New analysis of the Montreal light rail project shows the
public will be financing an even bigger part of the P3 project’s profits than originally expected.
La Presse has analyzed the Caisse’s most recent reports on ridership and fares, as well as the budgets of existing regional transit authorities. Working with two public transit experts, the newspaper predicts that the Caisse’s expected profit falls far short of what the light rail project will generate.
Using a rate of return of 10 per cent – a yield the Caisse has demanded elsewhere – the annual profit on the pension fund’s $3.1 billion investment would be about $300 million. But best estimates of the REM’s operating profit are only $66 million, leaving approximately $240 million unaccounted for.
The result: the public will be expected to make up the difference, likely in additional payments made by municipal and provincial governments, as well as riders. The
Montreal Gazette is also reporting that the Caisse will
charge the regional public transit authority a per-passenger fee, in addition to direct fares paid by riders.
Federal finance minister Bill Morneau has said the REM is “
perfectly suited” for funding through the Liberal government’s infrastructure bank.
In reality, the project is a prime example of
everything that can and will go wrong with having private finance control public infrastructure. Some proposals for an infrastructure bank could give private, for-profit investors – including pension funds –
unheard of control over our public infrastructure.
The total project cost has risen to $5.9 billion, from an original estimate of $5.5 billion.
CUPE Quebec is part of the
Trainsparence coalition opposing the REM.[...]
