VIA CUTS?: MEMO OUTLINES COST- SAVING OPTIONS
Government says it is committed to providing service as transport department looks at where and when
OTTAWA — The federal government may sell part of Via Rail or cut the services provided by the money- losing passenger- rail company as the government looks to pare spending, documents show.
The federal transport department is “assessing several options for future support for passenger- rail services,” including “significant reductions” in service and privatizing part of the network, according to a briefing note prepared for Transport Minister Denis Lebel, which was obtained under access- to- information laws.
“Potential service level reductions could include: reduced frequencies on the western and eastern transcontinental service; reduced frequencies to certain remote areas; and removing regional services in rural areas that are well served by other public modes and highways,” staff say in the note.
Prime Minister Stephen Harper’s government has promised to eliminate its budget deficit by the fiscal year starting April 2015, in part by cutting operating spending. Federal money for governmentowned Via has increased in recent years as it “regularly requires additional funding to cover operating shortfalls,” according to the documents.
“Privatization and public sector partnerships in the Quebec City- Windsor corridor are being assessed,” staff say in the documents, referring to the most densely- populated sections of Quebec and Ontario, including Toronto and Montreal.
Via had an operating loss of $ 261.5 million in 2010 according to its latest annual report. Annual revenue fell 5.3 per cent from 2005 to 2010 to $ 274.4 million, while operating expenses rose 15 per cent to $ 535.9 million.
The government provided a combined $ 1.2 billion for operations and $ 441 million for capital spending in that period, annual reports show.
“At this time, there are no plans to privatize Via Rail,” said Pierre Florea, a spokesman for Lebel, in an email. “While the department can make suggestions, the minister is in charge of government policy.”
A spokesman for Montrealbased Via Rail said the company “regularly discusses various plans and scenarios with government.” Via’s mandate remains to “operate the current network,” Malcolm Andrews said in an email.
Finance Minister Jim Flaherty said in November he was delaying plans to balance the budget by a year, amid a dimming outlook for global growth and more conservative revenue estimates.
Via Rail, created in 1977, operates from British Columbia to Nova Scotia. But about 80 per cent of the company’s ridership moves between Windsor, Ontario and Quebec City, the country’s main commercial corridor.
Transport Canada has been reviewing the federal government’s support for passenger rail since 2008, said the note, which is dated April 13, 2011.
It’s common practice for Via to “adjust schedules based on passenger demand,” Florea said.
“Our government is committed to safe and efficient passenger rail for all Canadians.”
Via plans to use $ 923 million in government funding to meet maintenance and safety requirements and fund equipment and infrastructure projects through 2014, according to the note.
It makes no sense for taxpayers to pay for Via’s upgrades if it’s going to be sold, said Bob Fitzgerald, national staff representative with the Canadian Auto Workers union, which represents Via employees.
“It would be devastating to employees and the country to scrape the cream off the top and let the rest of it die,” Fitzgerald said, referring to privatizing service in the Windsor- Quebec City corridor.
Via could prove to be a tough sell to investors. The company owns less than two per cent of the 12,500 kilometres of track it uses, relying on freight railways such as CN and CP for track. Via’s fleet includes 396 passenger cars and 78 locomotives, according to its website.
“Under prevailing market conditions, passenger rail services are uneconomical and, without continued and substantial government support, will continue to decline,” Jean Dupuis, a researcher for Canada’s Library of Parliament, said in a November report.
“High- speed passenger rail provides the best potential for profitability and market growth but would require substantial investment.”
While Via’s total ridership dropped 9.8 per cent between 2008 and 2010 to 4.15 million, the total was up from 4.1 million in 2005.
The briefing note also shows Canada is looking at improving service between Windsor and Quebec City, including through high- speed rail.
Florea said a high- speed rail network would cost between $ 20 billion and $ 40 billion.
“Given the very high public cost and in the current fiscal circumstances, this project is not a priority for our government,” he said.