Library of Parliament Research Publications
Current Publications: Business, industry and trade
VIA Rail Canada Inc. and the Future of Passenger Rail in Canada
Jean Dupuis, Economics, Resources and International Affairs Division
31 August 2015
Background Paper
† No. 2015-55-E
PDF 478 kB, 17 pages
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4.2 Federal funding
Given the federal government's directive to VIA Rail to provide passenger rail service to the general population, and VIA Rail's current operating cost structure, the corporation requires federal subsidies to fulfill its mandate. Figure 3 illustrates VIA Rail's annual capital and operational subsidies, in constant (2002) dollars.
Figure 3 – VIA Rail's Annual Subsidies, 1977–2014 (in constant 2002 dollars)
Source: VIA Rail Canada Inc., annual reports, 1977–2014; and
Public Accounts of Canada, 1977–2014.
In its first years of operation, VIA Rail's annual subsidies rose continuously until 1983, when the federal government began reducing subsidies. Beginning in 1982, capital subsidies rose as VIA Rail disposed of some aging equipment and second-hand locomotives and replaced them with new, more technologically advanced rolling stock. By the mid- to late 1980s, total subsidies fluctuated between $700 million and $1 billion per year; then in 1989, the federal government again directed VIA Rail to restructure its operations to reduce subsidy requirements. Many uneconomical routes were altered or simply abandoned, resulting in a 45% drop in annual ridership (see Figure 2).
Federal funding declined continuously throughout the 1990s, at the same time that VIA Rail was restructuring and downsizing its operations. By the late 1990s, operational subsidies, which constituted the bulk of federal funding, fluctuated between $180 million and $200 million per year. After declining in the mid-2000s, total annual subsidies started climbing again in 2006. In 2010, they peaked at almost $445 million and then declined to about $318 million in 2014. (All figures are in constant 2002 dollars.)
Apart from a few isolated peaks in the 1980s, capital subsidies declined over 10 years, from the late 1980s until the late 1990s, when VIA Rail received no capital subsidies at all. Capital subsidies resumed their growth in 2000 and peaked in 2001 at almost $155 million in constant 2002 dollars, only to decline and then surge back in 2009. The increase in capital subsidies was attributable to federal government announcements made in 2007 and 2009 of new capital subsidies to help refurbish VIA Rail's rolling stock, upgrade fixed infrastructure and facilities such as stations and tracks, and improve passenger rail service. In 2014, capital subsidies stood at $65 million in constant (2002) dollars.
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