proposed corridor, officials said. The line will include a stop in Laval, Que.
(If only the media were as constructive when a Conservative politician made a procurement choice that was seen to favour a politically-important region, as with the CF-18 fighter repair contract or the sale of LAVs to Saudi Arabia for example.)
A core group at Build Canada have put energy into the HSR topic, and some smart and successful people are prepared to sign-up to the inherent risks given the nation-building opportunities they see. The organization’s memo on the topic is worth reading as it lays out both the opportunities and pitfalls ahead. These proponents firmly believe that Canada can avoid some of our earlier quagmires as Alto attempts to execute what would be the most expensive infrastructure project in Canadian history.
Easier said than done, of course, as is everything worth doing.
The counter-argument comes from Matti Siemiatycki, a professor and the director of the Infrastructure Institute at The University of Toronto. Prof. Siemiatycki has offered a laundry list of other things we could be doing with the same amount of money, such as i) $10 billion to provide clean drinking water to Indigenous communities, ii) the east-end tramway project in Montreal, iii) a subway line in Vancouver to UBC, iv) the Eglinton East LRT in Toronto, v) the Calgary Green Line and vi) the Quebec City tramway. With $14B left over (if you believe the $80B HSR price tag).
Prof. Siemiatycki’s perspective is all the more compelling if you delve into the robust 1995 Ottawa-Ontario gov’t HSR study. In that detailed document, you’ll notice that the team went to great lengths to model the projected revenue under various pax and speed scenarios. What isn’t analyzed are the annual operating costs of providing those same scenarios.
Perplexing, that.
Can you imagine pitching your Minister, corporate boss or would-be investor on a project with no sense of what it would cost to generate the forecast revenue in your financial model? It’s like taking the “L” out of the “P/L statement” on the assumption that you can’t go bankrupt. That premise only makes sense if your working assumption is that the Federal public purse will cover any operating shortfall.
In October 2026, Transport Canada updated a web page titled “Feasibility study for a high speed rail service (HSR) in the Quebec City – Windsor Corridor.” That study was prepared by a collection of international consulting firms in 2011.
Although the report is private, TC shared two key points:
From the point of view of the Canadian economy as a whole, the economic analysis showed that HSR between Quebec City and Windsor would not generate a positive net economic benefit. However, a project between Montreal, Ottawa and Toronto only could generate a positive net economic benefit at both 200 and 300 km/h.
I guess that explains why Windsor is off the table, while begging the question as to how Quebec City has remained as a station stop under both Liberal Prime Ministers. (Ed. note: is that even a question?)
The main findings from the financial analysis for both the public case and the private sector case for the full Quebec City – Windsor Corridor indicate that while the project could cover all operating costs, governments would need to contribute significantly to the project development cost and receive no financial return on investment.
In other words, as long as the taxpayer funds a significant chunk of the construction project (including rolling stock?), the line will break-even based upon some confidential financial modelling about fares and passenger loads.
Just because we have an “Infrastructure Institute” at Canada’s largest University doesn’t mean that politicians need to heed its advice. What’s irresponsible, however, is to pretend that taxpayers are in the clear once the first $80-100 billion has been spent to build this all out.
Unlike the airport operation at Billy Bishop Toronto City Airport, huge passenger fare subsidies will be both expected and required for the HSR “business case” (Ed. note: can you call something a “business” if it would go bankrupt without ongoing taxpayer subsidies?) to work once the final ribbon is cut by some future Prime Minister in 2045.
Whether it be the MBTA, Metrolinx, MTA, TER, TTC, or Via Rail, passenger fares are insufficient to cover the cost of operating many Western transit systems.
According to the financial statements of Ontario’s Metrolinx, for example, which services a massive 70 million passengers a year (vs. the ~12M forecast in the 1995 HSR study), the annual operating subsidy is around 50% per pax. Which means that your average fare covers just half of the cost of your ride — despite the cost efficiencies that flows from high occupancy levels. That subsidy is directionally similar to U.S. comps MBTA and MTA (although 60% of MTA bus passengers evade fares). France’s TER rail fare subsidies are even higher.
VIARail’s per pax subsidy was $92.74 in 2023. You willingly funded that subsidy via your taxes, despite on-time performance of just 59%. Explains why Federal bureaucrats believe you’ll support some form of HSR pax subsidy, too.
In an effort to get to the bottom of that fundamental assumption, I reached out to the public affairs team at Alto a week ago with this simple question:
I’m working on a piece regarding the latest HSR announcement. While estimates have been provided regarding the initial project development costs ($3.9B), as well as a general range of $60B - $90B for construction, is any information available regarding the business case itself, including estimates as to annual fare (or operating) subsidies in relation to various ridership scenarios?
As of publication, I’ve not heard back. Perhaps the media/blogger email inbox isn’t monitored?
Nevertheless, I’m not the only one who is aware of this dirty secret. In June, the UofT’s School of Cities stated that the project is not viable as a “business” without ongoing taxpayer subsidies...
That may explain why Ottawa rushed-out “internal documents” to the Canadian Press Wire Service (see prior post “Has CP Newswire lost the plot?” Dec. 2-24) in an effort to build popular support following the Minister’s recent press conference. As published in The Toronto Star just yesterday: “the Crown corporation responsible for the project has estimated that 72 passenger trains per day.” Every half-hour during peak times, apparently. A pretty bold claim, perhaps even untenable, as Air Canada can’t make money in “the Triangle” with similar frequency levels — despite decades of route optimization efforts.
We get it: High Speed Rail will be fast and frequent. But what percentage of each fare will we taxpayers have to cover to “induce” ridership?
It feels like only yesterday that Ontario’s former Minister of Infrastructure and Minister of Transportation, Glen Murray, laid out the plan for the UP Express, linking Toronto’s Pearson Airport to Union Station. One can easily argue that the original capital cost (~$600M inc. Pearson infrastructure components, plus rolling stock) matters not now that Canada’s largest city has a key service.
What is instructive is how the fare scheme (love that word) evolved over the first decade of service.
After launching in 2015, the UP Express fare was eventually cut from $27.50 ($19 with a Presto card) to $12 per trip. Apparently, the new line “struggled to make ridership goals” in the early years. Fares were reduced, and then reduced again. If you ride on a normal weekday, the UP Express is now $9.25 with your Presto card. Plus another 40% off if you work at the airport.
That discounted employee fare is about 1/3 of the original Presto fare, even though the route is now packed at rush hour. As with most subsidies, once users (voters) get hooked it’s very tough for politicians to take them away.
I’m not telling any tales out of school to say that it seems unlikely that the original UP Express business case approved by the McGuinty (also Liberal) government foresaw such a dramatic reduction in passenger revenue (given its small cars, modestly higher UP occupancy levels can’t make up for large fare price cuts). All of which undercuts the confidence one can have in whatever this generation’s Consultants tell Ottawa regarding HSR revenue (pax loads x pax fare, plus a bit of advertising income) in, say, 2050.
A 2008-10 vintage consultant forecast couldn’t get 2016 UP Express passenger loads/fares right. Makes it hard to be confident about HSR fare revenue and operating expense assumptions in 2050.
As for the economic benefits of the entire HSR route, once completed, the C.D. Howe estimates them to be less than $500M /year in PV dollars. Not nothing, even if that’s much lower than what BBTCA already delivers, for example.
Importantly, the C.D. Howe report authors wanted to be clear that they hadn’t undertaken a “full cost-benefit analysis.” Perhaps for fear that the annual taxpayer-funded operating subsidy would exceed $500M per annum. Case in point: although it serves more customers than HSR will upon completion, making it more efficient in theory, the Ontario government “contributed” $1.3B to the operations of Metrolinx for the fiscal year ending in March, relative to the overall $3.2B cost of the operation.
Transit is both necessary and awesome, but it’s neither easy nor cheap.
Terry Johnson, president of Transport Action Canada (a transportation advocacy group) believes “there is a ‘vast amount of untapped demand’ for a rail line that could, for example, allow Torontonians to ride a train to Quebec City for a long weekend. There are ways in which this will completely knock people’s socks off in terms of what new possibilities it opens up.’”
When completed, a one-way ride from Toronto-Quebec City on the the proposed HSR would take about 4.5 hours. As for the Mr. Johnson’s claim about a “vast amount of untapped demand” for weekend trips to Quebec City, GTA residents can already take Porter Airlines from Billy Bishop Toronto City Airport to that gorgeous, historic spot. One of the Porter flights leaves at 1:50pm on Dec. 31st, and you’ll get there in an hour and a half. A round trip fare for the coming NYE weekend would run you $609, inc. taxes and fees. In my experience, if you check-in online and hit the security line at 1:05 (with carry-on) you’ll be in good shape to board with ease.
If you wanted to go by rail, instead, the cheapest Dec. 31st fare that I could find on VIARail was $605.31 — and that’s after a huge fare subsidy courtesy of we taxpayers. How a privately-operated HSR could be cheaper than that VIA fare, with or without some form of Federal taxpayer subsidy, I do not know.
Which invariably means that a HSR train trip from Toronto to Quebec City will be no cheaper, and take twice as long, as flying out of YTZ on an environmentally-friendly made-in-Canada Q400 Turboprop (35% lower CO2 emission versus regional jets and 50% lower CO2 emission versus narrow body jets).
Fans of Mr. Carney’s book “Value(s)” will be pleased to hear that Alaska Airlines is already working on a Q400 hydrogen-electric propulsion system “in an effort to expand the reach and applicability of zero emissions flight technology.” Porter has tested biodiesel. In the event the HSR is 100% electrified in 10 or 20 years, you can be sure that various technological advances will give commercial airlines multiple options if they’d like to reduce their Turboprop carbon footprints further.
And that assumes that commercial jets make no similar progress, either on the noise or emissions fronts.
The BBTCA terminals and underwater pedestrian tunnel are already built, and if capacity is an issue, the Federal and Municipal governments have it within their power to meaningfully increase throughput long before the first HSR shovel goes into the ground. Whatever the bill for those airside improvements might amount to, it’ll be far less than the aggregate cost of just the lawyers, environmental and community consultants involved in the Alto project over the next half-decade.
You think I’m joking? You need a budget to move the gartersnakes off your Federal infrastructure site, as we learned via the Windsor Bridge environmental assessment.
Imagine just how many bats, fish, insects, snakes and Willowleaf Asters (the WDBA had to move those, too) you’ll come across when you lay down 1,000 kms of rail through what’s currently natural habitat.
I know HSR works in Spain, for example, but they’ve got 50 million citizens, multiple urban hubs and no crazy freeze/thaw challenges. Plus 94 million visitors (compared to Canada’s ~20M/year) looking to hit the highlights during their vacation. No one would ever compare Ottawa with Barcelona, Madrid, Seville or Valencia as a tourist draw.
I have no idea what “new possibilities” Mr. Johnson is referring to, beyond the human capacity to allow Hope to triumph over Experience. Tally-Ho, it’s only money!"
