Getting Canada back on track: economic case for making rail infrastructure a priority

Bruce Hyer

Transport Minister Lisa Raitt announced on May 12 that the federal government would be intervening to save VIA Rail’s Halifax-to-Montreal Oceanroute. Many breathed a sigh of relief.

The Ocean line had been in jeopardy since CN announced in February that they would be abandoning a 70-km stretch of track between Bathurst and Miramichi, N.B., that is used jointly by VIA. 

The track was underused and in need of an upgrade, but with no buyers willing to invest, it looked as if the Maritimes would be without passenger rail service for the first time since 1836.

Mercifully, reason prevailed. But while the $10.2-million in federal funding for the Ocean line is a welcome investment, sadly it will still only restore service up to the dismal status quo that has been in place since the October 2012 round of VIA service cuts, when the Ocean’s six times weekly service was reduced by half.

The Maritime rail service cuts are symptomatic of a trend afflicting VIA for decades. Beginning with devastating cutbacks in the 1981 and 1989 federal budgets, Canada’s passenger rail system has been in a state of mismanaged decline that has accelerated with each subsequent government.

Today, VIA’s managers have the unenviable task of trying to increase ridership in the face of higher prices, reduced service, ever-increasing competition from short-haul airlines, and gouging by track owners, all in the midst of weakened post-recession travel market.

Funding for capital renewal—the key to modernizing any business, public or private—has always been inadequate under a succession of governments dating back to VIA’s slap-dash creation in 1977.

Passenger rail is the safest, most fuel efficient and environmentally responsible means of getting people from A to B. What’s often overlooked is the fact that passenger rail also has the potential to be an economic driver, if governments are willing to step up to the plate and invest in a system that works for all Canadians.

There is an abundance of evidence from around the world showing that investment in passenger rail infrastructure pays huge dividends—indeed, one would be hard-pressed to find a more surefire way of driving economic growth.

The U.S. Department of Commerce estimates that every dollar invested in rail infrastructure generates $3 in economic activity. The American Public Transportation Association reports that every $1-million invested in rail infrastructure creates up to 36 new jobs.

Canada consistently lags far behind other developed nations in rail investment. In 2008, our total rail infrastructure investment amounted to only $0.82 per $1,000 of GDP. China invested more than 15 times that amount.

Decades of underfunding, deregulation, and privatization have left Canada’s patchwork of rapidly-aging rail infrastructure in serious need of repair and upgrading, as is evidenced by the alarming number of recent derailments and safety breeches.

Federal investment in passenger rail is at its lowest level in history: inflation-adjusted per-capita funding has declined 90 per cent since 1981. The inadequacy of Canada’s current rail infrastructure translates into missed economic opportunities at every turn.

The Federation of Canadian Municipalities estimates that traffic congestion costs our economy approximately $10-billion every year in lost productivity. Meanwhile, a double-track railway line can handle the same amount of passenger and freight traffic as a 16-lane superhighway. One of Toronto’s GO Transit 10-car commuter trains carries the same number of passengers as 1,400 cars.  

In Canada, these proven arguments favouring rail investment and modernization haven’t sunk in with our federal and provincial governments. But they have in the U.S.

The American railway system went through all the difficulties we are witnessing in Canada today, and the U.S. objective is to prevent it from occurring again.

Under a series of interlocking national and state rail plans, the U.S. is aiming to get as much freight and as many passengers as possible off the overloaded, publicly-funded air and highway systems.

Each of these coordinated rail plans emphasizes the public and private sector benefits of doing so. A key advantage is reduced public spending on the other modes of transportation.

Lofty plans are nothing without money. To make it happen, U.S. legislators have endorsed public-private partnerships for improvements that will generate huge benefits for the public and the railways themselves.

Substantial public investment in the capital renewal of Amtrak, VIA’s American counterpart, is also part of this long-term plan. It’s all about getting the biggest bang for the public’s transportation buck.

If our governments want to get serious about reducing gridlock and building a sustainable Canadian transportation system, then investing in passenger rail infrastructure is clearly one of the key ways forward. The way to fund it is with a significant fee or tax on carbon at the source. Our future as a competitive nation is riding on it.

Green Party deputy leader Bruce Hyer represents Thunder Bay–Superior North, Ont.

Originally published in The Hill Times, June 2, 2014