The region’s largest business advocacy group and local tourism officials say they’re on board with Via Rail’s push to find out whether its proposal for high-frequency rail linking Toronto, Ottawa, Montreal and Quebec City should get funding from the private sector.
Via said Tuesday it is getting $71 million in federal cash – some through Transport Canada and some from an infrastructure financing agency – to tackle the last few details needed to make the case that its plan should get private-sector backing.
The announcement got a thumbs-up from Ottawa Board of Trade CEO Ian Faris, who said more frequent train service would make it easier for his organization’s members to do business with their counterparts in Canada’s two biggest cities.
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“From a business standpoint, I think it’s a bold move,” he said. “This is obviously an investment in looking to see whether a business case can be made. I think we should support at least the fact-finding and whether it makes sense and is feasible from a financial perspective.”
Faris said the Ottawa business community is “clamouring” for better transportation connections to Toronto, Montreal and the U.S., and faster and more frequent rail trips would go a long way toward solving the problem.
“That’s really an air issue, but when you’re talking about Toronto and Montreal, rail is probably preferred if you can get it down to a manageable time,” he said. “If it’s two hours and 40 minutes … to Toronto, you’re definitely competing with air, particularly given the central location of the Via Rail stations in Ottawa.”
Tuesday’s news also drew praise from the local tourism industry.
Chateau Laurier director of public relations Deneen Perrin said Toronto in particular is a “key market” for the iconic hotel, noting 30 per cent of its guests come from the GTA.
“Anytime there is an improvement in any kind of travel to Ottawa, whether it be direct flights or you’re reducing travel times, there’s a great impact,” she said.
Ottawa Gatineau Hotel Association president Steve Ball agreed, saying “anything that alleviates traffic and makes it easy for people to get around without using their cars is good for travellers.”
Earlier Tuesday, the head of the federal infrastructure financing agency said there is “strong interest” from private investors to kick in for dedicated rail lines aimed at increasing the frequency and speed of trips and ensure Via’s trains will no longer have to yield to freight trains on borrowed tracks.
But Via must first make the case that the project is worth pursuing, which is where the new federal money comes in.
Federal coffers will fund work to make sure that Via trains can seamlessly move between any new dedicated tracks and local transit systems in Montreal and Toronto.
For Montreal, that includes running Via trains along the electric-rail system under construction, known best by its French acronym R.E.M., which the Canada Infrastructure Bank is also financing.
The infrastructure-bank money, totalling $55 million, will be largely used for environmental assessment, consultations with Indigenous communities, and a technical and financial review to help the government make a final funding decision. The rest of the money, $16 million, is coming from Transport Canada.
If the rail lines are built, passenger routes would connect Toronto, Ottawa, Montreal and Quebec City along discontinued and lesser-used tracks. Connections would also be made to Peterborough and Dorion and Trois-Rivieres in Quebec.
The proposal would likely come with a price tag of $4 billion or more and Via Rail is looking at ways to bring in private cash to supplement public dollars.
“It is seen as an option. We have participated in a round of market-sounding with potential investors who have shown strong interest,” said Pierre Lavallee, chief executive of the Canada Infrastructure Bank.
“There’s interest and there’s a very real need for more detailed information, which is what we’re going to be developing,” he said.
“We’re obviously working in that direction and we’re hopeful it all works out to develop a great project for Canadians.”
The Liberals created the Canada Infrastructure Bank in 2017, aiming for it to use $35 billion in federal funding as a carrot to entice the private sector to get involved in paying for new, large-scale projects that are in the public interest and can also provide a profit for investors.
So far, the agency has gotten involved in two projects, first with a $1.28-billion loan to the electric-rail project in Montreal, and last month with up to $2 billion in debt to expand GO Transit’s rail network around Toronto.
The money unveiled Tuesday is the first time the agency has handed out money without an expectation of repayment.
Lavallee said this shouldn’t be seen as a sure sign the agency would help finance the entire project. First, the federal government has to make a decision whether to move ahead, and then the infrastructure agency would have to do its own research to see if it’s worth investing in a “transformational project,” he said.
There is some consensus among partisan actors that the project could reduce greenhouse-gas emissions and boost regional economies, though NDP transportation critic Robert Aubin, who represents the Trois-Rivieres riding, said people are disappointed that the government didn’t announce the start of construction, but rather another study.
A transportation advocacy group said the risks for the project are lower now that Via Rail has focused on existing corridors and rights-of-way, meaning work could be done by 2022.
“The largest risk, which we feel the government needs to pay more attention to, is the escalating opportunity cost to Canada of falling further behind the rest of the world on this vital aspect of our transportation infrastructure,” the group Transport Action Canada said in a statement.
“Infrequent and inadequate inter-city rail service both is a constraint on our domestic economic growth and a deterrent to international investors.”
Faris, meanwhile, said he still has a “nagging concern” about using public money to subsidize a project that could siphon passenger traffic away from airlines and private bus companies to Via Rail, a Crown corporation.
“If there is fair competition, we fully support it,” he said.
