VIA Rail

[steveintoronto]

(!).

Excellent find!

What has me entranced more than talking to VIA (which they should have been doing anyway) is the "freight at night". Whoa....that opens the door to all sorts of possibilities. And Kingston and Belleville mentioned! Must run, very late lunch, will pore over that later.

 

[nfitz]

Both Fitz and Dowling make excellent points:

I have no idea how you think my comment from 2 years ago about an Edmonton-Calgary service has any relation to your recent threadjacking and verbal diarrhœa - mostly because your signal to noise ratio is so low, that I ignore most of it. Generally I don't support what you are saying though.

Evidently. Sorry, I mistook you for someone who understood what he wrote.

I understand what I wrote. I seldom understand what you write though.

 

[steveintoronto]

I wrote:
[Both Fitz and Dowling make excellent points:]
Well I guess I made a mistake. Fitz didn't make a good point at all. My bad.

MD: The GO RER Business Case: I looked for hours one night for it, couldn't find it anywhere on the Metrolinx website or the web, save for one place: Steve Munro's website. Downloaded it, but yet to pore over it. Metrolinx does not make information that easily available.

 

[TOareaFan]

I've just done a cursory dig to ascertain what many of us know: Cash is in large pools from Corporations, let alone Retirement Funds *worldwide*!. Canada is very much in that camp. That's exactly why IRs are so low, velocity of money is very slow, Central Banks are *enticing* that money to move and multiply. The Feds can stimulate fiscally by making deals exactly like this one. Good for all concerned! It's an investment in the future multiplied again by using private capital.

I would never dispute that there are large pools of capital in this country.....it is the "sitting idle" statement I take exception to .

 

[mdrejhon]

I would never dispute that there are large pools of capital in this country.....it is the "sitting idle" statement I take exception to .

Maybe a more accurate way is, "invested a smidgen too ultra-conservatively" -- parked in safe investments -- where not enough invested in a way that enhances domestic infrastructure. But then again, Canada has a relatively good worldwide financial reputation given surviving the 2008 crisis. Probably a matter of POV....

 

[steveintoronto]

I would never dispute that there are large pools of capital in this country.....it is the "sitting idle" statement I take exception to .

Fair enough, I think any difference in understanding is the semantics. I'll dig to see what economists call it, but the common term is "sitting in cash". It's the lament of many central bankers that it is static, and not invested, but it's a very good point to define, since this discussion has been surprising in the general consensus of private investment to multiply Fed investment. Private for the rail infrastructure, FED and provinces for the Rolling Stock and Operating Company.

Edit to Add: This is even more abject than I thought, and it's *growing*! Reams on the web:
Canada's Corporate Cash Hoard Is Nearly One-Third Of GDP: IMF
[Canadian companies have been accumulating “dead money” — cash sitting idle in bank accounts — faster than companies in any other country in the G7, according to a report from the International Monetary Fund.][...]
http://www.huffingtonpost.ca/2014/03/25/canadas-corporate-cash-hoard-imf_n_5030345.html

I'm still perplexed to finding an answer for Paul's point on "dedicated track". Again it may be semantics, but even the existing report is ambiguous on the point. Pardon the length, there's no real way to shorten this:

Parliamentary Library,
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

[...]
6 Recent developments
Given that the federal government does not consider high-speed passenger rail a practical option or as a feasible solution to improve passenger rail service, VIA Rail has recently taken the initiative to explore another approach. VIA Rail is promoting the notion of high-frequency rail (HFR) rather than high-speed rail (HSR) through the acquisition and building of a rail network dedicated to passenger rail service only. A dedicated track for passenger rail service would resolve the rail traffic congestion issues associated with sharing the network with freight rail carriers.19

A passenger rail dedicated track would also allow VIA Rail more latitude to increase frequency of service; improve the availability and convenience of rail service to all Canadians and thus add ridership volume; generate more passenger revenue; reduce reliance on government subsidies; and improve the percentage of trains running on schedule.

VIA Rail's HFR strategy would require the acquisition of existing trackage from freight railways and the rehabilitation or rebuilding of existing rights-of-way found within the Toronto–Ottawa–Montréal segment of the Québec City–Windsor corridor. Unlike the HSR option, which would require the construction of an entirely new and dedicated high-speed rail network infrastructure and necessitate substantial investment in new and untried technology and equipment, the HFR option offers merely to expand and rehabilitate the existing rail network for passenger rail service using existing technology and operating at conventional speeds. The HFR strategy proposed by VIA Rail is considerably less costly than the proposed HSR schemes, with lower execution risk and quicker implementation to market.

According to VIA Rail, the HFR project would cost $3 billion in capital costs, two thirds of which would be for the acquisition and rehabilitation of trackage and signalling infrastructure. The Toronto–Ottawa–Montréal dedicated segment was selected for having the best potential to achieve profitability, and over the years VIA Rail would slowly expand passenger rail service to a greater number of communities across Canada. The dedicated rail network would include VIA Rail's intercity passenger rail services and regional and metropolitan commuter rail services such as MetroLinx (Greater Toronto region) and the Agence métropolitaine de transport (Greater Montréal region).

With a dedicated track, VIA Rail hopes that doubling the frequency of passenger rail service would increase ridership almost fourfold, thus increasing revenues and reducing reliance on federal government subsidies. To further reduce the burden on the Canadian taxpayer, VIA Rail is seeking to secure private financing to implement the project.20

VIA Rail intends to submit its HFR proposal to federal cabinet either by the end of 2015 or early 2016. If the proposal is approved, VIA Rail would implement the initiative in four to seven years.21
[...]
http://www.lop.parl.gc.ca/content/lop/ResearchPublications/2015-55-e.html

In the absence of the 'latest' proposal not yet submitted and published, and correlating with interviews with D-S like this: http://news.nationalpost.com/news/c...n-3b-corridor-from-toronto-to-montreal-report it *appears* to indicate a completely separate track, but the case isn't made absolute.

Opinions on interpretation? I'd be very interested to see if Urban-Sky can add any clarity to it, it's an extremely important point for the reasons Paul points out. Unless it is truly dedicated, then I question efficacy compared to now per investment. I think the investment has to go all in to get the value back out. But we'll see what the analysts say. Note the mention of Metrolinx and AMT in the quote above! All the more reason to invest in a totally dedicated passenger line....and that would be the platform for temporally separated operation, and thus APTA regs instead of FRA ones.

 

[TOareaFan]

Fair enough, I think any difference in understanding is the semantics. I'll dig to see what economists call it, but the common term is "sitting in cash". It's the lament of many central bankers that it is static, and not invested, but it's a very good point to define, since this discussion has been surprising in the general consensus of private investment to multiply Fed investment. Private for the rail infrastructure, FED and provinces for the Rolling Stock and Operating Company.

I think you have to get past the "sitting in cash" comment and really understand who is sitting on it. If a widget maker is sitting on the profits they have made that is one thing....they were/are never going to be an investor in infrastructure projects. What fiscal policy is geared to do is to try and get them to invest in their plants and technology to produce more widgets and, therefore, create more jobs.

Investment pools are the people who are going to invest in infrastructure....and they are not sitting in cash...they are just invested elsewhere....and often in infrastructure projects...just not in Canada (for the most part).

 

[steveintoronto]

It's investors:
http://business.financialpost.com/i...ecord-cash-pile-risk-billions-in-lost-returns

 

[TOareaFan]

It's investors:
http://business.financialpost.com/i...ecord-cash-pile-risk-billions-in-lost-returns

That is individual investors...people like you and me who for some reason are putting their savings/investments in safe savings accts and gics or other "cash/near cash" investments (if it is not clear look at the chart showing the "age" of the investors).....again, our investment pools (pension funds and the like) are invested and not sitting on an inordinate amount of cash.

That story is pointless in discussing infrastructure funding unless you (not me) has enough in your savings account to fund a rail corridor.

 

[kEiThZ]

The discussion of large pools of cash miss a lot of key points. To begin with pension funds have a fiduciary duty to provide certain returns. They don't exist simply to pool money and spend on infrastructure. They will only be investing if the rate of return is sufficient. That rate is virtually guaranteed to be higher than what the Government of Canada pays. I would think that people would be less supportive of the idea of wastefully spending more on interest just to avoid the optics of adding to the debt, for basica infrastructure.

As for the corporate cash hoard. Again. That's not to blow on infrastructure. It should be used to grow the business or returned to shareholders as dividends. Moreoever, the companies that have the cash, are usually not companies involved in infrastructure and transport. It's not like Bombardier or SNC-Lavalin has a large cash pile.

 

[mdrejhon]

That rate is virtually guaranteed to be higher than what the Government of Canada pays. I would think that people would be less supportive of the idea of wastefully spending more on interest just to avoid the optics of adding to the debt, for basica infrastructure.

Actually...Let's temporarily wear the politician shoes, and project a little:

At this stage, people are getting worried about the size of debt (Read: Wynne's "Ontariowe") and could eventually spillover to Trudeau in a few years if he does not choose carefully. He got a high honeymoon approval rating right now, relatively speaking, and it would not take much to knock that down.

While (some/many) approve of permanent infrastructure from deficit/stimulus spending -- there is a pain threshold and eventually you have to turn to something a little more private so the same said 4 billion can be spent elsewhere preventing....say.....health cuts (or your favourite verboten territory) and getting lower approval ratings that way in 2018.

Interest paid to domestic pension funds (rather than to China/foreign countries that own some of our debt, or worse yet, go to a 407-style situation) is possibly currently more politically tolerable on average than a lot of X (e.g. health cuts) at this stage, for many. There will come a lot of pressure to get deficit spending in control, or at least closer to (revised) promises, while still delivering on expanded infrastructure. A somewhat higher interest but no new federal/provincial debt eventually could possibly become politically easier with these projected variables. Even if not an accountant or beancounter's preferred option...

And a lot of that ongoing Europe unity instability could bring home a lot of new pension-fund investment in good 'ol safe Canada in a favorable domestic political climate.

In other words: VIA may have the opportunity of the century for the domestic-pension-fund scenario.

 

[kEiThZ]

At this stage, people are getting worried about the size of debt -- while some approve of permanent infrastructure from deficit/stimulus spending -- there is a limit and eventually you have to turn to something a little more private so the same said 4 billion can be spent preventing....say.....health cuts (or your favourite verboten territory)

This is a false dichotomy though. The liability would still exist. Since the Government of Canada would be guarantor on the debt. And it would still be passengers paying higher fees to pay down the debt. So why not simply do the same under government?

I submit to you that this comes down to optics: $4 billion more government debt paid down by passengers or $4 billion debt to pension plans, guaranteed by government, paid by passengers. Spending the $4 billion on health care instead simply means a higher debt, and a worse fiscal picture, because government's book liabilities will have increased $8 billion, not $4 billion, and passengers will only be funding $4 billion of it.

 

[TOareaFan]

This is a false dichotomy though. The liability would still exist. Since the Government of Canada would be guarantor on the debt. And it would still be passengers paying higher fees to pay down the debt. So why not simply do the same under government?

I submit to you that this comes down to optics: $4 billion more government debt paid down by passengers or $4 billion debt to pension plans, guaranteed by government, paid by passengers. Spending the $4 billion on health care instead simply means a higher debt, and a worse fiscal picture, because government's book liabilities will have increased $8 billion, not $4 billion, and passengers will only be funding $4 billion of it.

I still hold that the real value of bringing in outside investment is to leverage avaliable funds......if you have $100B to spend and you can use that to seed (say) via initial investment to "buy down" costs so that private investors can make money on 4 huge/impactful projects you might do that rather than, say, invest that $100B in one mega project.

It is, both, financial and political leverage.....otherwise, you are correct, the returns that any pension fund needs to invest in an infrastructure project far exceed the government's cost of funds in the bond market.

 

[mdrejhon]

This is a false dichotomy though. The liability would still exist. Since the Government of Canada would be guarantor on the debt. And it would still be passengers paying higher fees to pay down the debt. So why not simply do the same under government?

If it is really structured in a way that passengers will really pay down 100 percent of the debt, perhaps. Does it result in a good enough business case for the pension funds? That is a good question.

That said, we might see alternate financing structures not really mentioned in this thread at length for HFR... Where the risk equation is shared in an unexpected way...

Oh, I sure hope not, but if bailing out (farebox recovery fail), have our governments bail Canadian entities instead of foreign entities if we can... Taxpayers mad versus madder...

 

[SaugeenJunction]

$4 billion Via Rail plan opts for ‘frequency’ over speed in Windsor-Quebec City region
http://globalnews.ca/news/2639505/4...d-in-windsor-quebec-city-region/?sf24413131=1

"With any luck, the $4-billion project will be “shovel ready” a year from now, with the first of the new fleet carrying passengers by 2019, says Via president and CEO Yves Desjardins-Siciliano. “The fall of 2019, the dedicated corridor would exist between Montreal, Ottawa and Toronto at a minimum and even possibly all the way to Quebec City at that point,” he predicted in an interview with The Canadian Press."

Looks like Yves is still gunning for 2019. Optimistic I'd say.