TOareaFan
Superstar
In November of 2015, that was indeed newsworthy stuff
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VIA Rail
- Thread starter ehlow
- Start date
mdrejhon
Senior Member
And thusly, Touché.In November of 2015, that was indeed newsworthy stuff
I don't normally pay as blanket attention to Montreal news except when it is big enough to hit Toronto news (e.g. Bombardier solvency). I got the Bombardier Rail spinoff news, but I didn't put the "Caisse" two and two together until I read this news retroactively. This is now suddenly incredibly important/relevant to the GO RER sphere.
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steveintoronto
Superstar
Based on what? The Law states otherwise:
http://www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/telecharge.php?type=5&file=2015C17A.PDF
kEiThZ
Superstar
There are two separate discussions here.
1) Are the pensions plans willing to fund the HFR proposal and what arrangement do they want?
2) Is it good for the taxpayer?
Those are two completely different issues. I have no doubt that the pension funds will pitch in, if the return is attractive enough. But an attractive enough pension plan is most assuredly a bad deal for taxpayers. I would assume that's why VIA's CEO is playing up the angle of reduced subsidies. But that really negates the fact that net income would be higher with taxpayer/debt financing.
This is analogous to somebody buying a house and their parents offering them 100k at 3% and the bank offering them 100k at 5% and the individual chooses the bank because he wants to look good to his parents. How many would think that to be fiscally prudent?
1) Are the pensions plans willing to fund the HFR proposal and what arrangement do they want?
2) Is it good for the taxpayer?
Those are two completely different issues. I have no doubt that the pension funds will pitch in, if the return is attractive enough. But an attractive enough pension plan is most assuredly a bad deal for taxpayers. I would assume that's why VIA's CEO is playing up the angle of reduced subsidies. But that really negates the fact that net income would be higher with taxpayer/debt financing.
This is analogous to somebody buying a house and their parents offering them 100k at 3% and the bank offering them 100k at 5% and the individual chooses the bank because he wants to look good to his parents. How many would think that to be fiscally prudent?
steveintoronto
Superstar
You miss the point: It won't get built without it. So compared to Enterprise building it, or never getting built at all (and you are one of the most vociferous on that being the case), I know how the majority Public feel about it.
It's analogous to buying or renting. Can't afford to buy? Then you rent. Take your choice, or there's nothing.
crs1026
Superstar
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No, @kEiThZ nailed it.
The pension plan isn't buying in because they have misguided expectations, ie will settle for less than a full market return on their investments. They are accepting the low return because the government is backstopping the risk. That has a price, which is hidden to the taxpayer.
It's even like buying a car at 0% financing rather than borrowing from one's parents at 3%. The purchase price for a cash deal is lower than for a dealer-financed deal. The cash deal is more prudent. (That's why car dealers have to disclose the effective interest rate on a 0% finance deal.)
I agree that the government, like the car buyer, is choosing to borrow because they don't have the cash in hand. But if their parents have to cosign the loan, it makes no sense to take the financed deal... the risk is in the loan. Now you are paying the car dealer more money, and the car dealer is insulated from the risk of the loan.
The parents would be better to buy the car at the cash price, and then do their own loan to their offspring. My parents didn't mind doing that, but the taxpayer isn't as accommodating. The best deal would be for the government to finance this itself.
- Paul
No, @kEiThZ nailed it.
The pension plan isn't buying in because they have misguided expectations, ie will settle for less than a full market return on their investments. They are accepting the low return because the government is backstopping the risk. That has a price, which is hidden to the taxpayer.
It's even like buying a car at 0% financing rather than borrowing from one's parents at 3%. The purchase price for a cash deal is lower than for a dealer-financed deal. The cash deal is more prudent. (That's why car dealers have to disclose the effective interest rate on a 0% finance deal.)
I agree that the government, like the car buyer, is choosing to borrow because they don't have the cash in hand. But if their parents have to cosign the loan, it makes no sense to take the financed deal... the risk is in the loan. Now you are paying the car dealer more money, and the car dealer is insulated from the risk of the loan.
The parents would be better to buy the car at the cash price, and then do their own loan to their offspring. My parents didn't mind doing that, but the taxpayer isn't as accommodating. The best deal would be for the government to finance this itself.
- Paul
steveintoronto
Superstar
You miss the aspect of Gov't getting the best wholesale rates for borrowing in the Market, but besides that...the "parent" isn't buying.
If the Government would finance this completely themselves, then excellent. I see absolutely no sign of that being the case, do you? PPP has had problems, I've listed the debacles in London (UK) and other parts of Britain, but the problem wasn't the model, it was the implementation.
So again, I ask you, what sign is there of the the Gov't of Canada financing this themselves? And if they have, then Desjardins-Siciliano has completely missed it. And so has most everyone else.
Keith himself was the one talking negatively about "debt". This would then show as debt completely on the backs of taxpayers, and eventually, lowering the credit rating of government, thus increasing the cost of borrowing money to buy in the first place.
What's 'reckless' financially is buying what you can't afford.
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crs1026
Superstar
We are talking on two different things. I agree that Ottawa isn't likely to fund this project, although not because they would have to borrow for it. They are desperate to launch $17B of other infrastructure spending that they are financing through borrowing. This just isn't one they can sell politically.
So, we go to some other method of getting the project going. To do this, we borrow money from pension plans. (Likely backstopped by government guarantees)
Will we get a better interest rate by going this route? I suspect not. It's an expedient because our access to the cheapest money is blocked by political realities. I commend D-S for finding a way through the maze, but is this the best buy for the taxpayer?
It's possible that the pension plans' involvement will lead to a better project management strategy than if Ottawa built this themselves, so it might end up being cheaper and faster - and that might offset the higher borrowing cost. That gets back to the governance issue.
- Paul
kEiThZ
Superstar
Exactly. $4 billion for a government running over $100 billion in deficits over its mandate is peanuts. The only reason they can't find the money for this is political willpower. Everything takes precedence over VIA. From the restoration of the Court Challenges program to a huge increase for the CBC, this is a government that sees its role as that of activist to boost all manner of federal spending. How you view that, depends on your political orientation. My only disappointment is that VIA and transit falls somewhat lower on the priority list, from the looks of it.
A government that truly believed in VIA would have committed to this project already. Instead, VIA is going to have to resort to private sector financing at higher rates than what the government could borrow for. In turn, that means either less effective equipment or higher rates (and lower ridership) for users. That's what concerns me about private sector borrowing. It's better than not getting it built. But it's a tepid deal at best for taxpayers and users.
That said, the pension plans keep saying they need multi-billion dollar deals to capture their interest. And this is probably the only thing the feds can hand off in a reasonable amount of time that's sizable enough for the pension funds to take on.
Definitely not. Show me a single project anywhere in the world where a pension fund has funded it at lower than sovereign (prime) rates. Pension funds are in the business of making money, not building infrastructure. They aren't going to build infrastructure, if it doesn't make money for them. And making money, means well above prime, for any money manger. Exactly what a lot of people don't get. Pension funds don't invest unless return is better than prime. Otherwise, they might as well buy bonds and sit on them.
I would absolutely challenge this assertion. Our federal public service has great talent. And I have no doubts the feds could find the right talent to get this built reasonably well enough. The problem with governments executing projects, however, is that they are far more susceptible to politics. I've seen this first hand in defence procurement. Every engineer and project manager I worked with was very highly competent. However, political realities and interference sometimes made projects slow as molasses or untenable.
In this particular case though, we're talking EAs across regions and discussions with aboriginals. I have my doubts that the private sector is substantially more capable or competent handling such issues.
crs1026
Superstar
Yes, I was bashing the process not the people. Political interference is a problem.
I do think an investor-driven project has more hope of better practices in oversight and reporting that government-led projects don't naturally embrace. The natural tendency in government is to bury bad news or release it when no one is looking. Investors would demand meaningful and timely progress reporting and would be quicker to ask questions that required full answers. In the public sector oversight is mostly provided by the media, who often don't know what questions to ask or who only want a juicy (and often superficial) story line. Investors' analysts are better at looking for the true story. And, objective disclosure is often required by law where government can employ spin specialists.
Plenty of private sector projects do mess up notwithstanding this. It's no guarantee, but I'd put my money on the investors' square. There are private investors who can navigate the consultation and regulatory maze. They are the ones you don't hear about.
- Paul
kEiThZ
Superstar
I'll be back in Ottawa in 2019 from the looks of it. So I'm definitely interested in the possibility that VIA could get this done before 2020. Used VIA extensively when I was last posted there. But now that I'm married, and will travel with my spouse, fares look ridiculous. We're talking $200 for a couple doing roundtrip to Guildwood (military discount makes it a bit more palatable at $150). Compare that to the $70 my car would take in gas roundtrip as my high estimate (my hybrid actually does 4.5L/100km highway....fuel could cost me under $50 roundtrip). And VIA gets much more unfavourable as you get closer to your travel date. And it looks even worse if I consider going out to London to see the in-laws with VIA the whole way.
From looking at my personal situation, the best thing that could come out of the HFR proposal is lower fares. Not just a faster trip. I'd be happy if VIA was $75 per person roundtrip (before any discounts like the one I get). Perhaps Johannes has data for what train trips cost per km elsewhere. From my travels, VIA does seem a tad expensive.
From looking at my personal situation, the best thing that could come out of the HFR proposal is lower fares. Not just a faster trip. I'd be happy if VIA was $75 per person roundtrip (before any discounts like the one I get). Perhaps Johannes has data for what train trips cost per km elsewhere. From my travels, VIA does seem a tad expensive.
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SaugeenJunction
Senior Member
VIA Rail service to Chicago? The Consul General of Canada in Detroit tweeted this out during a talk VIA's president YDS was giving. Seems a bit vague... maybe YDS was talking about pre-clearance? It would be great to be able to take a train from Toronto to Chicago again though!
https://twitter.com/DouglasGeorgeCG/status/724613466800173056
https://twitter.com/DouglasGeorgeCG/status/724613466800173056
mdrejhon
Senior Member
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The trick is
(1) Visit www.viarail.ca on a Tuesday and;
(2) Select an "Escape Fare" for a trip many weeks in advance
(generally easy to find the lowest fares few weeks in advance for a weekday trip, or ~8 weeks in advance for a weekend trip)
I would hope that HFR makes the low fares more common and easier to find, at least for regular travellers.
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You can already do ~$75 today for Guildwood-Ottawa if you shop www.viarail.ca on a Tuesday approximately 8 weeks in advance. Not sure if it still qualifies for military, though...
The trick is
(1) Visit www.viarail.ca on a Tuesday and;
(2) Select an "Escape Fare" for a trip many weeks in advance
(generally easy to find the lowest fares few weeks in advance for a weekday trip, or ~8 weeks in advance for a weekend trip)
I would hope that HFR makes the low fares more common and easier to find, at least for regular travellers.
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steveintoronto
Superstar
Except that is not the case! They are *partners*, accepting risk and investment for a slow and virtually guaranteed return. They are investing in an *asset* along with the Federal Gov't and ostensibly, if discussions go as I hope, Ontario and Quebec too.
From the Globe April 14:
http://www.theglobeandmail.com/news...e-along-quebec-ontario-route/article29638997/
TOareaFan
Superstar
I really don't see the need/value in extending train to Chicago.
Chicago is a great city, and yes a lot of people make the jaunt/connection between Chicago and Toronto.....but this is a route that the airplane will always have a fairly clear advantage on.
Chicago is a great city, and yes a lot of people make the jaunt/connection between Chicago and Toronto.....but this is a route that the airplane will always have a fairly clear advantage on.