Canada Shouldn’t Build High-Speed Rail

It is still the time in this fair land for that railroad not to run

Canadians love the idea of rail.

A trans-continental railway, linking coast to coast, was one of the first goals of the modern nation of Canada. The first Prime Minister, John A. Macdonald, campaigned on it. The railroad got him the job, and lost him the job, thanks to (accurate) accusations of self-dealing in awarding the contracts to build it. The west-coast leg and the east-coast leg were built separately, and were connected into a transcontinental network by the Last Spike; the site where the Spike was driven into the ground is a national landmark.

In our own time, the late Gordon Lightfoot’s best song, “Canadian Railroad Trilogy”, is about the struggle to lay track across a vast, forbidding landscape, and how doing so forged Canada into a nation.¹ In some sense, Canada believes that the railroad is the nation.

But it isn’t. Those visions may seduce us, but let’s set them aside, and acknowledge that the just-announced-yesterday plan to build high-speed rail (HSR) between Toronto and Québec City is a bad idea.

The appeal of HSR is undeniable. Today, it can take as long as eight-and-a-half hours to travel from Toronto to Montreal on VIA Rail, Canada’s national intercity rail operator. HSR, traveling up to 300 km/h, could cut that down to a three-hour trip. And it wouldn’t just be convenient. It would be climate-friendly: sleek, electric, sustainable. It would be geographically appropriate: Toronto, Ottawa, Montreal, and Quebec City fall roughly in a straight line, along a gentle slope, in a corridor that includes more than a third of the country’s population. And it would give Canada what its peer nations—France, Germany, Japan, and, deliciously, not the United States—already have.

But as irresistible as it may seem, nonetheless this proposal to deliver it, called “Alto”, is a bad plan, announced at a bad time, and to be carried out in a bad way.

The HSR announcement comes at a moment of political transition and fiscal uncertainty, raising immediate concerns about whether it will actually happen. The project’s structure will introduce a range of organizational challenges​. Key design and governance decisions suggest Canada is making the same mistakes that have plagued HSR initiatives in the United States, while ignoring better approaches common in Europe and Asia. The plan features poor institutional design, overreliance on a domestic team that lacks expertise, a cumbersome consultation-heavy approach, and questionable project sequencing. And fundamentally, it fails to align with the realities of the corridor’s transportation needs.

Alto Has the Wrong Structure

Alto is supposedly going to be delivered by a consortium of world-class private companies: AtkinsRéalis (formerly SNC-Lavalin), CDPQ INfra, Keolis, SYSTRA, SNCF Voyageurs, and even Air Canada.

And therein lies the problem. The Alto HSR project has a preliminary budget of almost $4B CAD to be spent over six years. We know what it takes to deliver a successful megaproject… specifically, not to deliver it this way. Reliance on a murderer’s row of external partners, rather than a well-staffed in-house agency, incurs severe transaction costs.

What do I mean by that? Well, large infrastructure projects require tight coordination between planners, engineers, and construction teams. Project and team dependencies are great, such that a delay in any part of delivery has cascading effects. The way to handle this is to have a tightly integrated and organized team that can easily communicate internally.

Consortia of engineering and consulting firms are not good at this. Fragmenting the project among so many firms leads to inefficiencies; decision-making bottlenecks; and spiraling costs. Figuring out who will do what, when, and how, and the impacts on other parts of the project, requires immense amounts of internal communication. Typically, there are so many firms involved, so many teams, and so many decision-makers, it’s necessary to have consultants administering the work of other consultants, which devours budgets even faster.

In other words, a huge chunk of the budget goes not to delivery, but to overhead. This path, that the Alto HSR project has elected to take, is the same one that HSR in California and Texas has taken. Overemphasis on private partners and insufficient authority in the public sector led to overlapping contracts, legal disputes, and construction delays.

There is a better way. France and Japan, by contrast with the Anglosphere, rely on clear, centralized oversight by the public sector. In those countries, the public body does not roll up all the work into a single project and assign it to a consortium. Instead, it does its own project management, segments the work into separate contracts, which it assigns to individual firms. This approach keeps responsibility with the client (i.e., the government) to know what it wants and to specify how to get it, removing the possibility for misaligned incentives, moral hazard, and the general friction that coordinating multiple parties involves.² The Alto plan ignores this global best practice in favour of aping what the Americans have traditionally done.

Aping what America does is a classic Canadian move, of course, and a fine one… when the Americans know what they’re doing. But in this case, they don’t.

Alto Has the Wrong People

There are countries that have built and maintain successful high-speed rail networks. France and Japan are the most obvious ones; others include Spain, China, and Germany. If Canada had the same state capacity and experience that those countries have, the consortium model Alto endorses might have some chance of success.

In-house expertise is crucial, for two reasons:

1. It allows the public client to scope its own work: design the line, specify the rolling stock, establish the station locations, and set high-level goals and expected outputs that are reasonable and feasible. Then it can assign the gritty work of transforming those plans into something that can be executed to the private sector.

2. …and when the private sector comes back with inflated costs for any element, the in-house team can recognize they’re being asked to overpay, and can push back.

Absent a strong in-house team, the public is unable to adequately specify scope, nor to exercise appropriate cost control. And it is scope creep and lack of cost control that leads to projects blowing through their budgets and timelines.

So the Alto plan could work, if Canada had domestic expertise and state capacity in HSR, enough to take on more of the project management itself, and to impose discipline on its private partners when they fail to deliver, or overcharge. But it doesn’t. Canada has never built HSR, so of course it lacks domestic expertise in the subject. (For that matter, the United States lacks it as well.) The expertise lies instead in Europe and Asia, where high-speed rail projects are led by agencies with decades of technical and managerial experience. France’s SNCF and Japan’s JR Central, for example, developed their systems through in-house expertise that has been accumulated over decades.

Canada had to start somehow, of course. And the best way to start would have been to pillage those agencies. Alto should have gone to mid-rank staff there and offered them a chance at a top job, and a competitive salary, if they uprooted themselves to Canada; yes, a sacrifice, but also a chance to build something new. (In fact the TTC got the person who would become its best leader, Andy Byford, with his deep experience in London and Australia, by doing pretty much this.) It would not have been cheap, but when you’re starting from the bottom and want to get good fast, it’s the only way. And that expertise would have more than paid for itself in preventing cost overruns in the future.

That’s not what Alto has done. The agency’s CEO has no rail experience; he previously ran the Port of Montreal. The rest of the C-suite is cut from similar cloth, with jobs within the government of Canada, of Quebec, Hydro-Quebec, or other energy firms. They are, frankly, the wrong people for the job: they have almost no transport experience, and none in passenger rail.³ HSR technology is not a North American area of expertise; an all-Canadian team is far too insular to succeed.

Alto Has the Wrong Process

Here is a screencap from the front page of the Alto website; to be precise, the bottom half of it.

You will notice that two of the three items here relate to engagement and consultation. You might expect the third one, “Making a Difference”, to link to a job board, but it does not. It links to even more material on public engagement.

Public engagement is important, of course. It’s important that affected parties know what the project is going to do, and how that will affect their lives. A skilled communications team can help convey those messages and prevent some friction.

But not all friction. Let me be blunt: this project will annoy, or even enrage, everyone who lives along the corridor’s length. For much of its length, it will not run on existing railbeds; it cannot, since high-speed trains can’t share space. It will have its own, proprietary, dedicated right of way (ROW). And that ROW cannot feature level crossings: trains moving at 300 kph can’t rely on a moving wooden arm for a barrier. The only ways to cross the ROW are with expensive overpass bridges, or even-more-expensive tunnels.

This project will demand immense sacrifices. To name only a few:

• Land will have to be acquired, and if the owners don’t want to sell, it will need to be taken by eminent domain

• Adjoining land will lose value because high-speed trains will be passing often, impoverishing its owners

• Because cheap level crossings are not feasible, only some roads will get expensive above- or below-grade crossings, disrupting the local road network

• New access roads parallel to the ROW will have to be built to connect to the few crossing points, requiring further takings, and further affecting land uses and land value

The list of people whose lives this project will make worse is almost endless.

The way to handle this was to make some hard decisions early. But Alto is taking the safe route of not making any decisions at all, waiting for the public consultation process to resolve first.

That, of course, is what California’s HSR project did. It relied, heavily, on stakeholder negotiations, and underwent onerous environmental review. That delayed the project by decades and added billions in costs, to the extent that the project will probably never be completed. The same dynamics are likely to play out in Canada. If every routing decision is subjected to extensive consultation and negotiation, the project will become mired in procedural gridlock.

Alto Has the Wrong Timing

Even if Alto had the right structure, people, and process, I’d still be dubious, given the timing of this announcement. Infrastructure megaprojects require long-term stability, both political and financial. Yet this plan has been unveiled at a precarious political moment, with a lame-duck prime minister, looming elections, and no funding commitments beyond an initial $4 billion​. Projects launched under these conditions rarely succeed. Work like this demands cross-party acceptance to survive political transitions.

The Liberal Prime Minister, however, has announced HSR in his final weeks in office; his successor, whoever that may be, will likely immediately contest and lose a general election, leading to a new Conservative government. Will the Conservatives welcome spending billions on a project, announced weeks before, into which they had no input? It’s possible, but like I said, I’m dubious. They may ask, with justice, if this project was such a Liberal priority, why the government waited until the tenth year of its mandate, when the Prime Minister had already announced his retirement, to commit to it? If they chose to cancel the project, I wouldn’t blame them.

If they did choose to cancel it, they’d have a good argument to hand: building HSR in this corridor is premature. The time to build HSR is when there is substantial demand for rail travel within a corridor that the existing low-speed rail cannot meet. That’s not the case in the Montreal-Toronto corridor today. Annually, about 3 million people travel between these cities by existing low-speed rail, while about 5 million fly.

These are dwarfed by the 65 million people who take that trip by car.

These numbers suggest that market demand is for car travel, not other modes; relative to car passengers, train and air passengers are few. And that is not a recipe for HSR success: HSR historically has flourished in corridors where rail travel is already significant. There were lots of rail passengers traveling the Paris-Lyon corridor in France before the introduction of HSR (there called TGV) service. Trying to bootstrap demand from car to HSR, without first building up a strong intercity rail network, is a fool’s errand.

Before this announcement, the Liberal government had spent years preparing the grounds for high-frequency rail (HFR); trains that ran often rather than quickly. That was a good strategy: cheaper to implement, and a necessary first step. It was precisely the plan that would create the user base for HSR in the future by creating that strong intercity rail network. Pushing it aside in favour of HSR smacks of a desperate political ploy to win votes.

Too Silent to Be Real

The Alto HSR proposal rests on a compelling vision: fast, sustainable, and modern transport linking the country’s largest cities. And speaking against it is painful: in my youth I divided my time between Toronto and Montreal and traveled by rail exclusively. Indeed, my wife and I are visiting Montreal in a few weeks, and we will travel, round-trip, by train. Then and now I would have welcomed faster trips. None would celebrate Alto’s success more than I.

But I don’t expect success. The Alto plan is flawed in structure, team composition, process, and timing. Without a strong and experienced public-sector planning agency, willingness to tolerate or overcome objections, and a realistic assessment of market demand, this project will not transform transport in Canada, but instead become yet another infrastructure boondoggle.

The structural flaws of the project stem from its reliance on a fragmented consortium of private companies rather than a centralized, expert-led public agency. The planning process is backwards, prioritizing consultant-led decision-making and excessive public consultation instead of clear, decisive leadership. The timing is suspect, with a lame-duck government announcing a multi-billion-dollar initiative without expectation of long-term support. And most fundamentally, the scale of the project is mismatched to Canada’s actual transportation needs, ignoring the fact that HFR offers a practical alternative.

The romantic appeal of rail is deeply ingrained in Canada’s history and culture. Not for nothing did Gordon Lightfoot celebrate the determination that drove this country to build a national rail network. If ambition was all it took to succeed, I’d say we should go for it. But successful infrastructure projects require more than determination, and if that’s the only thing we’re relying on—as opposed to evidence-based planning—we’ll fail.

So instead, let’s pursue high-frequency rail in this corridor. That will mean setting aside doing the wild, ambitious thing that gets everyone excited, in favour of the unromantic, unglamorous thing that will work and make peoples’ lives better. Sure, it won’t win any headlines… except perhaps “Worthwhile Canadian Initiative”.

But the reason that news story has become a punchline is because doing low-key things, but ones that succeed and make the world a better place, has always been a Canadian virtue. Even if Lightfoot didn’t sing about it, it’s one we should embrace.

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Postscript: Off-Ramps is on hiatus, in order to permit me to write about this sudden development in transport innovation. It will return next week.

Also: in the interests of being timely, and not overloading an already-long piece, I’m letting this issue of Changing Lanes be mostly negative. It is almost entirely about what Canada shouldn’t do. But in our present circumstances, the country needs a national transport project that will do today what the trans-continental railway did in Canada’s early decades: knit the nation together, while also showcasing, for the world’s benefit and for our own, what Canada is capable of. I have a suggestion in mind. It will be the subject of a future issue.

1. Well, perhaps second-best, coming behind “The Wreck of the Edmund Fitzgerald”. Still: Lightfoot was, in my view, the greatest singer-songwriter Canada has ever had; to be his second-best song is still high praise.

2. I’m relying in this case on sterling work done by Lee Haber and his work Build It Right—a Study of HFR/HSR in Canada, unfortunately not available on the Internet, but discussed here. I should add that Haber may object, even strongly, to the conclusions his work has led me to reach. Viri honesti possunt dissentire.

3. The honourable exception is Maria Luisa Dominguez, the Chief Project Management Officer, who previously oversaw expansion of Spain’s HSR network. Hiring her was the right move, but she should be the CEO.