Canada awarded a contract for a 1,000-kilometre high-speed passenger rail project between Toronto and Quebec City to a group led by the Caisse de Depot et Placement du Quebec (CDPO).

Prime Minister Justin Trudeau made the announcement Wednesday in Montreal. Overall costs were not disclosed, but high-level studies done by the transportation department said a high-speed rail project in the region would reach well over $65 billion — and it’s likely to be much higher.

The government chose a consortium named Cadence to develop, build and operate the project. It includes CDPQ’s infrastructure unit along with engineering firms AtkinsRealis Group Inc. and Systra SA and transportation companies Groupe Keolis SAS, Air Canada and SNCF Voyageurs.

Canada has allocated $3.9 billion over the next several years to develop the project, but there’s no timeline for completion.

Proponents have been talking about high-speed rail for decades as a tool for economic development and reducing emissions. Canada is the world’s second-largest country in land area, but 60 per cent of its 41 million people live in Ontario and Quebec and most of those are in a southern corridor — density that creates suitable conditions for rail.

But Trudeau is set to leave office next month and an election is near. A new government will be under pressure to make investments in military, security and energy infrastructure; it’s too early to say where a high-speed rail project would fit in with its priorities.

Trudeau and Transport Minister Anita Anand emphasized at a news conference that it would be hard for a future government to walk away from the contracts, or to pass up the productivity gains to the Canadian economy.

“Future governments will make their determinations about how they invest. But this investment in Canadians, which starts right now, is going to be very difficult to turn back on,” Trudeau said.

Philip Lawrence, a Conservative member of parliament, said that if his party is elected, it will make Canada’s rail network “more reliable, efficient and cost effective.” But he did not pledge to support a high-speed train. “Today’s announcement is yet another promise with no details that will take years and $3.9 billion on planning and bureaucracy, without laying a single piece of track,” Lawrence said in an email.

Seven stops

Currently, a passenger train trip between Toronto and Montreal takes about five and a half hours, roughly the same time as by car. Train trips are often delayed because they use Canadian National Railway Co. tracks, on which freight has priority.

High-speed trains moving on dedicated tracks at a top speed of 185 miles per hour would cut times significantly. Toronto to Montreal would take about three hours, while Toronto to Ottawa would be a little more than two.

Stops are planned in Toronto, Peterborough, Ottawa, Montreal, Laval, Trois-Rivieres and Quebec City.

CDPQ has built an expertise with rail systems. The pension fund is currently building an $8 billion light rail system in Montreal, known as the Réseau Express Métropolitain. The pension fund undertook the 42-mile project in 2015 to link Montreal’s international airport to several suburbs. A first phase is operational, and the project is slated to finish in 2027, seven years behind schedule.

Two other groups made proposals, and the government now owns the right to use their ideas as well. The losing bidders included engineering firm Jacobs and Deutsche Bahn AG, the German rail company.

California debacle

Gilles Roucolle, author of Transformations in Mobility and Oliver Wyman’s co-head of Europe, said that the Toronto-Montreal corridor is already well-served by airlines and roads. The “stickiness effect of frequent flier programs” and the relatively low cost of road transportation must be considered before choosing the best project for this corridor, he said.

“It’s a market that is already quite well-covered competitively,” Roucolle explained. Key benefits will be the reduced door-to-door transit time and flexibility for business travellers. “If you don’t have frequency, you cannot catch the high-contribution travellers.”

A similar project under construction between San Francisco and Los Angeles is facing significant funding and political challenges.

The California High Speed Rail Authority was established in 1996, but voters took until 2008 to approve almost US$10 billion of general obligation bonds for the project. Construction started seven years later. Costs have since soared to US$128 billion, and about six per cent of the project has not been cleared by environmental authorities.

Uncertainty remains over how the California project will be funded and whether a first 171-mile segment between Bakersfield and Merced will be commissioned between 2030 and 2033, as is the target.

The train “is the worst-managed project I think I’ve ever seen,” United States President Donald Trump said last week, calling for an investigation into it.

—With assistance from Laura Dhillon Kane.

Bloomberg.com