Carney government hiding the true cost of high-speed rail from taxpayers

The Carney government wants taxpayers to pony up for the Alto high-speed rail project without showing us the bill.

Source: Unsplash (enhanced with ChatGPT)

Author: Noah Jarvis, Ontario Director of the Canadian Taxpayers Federation

The government is planning to build a high-speed rail line from Toronto to Quebec City with six stops in between. Politicians and Alto have repeatedly told taxpayers the project will cost $60 to 90 billion and will finish construction by 2043.

But reporting from The Globe and Mail revealed the government knows it will cost a lot more than taxpayers have been told.

A leaked report shows that Alto estimates building and maintaining the high-speed rail line for 40 years will cost between $148 billion and $152 billion. That’s the government’s own estimate.

But the transport minister and Alto bigwigs have continued to tell taxpayers the high-speed rail would only cost up to $90 billion. Alto’s website still lists the $60- to $90-billion estimate.

A $150-billion price tag for high-speed rail completely changes the project’s math, and the government has been keeping taxpayers in the dark.

Paying $150 billion for high-speed rail instead of $60 to $90 billion means the line needs much higher fares to make sense financially.

But the government doesn’t even anticipate it can cover the acknowledged costs for the high-speed rail line with its fare revenue estimates after 40 years of operation.

The government estimates the Toronto to Quebec high-speed rail line would only generate about $105 billion in fare revenue in its first 40 years. If you’re 40 years into running the line and still far from breaking even, how can high-speed rail be a worthwhile investment?

And assuming the Alto project won’t face cost overruns is like assuming the sun won’t rise tomorrow morning.

Award-winning urban geographer Bent Flyvbjerg has found that 9 in 10 megaprojects run over budget. The average rail project suffers a 45 per cent cost overrun while expected ridership is on average 51 per cent lower than estimated.

That’s because politicians and bureaucrats are incentivized to undersell the cost of a project while overvaluing its benefits to convince taxpayers of the project’s merits.

Politicians see big projects as an opportunity for a bunch of ribbon-cuttings and press conferences and to build a “lasting legacy” at taxpayers’ expense. Their short-sighted goals often conflict with what makes sense.

Look at California’s high-speed rail project.

Politicians told California taxpayers in 2008 that building a high-speed rail line from Los Angeles to San Francisco would cost $33 billion and complete construction in 2020. Fast forward to 2026 and construction is expected to finish in 2040, while its estimated cost has spiked to $126 billion.

The Carney government isn’t giving taxpayers the full picture on how much high-speed rail will cost. And taxpayers can’t afford to pay for a big train boondoggle while the federal government continues to pile big debt onto the taxpayer credit card.

The federal government is adding $65.3 billion to its debt this year, driving up total government debt to $1.4 trillion.

This has caused debt interest charges to soar, nearly tripling over the last six years. This year, debt interest charges will cost taxpayers $58.7 billion, or over $1,400 for every Canadian. Debt interest is costing taxpayers more than the government will collect in sales tax revenue this year.

Taxpayers can’t afford to pick up the tab on the Carney government’s high-speed rail plan. Politicians keep fibbing to taxpayers about the cost, but they still expect taxpayers to swipe the card and pay up.

The Carney government can get up and leave Alto behind before taxpayers are handed a devastating bill they can’t afford.