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VIA Rail

Please use the link to submit your questions instead of just posting on here. It takes less than 1 minute. The more questions they receive on HFR, the more pressure they'll be under to respond.


I believe @crs1026 has indicated that he has submitted the above questions. He can correct me if I have misinterpreted.

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Placing the questions here (as well as; not in lieu of submitting them) is a way to encourage others to ask questions on these topics.
 
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I believe @crs1026 has indicated that he has submitted the above questions. He can correct me if I have misinterpreted.

***

Placing the questions here (as well as; not in lieu of submitting them) is a way to encourage others to ask questions on these topics.
I did submit them. Wanted those here to see in hopes that it might generate other questions as well as supporting/similar questions.

- Paul
 
Hmmm re HFR


Report is here: https://distribution-a6172746566616...704724e52cf231bd8a8c510982a3131988ab35d1d3f9a

Note 6 mentions HFR

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The PBO is getting weirder and weirder. Their leader is more political (even appearing on political chat shows alongside politicians to opine on the news of the day!). Anyways, from the article:

"The independent spending watchdog reached his conclusion by reviewing the bank’s latest announcements and comparing its track record with those of similar bodies, such as Infrastructure Ontario and the Caisse de dépôt et placement du Québec."

So if tomorrow the announced $4 billion for HFR, this would be all thrown off!
 
Correct me if I am wrong but was the Canadian Infrastructure Bank not designed (or hoped) to take a set amount of public money and then leverage that money with the private sphere to fund public projects. I.e. $1 public dollar hoping for $1+ private dollars.

I have a hard time seeing how some of these projects would be lucrative to the private sector in order to get them to invest. VIA ownership is going to stay with VIA so there isn't any real ownership opportunities. HFR goes through relatively rural areas for a large portion of its land so unless your offering development opportunities along the ROW again limited return on investment. While the corridor has tended to make VIA rail money I don't see how they would get a suitable return on investment for their initial offering. With a project like HFR (which may be a write off) where does the private dollars come in? Would this not be better off being funded by the Government of Canada/Ontario and leave more potentially lucrative (Hydro, toll roads, etc) to the investment bank?
 
The PBO is getting weirder and weirder. Their leader is more political (even appearing on political chat shows alongside politicians to opine on the news of the day!). Anyways, from the article:

"The independent spending watchdog reached his conclusion by reviewing the bank’s latest announcements and comparing its track record with those of similar bodies, such as Infrastructure Ontario and the Caisse de dépôt et placement du Québec."

So if tomorrow the announced $4 billion for HFR, this would be all thrown off!

This person appears to agree with you.


And...

 
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^I would be quite disturbed if Ottawa were able to circumvent the PBO or similar oversight just by funding a “Bank” instrad of being directly accountable for its spending.

The report does not reflect well on the Bank in terms of getting on with business. But unless the money earmarked for VIA is committed to some other investment, we don’t have to worry about HFR.

Certain of those 17 potential investments do strike me as flimsy investment opportunities, which sure leaves the impression that the Bank is a charade rather than a useful instrument of economic development.

- Paul
 
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There are many reasons why the bank may both help to encourage private investment but also find that very mission challenging in Canada. From my perspective:
1. Scale. A lot of infrastructure projects are simply too large for many private sector entities to undertake.
2. Political Economy of Infrastructure. The voting public may simply find it too unpalatable to charge the kinds of rates needed to earn a competitive ROI. This particularly applies to roads and bridges.
3. Duration. Very few entities have the ability to tie up capital for time spans longer than 10 or 15 years, which may be what's required to actually achieve positive NPV.
4. Cost of Capital. CIB has a lower financing rate than almost any potential private sector partner, so its NPV can be positive even for projects like HFR.

My goal here isn't to state the obvious to a clearly educated audience, but there are clear reasons why the CIB should exist. Another motivation is the quality of management you might expect from an arms length agency could be higher than in a politicized ministry (e.g. Finance vs. CPPIB).
 
Canada's general intolerance of road tolls and user fees for infrastructure is problematic. People love nothing more than to complain about the cost of transportation - GO fares, VIA ticket costs, 407 fees, airline costs, etc.

There isn't political support for projects that are user funded, which limits the amount of infrastructure that can be built overall.
 
^I can understand the value of an infrastructure fund where the capital cost is enormous and private investment does not accept the risk. But not all infrastructure can be monetized as a matter of ROI in a straightforward way.

Consider the proposal for the Calgary-Banff passenger railroad (it's on the "list of 17"). It makes eminent sense to build this, given the direct and less direct costs of the alternative (ie increased road congestion and highway expansion in a space constrained, environmentally delicate area of national significance). The capital cost is credibly said to be around $1B.

However, the eventual ridership might optimistically only be 1,000-2,000 per day. The expense is justified at that ridership as a shift away from road use, but at that ridership one probably can't service the capital cost from the farebox. In effect government would be paying itself to not have people use the highway (barring, of course, a significant highway toll).

Rather than try to monetise that investment in some arcane and contrived way, government should simply establish the direct and indirect costs and benefits, and make a public policy decision based on the pro's and con's. It's a public good decision, not a cash flow/ balance sheet decision.

Happily, HFR is said to have the ability to operate in the black (give or take $491M) from the farebox - so the Bank is a credible way to finance the project. If only we could get the paper to the top of the pile!

- Paul
 
This is not true for public transit. Public transit operating costs are funded mainly by user fees throughout the country (in fact, the TTC has one of the highest operating cost recovery rates through user fees in the world) and there is broad support for building public transit in all large urban centres in Canada. Also there is no model where intercity rail does not run on user fees, so I'm not sure what alternative you are trying to compare to?
I'm discussing the public appetite for it. TTC does have high recovery fees, but you see the political reaction whenever there is discussion of increasing the fare, even to just generally match inflation.

You see it in the calls to remove the tolls from the 412 and 418, from the constant complaints about toll rates on the 407, about people complaining about how expensive GO is all the time, about the huge negative reaction when Tory proposed to toll the DVP and Gardiner despite it making a lot of sense for a whole variety of reasons, etc.

Especially road tolls are much more generally accepted around the world than here. Most of the world is building their freeway networks on the basis of toll systems to finance large networks quickly, but Ontario continues along growing it's infrastructure network much slower than it needs to because the expectation is that it will be free or very cheap to use and needs to be covered by a very limited general tax revenues pool.

The vast majority of major US roads projects these days are at least partially financed by tolls. That is absolutely not the case in Canada. Tolls have a long history of very poor reception here.
 
I'm discussing the public appetite for it. TTC does have high recovery fees, but you see the political reaction whenever there is discussion of increasing the fare, even to just generally match inflation.

You see it in the calls to remove the tolls from the 412 and 418, from the constant complaints about toll rates on the 407, about people complaining about how expensive GO is all the time, about the huge negative reaction when Tory proposed to toll the DVP and Gardiner despite it making a lot of sense for a whole variety of reasons, etc.

Especially road tolls are much more generally accepted around the world than here. Most of the world is building their freeway networks on the basis of toll systems to finance large networks quickly, but Ontario continues along growing it's infrastructure network much slower than it needs to because the expectation is that it will be free or very cheap to use and needs to be covered by a very limited general tax revenues pool.

The vast majority of major US roads projects these days are at least partially financed by tolls. That is absolutely not the case in Canada. Tolls have a long history of very poor reception here.
Here in BC, both political parties made it a major election promise last election to remove tolls on new bridges built into Vancouver.
 

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