The NDP and Unifor are sounding the privatization alarm after documents reveal the federal government is only entertaining public-private partnership funding models for a mostly electric rail megaproject in Canada’s busiest service corridor.

Transport Minister Omar Alghabra’s response to an order paper question posed by NDP MP Taylor Bachrach revealed the government broke down the pros and cons of two procurement options, both of which involve the private sector at a minimum designing, building, financing and maintaining a high-frequency rail corridor proposed by Via Rail, a Crown corporation. This will include setting fares and ticketing policies.

Transport Canada media spokesperson Sau Sau Liu sent a statement to Canada’s National Observer saying the federal government “conducted a robust assessment of many procurement options for [high-frequency rail], including a public model.” No details of this public model assessment were presented when Bachrach asked for specifics, save one brief reference that indicated a public model was assessed.

Canadians deserve a detailed comparison between the public-private partnership model the federal government “is so fixated on” and the traditional public procurement approach, Bachrach, the NDP’s transport critic, said in the House of Commons on May 29.

“The problem with that is that it ends up costing Canadians more in the long run because the private sector has to build a financial return into their calculations,” Bachrach told Canada’s National Observer in an interview. He pointed to a 2014 audit from Ontario’s auditor general that found partnering with the private sector on infrastructure projects cost the province $8 billion more than if those same projects were managed publicly.

“The federal government has access to the lowest cost financing out there and is able to leverage that to build public infrastructure affordably,” Bachrach added. “But instead, the Liberal government has been tirelessly pursuing this, this, this dream of turning public infrastructure over to their corporate friends.

“Why is the minister so obsessed with privatizing our public rail system?” he asked his colleagues in the House.

In response to this criticism, Transport Canada has repeatedly said Via Rail “is not being privatized.”

“Throughout the entirety of the [high-frequency rail, HFR] project, including during operations, the Government of Canada will retain ownership of Via Rail and its assets and infrastructure,” reads the statement from Transport Canada.

Transport Canada’s analysis concluded a public-private partnership was the “optimal model to ensure the best possible outcome for Canadians due to the ability of the private sector to manage certain project risks and costs efficiently” and “draw in global expertise and innovation for both building and operating HFR.”

The proposed rail project would create a faster, more frequent rail service among the major centres of Quebec City, Trois-Rivières, Montréal, Ottawa, Peterborough and Toronto. Almost all the tracks Via Rail operates its services on are owned and maintained by Canadian National Railway. Via’s high-frequency rail proposal is in part a response to the delays caused by sharing the tracks with freight trains, which have the right of way. The new routes would use a combination of newly constructed tracks and upgrading discontinued tracks.

The Quebec City-Windsor corridor is Via Rail’s most profitable service, accounting for 80 per cent of the Crown corporation’s revenues in 2019 and more than 90 per cent of ridership.

“Once that service is handed over to a private investor, Via Rail is going to be left with a small fraction of its previous revenue,” Bachrach told Canada’s National Observer in a phone interview.

Alghabra came under fire last March when he announced the government was seeking private proposals to solicit “advice and views from industry” for the Via Rail high-frequency Quebec City-Windsor corridor. At the time, Unifor promised to “aggressively fight back” against what it described as “the first of many steps to privatize Via Rail.”

“Right now, we’re in the fight of our lives against privatization,” Jennifer Murray, Unifor’s Atlantic regional director, told Canada’s National Observer. “It’s scary to think that only pieces of [Via Rail] would be considered to be privatized, leaving us all wondering what the intentions are with the rest of the system.”

Although the entirety of Via Rail is not being privatized, when private investors come in and take profit out — particularly in the most profitable region — “and it is no longer going to be a completely publicly owned railway, then I guess, what would it be if it’s not privatized?” asked Murray. Unifor represents more than 2,000 Via Rail workers across Canada.

The climate connection

There are mandatory routes, such as Vancouver-Toronto or Montreal-Halifax, that, while not nearly as busy or profitable, are still essential and give Canadians options to get from Point A to Point B. Murray says the rail system is one of the solutions to creating a “greener economy” but that we have to build on it and expand service outside the busy Quebec City-Windsor corridor, too. Right now, many of the services Via Rail is required to run are not convenient. For example, the Via Rail service from Vancouver to Toronto departs only twice a week and takes nearly four days to arrive at Union Station. Murray is confident if services are expanded and improved, more people would travel by rail, which she says is part of addressing climate change.

This summer, wildfires spurred by climate change are raging across the country in B.C., Alberta, Nova Scotia, Saskatchewan and Manitoba.

Transport Canada says the project “could transform intercity passenger rail” through a variety of outcomes, including “providing a greener rail system and cleaner travel option using electrified technology.”

Last June, Green Party Leader Elizabeth May tabled a petition with just over 1,000 signatures calling on Alghabra to “stop the privatization of VIA Rail Canada in the Quebec City-Windsor corridor.”

May has a private member’s bill currently awaiting second reading that would see Parliament create a legislative framework to ensure Via Rail exists to serve the Canadian public and seek to protect it from privatization. “Any creeping privatization must be resisted,” she told Canada’s National Observer in an emailed statement.

The problem with P3s

Nate Wallace, Environmental Defence’s program manager for clean transportation, says public-private partnerships have deeper problems than just inflated costs.

When the reins are handed to the private sector, it “hollows out” the public sector’s capacity for these sorts of projects and constrains the government’s ability to take on future projects because “they don’t ever learn how to do it,” he explained. The cost increases associated with public-private partnerships and the public sector’s increasing lack of experience with big projects “creates consequences from a climate perspective because we need to be building a lot more rail transit,” said Wallace.

Ottawa’s light rail train (LRT) is just one high-profile example of a public-private partnership plagued with increasing costs, delays and a recently settled lawsuit between the city and construction companies. In Waterloo Region, the cost of extending light rail transit into downtown Cambridge is now triple the original estimate.

It’s “really sad” a public model for the high-frequency rail project wasn’t considered in any detail, said Murray, who is involved in Unifor’s campaign to Get Canada Back on Track, which pushes back against service cuts and advocates for “the federal government to create a national passenger rail service that provides safe, reliable, frequent transportation across the country and good, green, long-term jobs.”

“We want it to be done as a public corporation, publicly owned and operated and maintained,” said Murray. “I think that it can be done. But the government has to reach out and certainly entertain that as an option.”

By Natasha Bulowski, Local Journalism Initiative Reporter

Original Published on Jun 01, 2023 at 12:15

This item reprinted with permission from   Canada's National Observer   Ottawa, Ontario
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