On March 9th 2022, federal Minister of Transport Omar Alghabra unveiled a Request for Expressions of Interest (RFEOI) for private sector partners interested in building the long-studied High Frequency Rail (HFR) project. This announcement contained several major surprises: the extension of the project scope to the whole Windsor-Quebec City corridor; an invitation for the private sector to propose faster trains than previously envisaged; several years of further procurement phases before work gets started; and that operation of all VIA Rail services in the corridor could be included in a public-private partnership contract of up to 50 years.
Transport Action is concerned that these scope changes put the entire High Frequency Rail project in jeopardy due to the significant cost escalation, and we are very disappointed that a final decision to proceed is unlikely to be made before the next federal election in 2025, despite the many years of work already done and millions of dollars already spent on the project.
The prospect of private sector operation of VIA Rail services has understandably raised concerns from passengers and our members, while sparking outrage from the unions representing VIA Rail employees. We have serious concerns that this would introduce many new project risks while adding little of value and seriously harming VIA Rail’s ability to continue delivering services to the rest of Canada, and we have communicated these concerns to Transport Canada and Minister Alghabra.
VIA Rail originally advanced the HFR proposal in late 2015 as one that would bring two thirds or more of the benefits of High-Speed Rail at one third of the cost. HFR was presented as the minimum infrastructure investment needed to overcome the capacity constraints resulting from reliance on Canadian National’s freight railway infrastructure and permit reliably on-time hourly train services in the corridor.
VIA Rail was acutely aware of the wasted effort of VIA Fast, ecoTrain and other past High-Speed Rail (HSR) proposals, and devised HFR to avoid the pitfalls of those potential megaprojects, focusing on the more practical goal of reliable high average speed.
The original HFR concept was a comparatively tightly scoped project, with capital investment valued at around $5bn, to restore the abandoned railway alignment between Havelock to Glen Tay, providing a much shorter trip between Ottawa and Toronto, and upgrade existing tracks through Peterborough and Trois-Rivieres to Class 5 or 6, permitting speeds of up to 110mph with VIA’s existing conventional trains or the replacement corridor fleet also requested at the time.
Services to southwestern Ontario were not part of the original scope of HFR because the provincial government was studying High-Speed Rail to London, a project since cancelled following the change of provincial government. Further upgrades to the proposed HFR network, like electrification or raising track speed above 110mph, were expected to come later, once ridership growth justified them, and once growing fare revenues provided cash to create a positive feedback loop of lower operating subsidy requirements.
Some of our members, with equally long memories of Canada’s history of HSR studies going nowhere, questioned even the original scope of HFR as potentially too ambitious versus investing in the existing routes. Transport Action requested answers to several technical feasibility questions and a comparison with the cost and benefit of upgrading the Kingston route. Very few technical or commercial details were made public at the time on the grounds of potential future commercial confidentiality, so answers to these questions were not received, and many of these details plus the subsequent work remain shielded from public scrutiny.
However, VIA Rail and then-CEO Yves Desjardins-Siciliano conducted extensive public consultations and outreach to communities along the corridor and beyond, making the case for HFR, assuring communities on the existing routes of the intention to continue serving them, and clearly articulating VIA’s rationale for pursuing a modest and therefore more readily deliverable project.
We have since seen data demonstrating the feasibility of the proposed travel times through Peterborough, a key question due to the number of curves on that route, and we now know that the HFR proposal originally presented to the government by VIA included cost estimates and financial projections that had been checked by two major European banks.
However, the government did not swiftly act upon the opportunity to modernize the Toronto-Quebec City passenger rail infrastructure at modest cost, and also failed to take steps to protect the proposed HFR corridor while studying the proposal. Most notably, the Mount Royal Tunnel that would have allowed trains from Montreal to quickly access the North Shore route through Trois-Rivieres, is no longer available. This critical piece of infrastructure was co-opted for the Réseau express métropolitain (REM) automated light metro project. While the REM team initially gave assurances that technical compatibility would be retained, allowing VIA to operate HFR trains alongside the REM trains through the tunnel, these have since been withdrawn. HFR will now require a costly new tunnel, a change of Montreal station location, or long detour. (See our article Solving the Mount Royal Tunnel problem for High Frequency Rail)
After several years of deliberation, the government created a Joint Project Office (JPO), with team members from VIA Rail and the Canada Infrastructure Bank in 2019, to study and “de-risk” the project. $71.1 million in funding was announced for this work in June 2019 and Vernon Barker was appointed as Project Director in October, bringing experience from Siemens Rail Systems and First Group’s Rail Division in Britain’s privatized rail ecosystem. In January 2020, a joint venture of AECOM and Arup were retained to act as the project engineers.
The work of the Joint Project Office was originally described as follows:
This funding will be used to establish a Joint Project Office (JPO) between the CIB and VIA Rail to explore the possibility of HFR in Quebec City-Toronto Corridor, focusing on the following de-risking activities throughout 2019 to fall 2020:
The JPO will also undertake preliminary design work for multi-modal hub passenger hub in Dorval to facilitate the movement of urban and intercity passengers to the Trudeau Airport.
As well, steps are being taken not to preclude interoperability and integration of HFR with operating tracks used by local and regional transit providers in Montreal and Toronto.
The JPO team presented its report to the Minister of Transport in December 2020, but no details have yet been released to the public. Of the tasks assigned to the JPO, the stakeholder consultations did not take place and substantive action on land and right of way safeguarding has not been forthcoming. When Transport Canada published an updated set of Track Safety Rules in 2021, standards for Classes 6 and 7, required for 110 mph and 125 mph passenger train operation, had not been added. Neither have any regulatory changes to track access been advanced.
The federal government earmarked $491 million over six years for VIA Rail to invest in infrastructure upgrades in preparation for HFR in budget 2021. Which projects would be funded by this welcome capital infusion for VIA Rail was not initially specified, although it is now clear that this includes the proposed new intermodal station at Dorval. An RFQ for architecture and engineering services for that project was issued in January 2022.
Federal Minister of Transport Omar Alghabra finally announced the government’s intention to proceed with High Frequency Rail in Quebec City on June 6, 2021. This was followed be a series of announcements by along the corridor. [link news article]
On July 21, Omar Alghabra made further announcements in London and around southwestern Ontario to indicate that HFR would be extended to Windsor in a future phase. The media critiqued the lack of substantive detail in these announcements. However, Transport Action welcomed this development, which seemed aligned with our policy work with Ontario’s regional transportation task force, recommending upgrades to the existing rail network that would alleviate freight bottlenecks as well as enhancing passenger rail capacity.
It was expected that formal public consultations for HFR and consultations with Indigenous communities along the proposed route would begin in fall 2021, with a view to starting the Impact Assessment process required for large infrastructure projects. This was stymied by a federal election being called, because public entities are required to observe the “caretaker convention” and not make major decisions during the writ period. However, these activities did not resume after the election, and remarks at the unveiling of the first train of the new corridor fleet on November 30 gave no hint of pending HFR scope changes. Nothing further was communicated publicly until the RFEOI announcement on March 9th.
Now, following the unveiling of the RFEOI, it appears that HFR is being touted as a one-off public-private megaproject, rather than a VIA Rail project of limited and manageable scope and modest cost. The door is open for private sector proponents to advance something closer to High Speed Rail, with the attendant challenges of choosing greenfield alignments and meeting North American rail safety standards. Coupled with the increase in scope to include operations, this seems to abandon a great deal of the design and “de-risking” work that has already been done, although it is understood that the JPO’s preferred alignment and project details, still unpublished, will form the reference case against which private sector proposals will be measured.
The government is attempting to proceed using a procurement process modelled on GO Expansion’s “On Corridor Works” project, while now suggesting that the HFR project may be even larger. The value of the GO procurement is $15.7 billion in capital. This could mean the HFR project has grown to be many times its original size.
The RFEOI also says that a final investment decision by Canada might not be made until the end of the co-development phase with the preferred bidder, possibly as late as 2027, an apparent reversal of the clear signal that the government was ready to proceed with HFR in summer 2021.
Interestingly, the industry has already pointed to GO Expansion being too large a project bundle to swallow, resulting in a smaller number of participants in the procurement and a less competitive process, even though that contract doesn’t include bearing revenue risk in the way envisaged in the HFR RFEOI.
It is inevitable, and in fact envisaged, that the private development partner for HFR, would not be a general contractor and would subcontract bundles of infrastructure work. Neither would the private consortium be expected to include a rolling stock supplier. The core capabilities sought in a private development partner appear to be in the areas of operations, project planning and management, and financing.
These development partner requirements, as set out of the RFEOI, are thus potentially infeasible for a private sector consortium to assemble, and key requirements are almost certainly easier to meet through existing public sector capacity and strengthening Canada’s public sector competencies. Experience with very large railway infrastructure projects is rare enough, and experience with delivering them on time and on budget rarer still, but only two organizations have practical experience running intercity passenger services in the North American context with private-sector host railways, heavier equipment standards, and our somewhat less supportive government regulatory environment: Amtrak and VIA Rail.
Brightline, the only successful private sector intercity rail operator in North America, has a completely different relationship with its infrastructure thanks to its genesis as a subsidiary of Florida East Coast, and it has its hands full with its own expansion projects.
On top of these requirements, the private development partner is expected to lead transit-oriented development around stations and would be expected to have the financial capability to borrow several billion dollars and offer a commercial rate of return on that investment, despite the panoply of external risks it would face over the 30-50 year proposed life of the public-private partnership operating agreement.
The requirement of “VIA, but with more money and project managers” can be met by giving VIA adequate access to capital and recruiting board/executive talent to strengthen project management capacity — from the same talent pool that a private partner would have access to.
The government envisages a private partner using transit-oriented development to offset some of the project costs. However, the capacity to undertake transit-oriented development to create value around new stations already exists in the public sector in the form of the Canada Lands Company and the Canada Mortgage and Housing Corporation (CMHC). Using those capabilities would allow transit-oriented development to be properly aligned with Canada’s National Housing Strategy, building complete communities with affordable housing and amenities like libraries, rather than maximizing the real estate profits.
The other problem with the transformation of HFR into a megaproject is that Canada hasn’t delivered such a project in more the half a century. The last major public infrastructure project of similar scale in Canada was the St Lawrence Seaway. The Government of Canada has since avoided such nation-building projects, failing to keep pace with population and industrial growth, leading to the infrastructure deficit Canada faces today and which the Liberals were elected in 2015 on a platform of tackling.
While much progress has been made on transit over the past seven years, this has mostly come through financial transfers to provinces and municipalities. Federal action in its constitutional remit of the national rail network has been limited to avoiding a complete service meltdown by allowing VIA Rail to replace its life-expired corridor fleet, an action that was long overdue.
That the High Frequency Rail project, originally designed to be a quick win closely aligned with the Canada’s economic, social, and environmental goals is still not underway seven years later; and now appears to be being rebooted as megaproject procurement process that might not get construction underway for a further five to seven years, is hard to present in a positive light.
Canada has greenhouse gas emissions targets to meet by 2030, and we can no longer afford to prevaricate on climate action or to forego shovel-ready solutions. One of the key goals of HFR is to slash carbon emissions by providing faster travel times than driving, which currently accounts for more than three quarters of all trips between cities in the corridor. HFR would also offer a practical alternative to flying for some city pairs. Shifting intercity travel from road and air to passenger rail powered by clean electricity is an effective way to deliver reduced emissions while growing the economy and improving quality of life.
Including corridor operations in the procurement came as an unwelcome surprise to people across the industry, including VIA Rail managers who had not been briefed and were thus not able to answer questions about job security from front-line staff. The VIA Rail team that grew corridor ridership by leaps and bounds between 2014 and 2019 despite aging equipment and host railroad constraints, and then guided the organisation through the pandemic, clearly has the capacity to continue managing corridor operations.
Furthermore, because the passenger railway industry is quite open, VIA Rail management already undertakes regular peer benchmarking and best-practice sharing exercises with SNCF, Deutsche Bahn, Amtrak and others. They already have access to any industry knowledge a new operating entity, which would almost certainly include a European or Asian state-owned railway operator, might bring.
Under the leadership of Yves Desjardins-Siciliano between 2014 and 2019, VIA Rail began developing a strengthened project management capability that could be applied to the wide range of projects needed to turn VIA around and bring Canadian passenger rail into the 21st century. This included the procuring the new corridor fleet, an IT and reservations system refresh, HFR, and long-distance fleet renewal. The intention was that this strengthened management capability could subsequently be applied to future initiatives outside the corridor, to Southwestern Ontario, to studying the Calgary-Edmonton corridor, further upgrades to HFR, etc.
Unfortunately, several of the executives, managers and analysts recruited to form the core of the HFR team at VIA have long since grown impatient of the government’s drawn-out decision making and have moved on to pursue their careers elsewhere in the industry. However, with assurances that their work on major projects such as HFR would not be in vain, it would be just as easy to rebuild the management capacity at VIA as to recruit a similar team under the auspices of a new entity, and at VIA the team would be able to enhance passenger rail operations across the whole country rather than being limited to southern Ontario and Quebec.
The operations of the St Lawrence Seaway continue to be managed by a professionally-staffed, non-profit Crown Corporation, acting in Canada’s national interest. The proposal that a European or Asian state-owned railway operator, acting as part of a private sector consortium, could do a better job of operating the Windsor-Quebec City corridor than VIA Rail could itself seems analogous to suggesting Seaway operations be handed over to the Suez Canal Authority or Panama Canal Company.
In an era where national interest, action on climate change, and thus transformational decarbonization of transportation networks, are all closely aligned, electrified passenger rail should be a national priority for Canada, and remain under public management.
Transport Action Canada wants to see the High Frequency Rail project succeed, and therefore recommends the following:
The government should direct VIA Rail and the HFR Project Team to immediately commence key pre-construction activities to ensure that this urgently needed project succeeds. This including securing land rights and track access rights, continuing consultation with Indigenous communities and municipalities, and commencing the Impact Assessment process based on the reference alignment studied by the JPO. Even if the procurement continues with a private operating partner, conducting these activities in parallel with selecting the partner could significantly shorten the process, reduce the risk of the corridor being further obstructed, and reduce the risk that nothing will be concluded before the 2025 election.
The HFR Project Team should welcome responses to the RFEOI on an infrastructure design-build-finance-maintain basis, where operations and revenue risk remains in the hands of the public sector and VIA Rail. It is considerably easier to quantify, manage and cost the project risks for specified outcomes measured in terms of frequency, speed, and reliability of available train paths. This approach has been widely used, including for most of Toronto’s rapid transit projects and the new Champlain Bridge. It would still allow considerable scope for innovation in design and construction; and leverage private sector incentives to build infrastructure to a high quality in order to reap the rewards of reduced maintenance costs.
Finally, the Government of Canada should seriously consider dispensing with the extra layer of complexity of the private development partner entirely, because such a partner can only be effectively monitored by duplicating similar levels of capability in the public sector, and instead direct the HFR Project Team and VIA Rail, working with the already-appointed owner’s engineers, to build HFR based on the reference alignment already devised by the Joint Project Office, tendering manageable packages of infrastructure works, and using the Canada Lands Company and CMHC to coordinate transit oriented development around stations.