HIGH-SPEED RAIL WRONG TRACK TO TAKE: Canadian Transportation Study Steering Towards Privatization and Deregulation
Contact: Filip Palda, Senior Fellow of The Fraser Institute
and Professor at l'Ecole National d'Administration
Publique in Montreal (514) 990-5204
Release Date: 18 September 1995
Vancouver, B.C.>>> The Fraser Institute has released a study that explains the path Canada should take in privatizing and deregulating its ground transport sector. Despite encouraging promises by government to privatize air and sea ports, end most transport subsidies by 2005, and cut the red tape that strangles profitable mergers and raises business costs, Ottawa's actions tell the real story. Witness the Pearson airport debacle, and the foot-dragging to end transport handouts and begin deregulation.
"If we continue to dicker while other countries get their acts together," says Filip Palda, editor of Essays in Canadian Surface Transportation, "Canadians will pay a steep price." Palda says Britain, New Zealand and the U.S. have already reaped the competitive advantages of deregulation.
Essays in Canadian Surface Transportation reaches the following conclusions:
* Subsidies to rail lines should end, and most aspects of the rail industry should be privatized.
* International evidence suggests that privately run airports and sea ports are more efficient than government-controlled ports. If Canada does not privatize these ports it should at least take power out of Ottawa's hands and allow lower units of government to build and administer ports.
* Proposed high-speed rail lines between Quebec and Windsor are based on unrealistic estimates of potential ridership and ignore less costly alternatives such as upgrading current rail lines for higher speed.
* Urban transit services such as buses and trains could reduce their costs by up to 30% if they were contracted out to private operators.
The attached Executive Summary provides further details.
High-Speed Rail
Richard Soberman's piercing critique of high-speed rail suggests that an air of fantasy still hangs over some fields of transport policy.
Soberman's essay makes fascinating reading for taxpayers who want to understand what they will be funding if they get a high-speed rail line. His essay is also a rich source of ideas for policy makers looking to justify a high-speed rail investment. For a 200 km/h line between Montreal and Toronto to break even, 4.7 million passengers would have to travel that line each year at $100 per trip. This is 128% of the combined 1987 VIA, bus, and airline traffic along the same route. Instead of losing ourselves in such reveries, Soberman argues that government should look at whether there are cheaper, more sensible ways to upgrade our passenger rail lines. With some minor changes to our existing lines, we may get faster trains that can pay their own fare. These trains may not be as fast as the French TGV, but neither will they railroad our public finances into the dirt.
Professor Soberman is Chair of the Department of Civil Engineering at the University of Toronto (416-978-5907).
City of Hope
Wendell Cox and Jean Love explain that cities are the last holdout against the modern ideas that are sweeping through Canadian transport policy. Privatization, desubsidization, and deregulation are not welcome words to municipal planners.
Trains are good for serving a dense city core where many people travel. But Cox and Love explain that in large urban areas, suburbs make up 73% of the population. The city makes up only 23% of the population and every year fewer people go to work there. This pattern suggests that trains are out and busses are in. When the city core is no longer so dense or so popular, busses running along special routes are the best solution. Such "busways" can be built for one tenth the cost of urban rail systems and provide citizens with better services than city trains. In spite of these advantages, Canadian cities stubbornly push for rail.
Wendell Cox is principal of Wendell Cox Consultancy, St. Louis, MO (618-632-8507). Jean Love is an independent consultant in St. Louis.