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Train wreck

Alberta's high-speed train proposal is on collision course with fiscal reality.

Mark Milke - July 20, 2009

Over the life of the project, 3,400 to 7,162 jobs might be created - nothing compared to the almost two million already employed in Alberta. But at $20B for the 7,162 jobs, that’s an even pricier per job cost than the Washington-Ottawa-Toronto bailout for the automotive sector - no small accomplishment.

And it’s not as if high speed rail would create much new demand for travel, resulting in new jobs and higher tax revenues. The TEMS report estimates between 88% and 90% of all high speed passengers would come from existing modes of transportation. Therefore, much of the touted economic “benefit” would be a mirage because of the substitution effect, i.e., a dropped plane flight for a train ticket.

On the environmental front, usually the trump card high-speed rail proponents flash to justify a new megaproject, the report concludes even the fastest high-speed train would only garner 7% of all passengers on the Calgary-Edmonton corridor - and that’s with the $20B spent. Most environmentalists could probably think of better places to spend $20B-plus-interest.

There are plenty of reasons why high speed rail doesn’t make sense in Alberta: the substitution effect I noted above and the low population density in the Edmonton-Calgary corridor (with 2.2 million people compared to 60-million in the Tokyo-Osaka region), and, given worldwide demographic projections, Alberta will likely never have the population crunch one sees in China or India where passenger rail makes sense.

Then there are the cost-overruns. The Japanese government once wrote off $350-billion to make rail “profitable.” Consider also how unprofitable VIA Rail, an existing Canadian low-tech rail line, has, since 1995, cost taxpayers $2.4 billion in operating subsidies alone.

I actually prefer to travel by train and did so during the two years I lived in Japan. But in Japan, passenger rail makes sense. In Alberta, a high speed passenger train makes no economic, tax, or even environmental sense. I suspect it never will.

Mark Milke is Research Director for the Frontier Centre for Public Policy.

This column was provided by Troy Media Corporation.

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