Do Or Die Says VIA Rail CEO
Tom Korski, www.blacklocks.ca
Canada faces the death of commercial passenger rail service or mammoth deficits without structural reforms at VIA Rail, says the Crown corporation’s CEO. “If you have a five-year plan you can deal with the clunkiness,” Yves Desjardins-Siciliano yesterday told MPs.
“If we do not have a dedicated track the deficit will simply increase and ridership will decline,” said Desjardins-Siciliano. “A future government will have to make the decision to eliminate VIA Rail or do something else.”
VIA’s operating deficit fell from $317 million to $280 million last year. Testifying at the Commons public accounts committee, Desjardins-Siciliano estimated this year’s deficit will decline to $270 million.
The CEO said management later this year will present cabinet with a detailed plan for 110 mph service on VIA-owned track along its busiest eastern routes that serve 90 percent of passengers between Québec City, Montréal, Ottawa, Toronto and Windsor, Ont.
“It would appear this is the cornerstone for the prosperity of VIA Rail,” said Conservative MP Joël Godin (Portneuf, Que.): “What would happen if it doesn’t come to fruition?” “We would expect in the next seven years the deficit would amount to between $450 million and $500 million,” Desjardins-Siciliano replied. “Ridership would certainly decline, and punctuality would also decline.”
Desjardins-Siciliano said the $5 billion upgrade is feasible with private investment, and would earn profits large enough to offset losses on rural routes. “Retirement plans, teachers’ pension funds – all of these are investors in rail networks throughout the world,” he said; “It is certainly feasible to be profitable. It is possible to attract investors who are looking for performance.”
“If the government were to ask us to come up with the funding, 60 to 80 percent of this could be found in public markets today,” he said; “We’re very optimistic about the future of our Crown corporation.”
Desjardins-Siciliano said VIA trains now frequently run late due to increased freight traffic on rail lines owned by Canadian National Railway Co. and Canadian Pacific Rail. “Our on-time performance has deteriorated considerably,” he said; “When VIA operates on its own tracks, of which we own close to 300 kilometres, our trains operate at higher speeds and on schedule 98 percent of the time.”
‘Run Like A Corporation’
VIA’s on-time performance has fallen from 87 percent of trains to 64 percent in the past five years, by official estimate. “Our travelers expect a reliable service,” he said.
MPs noted VIA Rail, established in 1978, is governed by cabinet order and not an Act of Parliament, unlike the U.S. Amtrak system governed by Congressional authority through a 1970 Rail Passenger Service Act. “I think enabling legislation would be a great addition for management,” said Desjardins-Siciliano; “That clarity would be welcome from a management point of view.”
“Let the company run itself like any corporation should, and it will eliminate its need for government subsidy,” he said. “When there is competition, they will be competing on a level playing field without government funding. That would be the objective of enabling legislation.”
“It is the most important Crown corporation without enabling legislation,” said Desjardins-Siciliano, adding reforms were needed to “turn the tide on the increasing deficit, sinking ridership and overall bad financial performance of the corporation.”
MP Pierre Poilievre (Carleton, Ont.), Conservative Treasury Board critic, questioned ongoing subsidies for the Crown railway as unfair competition to private airlines. “The airline system is not subsidized,” Poilievre said; “In fact it is a net contributor to the Government of Canada. Airlines pay corporate taxes, fuel taxes, airport rents; the passenger pays for the cost of security.”
“Why should taxpayers be subsidizing a money-losing mode of transportation at the expense of a money-generating mode of transportation?” he said; “That’s just the reality. The Winnipeg to Churchill per passenger subsidy is $1,000 – what is a plane ticket from Winnipeg to Churchill?”
“There are no planes on the 42 stops between Winnipeg and Churchill,” replied Desjardins-Siciliano. “That is why the Government of Canada provides the service.”
Subsidies per passenger on the VIA system range from $37 on the Toronto-Ottawa-Montréal run to $317 at Toronto-Niagara; $461 on Ocean service from Montréal to Halifax; $528 per passenger on transcontinental service from Toronto to Vancouver; and $779 per passenger from Winnipeg to Churchill, Man., the highest subsidy in the network.