JARVIS: Budget watchdog calls Ottawa’s bluff on high-speed rail costs

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Alto high-speed rail will cost more than the government is telling Canadians.

That’s why Prime Minister Mark Carney needs to avoid this trap for taxpayers and cancel the high-speed rail boondoggle.

The government is planning to build a high-speed rail line from Toronto to Quebec City by 2043.

The government has been telling taxpayers the high-speed rail line will cost $60 to $90 billion. That’s already a ton of money for a government that’s sinking deeper into debt every year.

Now Canada’s budget watchdog is pouring cold water on the government’s estimate.

Toronto-to-Quebec City would cost $75 to $113B: Report

Toronto-to-Quebec City high-speed rail will cost $75 to $113 billion to build, according to a new report from the parliamentary budget officer (PBO). That’s $23 billion more than the government is estimating at the high end.

The Alto project would cost about $2,195 for every Canadian under the government’s estimate, but would increase to $2,755 per Canadian with the PBO’s estimate.
Even the PBO’s estimate understates the true cost of Alto high-speed rail. The government wants to add an extra high-speed rail stop in Kingston. The PBO didn’t estimate the cost of adding a stop in Kingston. But, by applying its cost-per-kilometre estimates, a Kingston stop would add $4.4 billion to $6.7 billion to Alto’s price tag.

But even that’s not a complete picture of the cost to taxpayers. The PBO only estimated the cost to build high-speed rail without considering the cost to maintain the line.

Alto estimates that it will cost about $150 billion when you add the cost of maintaining the high-speed rail line, according to leaked documents.

If the PBO thinks Alto’s $60- to $90-billion estimate undersells the cost of building high-speed rail, Alto is likely underselling the cost to maintain the line.

If this all seems like a mess, that’s because it is. And it’s likely to get a lot worse.

Many high-speed rail projects around the world have suffered big cost overruns.

California dreamin’

California politicians proposed building a high-speed rail line in the late 2000s, telling taxpayers it would cost $47 billion Cdn. and be finished in 2020. Six years after the original completion date, the projected cost increased to $180 billion. Not a single piece of track has been laid and it’s scheduled for completion by 2039.

A similar story played out in the United Kingdom, where its HS2 high-speed rail line was promised to cost C$60 billion, but is now projected to cost up to $193 billion with a shorter route than originally planned.

Canadians need to take these nightmare scenarios as a cautionary tale.
“Costs could rise significantly beyond the PBO-estimated range,” said the PBO. “Given the institutional similarities between the U.K., U.S. and Canada, an HSR project in Canada may be at risk of similar cost escalation pressures.”

The Canadian government needs to learn from the mistakes of others and avoid the high-speed rail trap because taxpayers can’t afford to pay for the pain.

The federal government is $1.4 trillion in debt. Taxpayers are shelling out $58.7 billion to pay debt interest charges this year. That’s more than the government collects in sales tax revenue.

Taxpayers are being expected to hand politicians and bureaucrats a blank cheque for the Alto project. But the only thing that’s certain is that Alto costs too much already and is likely to get even more expensive. That’s a bad deal for Canadians, who’ll be saddled with more government debt and bigger interest charges as a result.
Carney needs to avoid the high-speed rail trap by cancelling the Alto project before taxpayers are stuck with the bill.

– Noah Jarvis is the Ontario director of the Canadian Taxpayers Federation

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