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Thursday, August 3, 2017

High-speed Rail Shrinking the Rural/Urban Divide

by Dr. Jeffrey Overall Guest Blog - The decision to implement a highspeed rail (HSR) system in Canada has long been debated among politicians.

According to Paul Langan, from High Speed Rail Canada, since 1970, the government has spent $35 million on conducting 25 studies on the feasibility of HSR in Canada. To date, Canada remains the only G7 nation without HSR and our existing system has been slated as at least 50 years outdated.

IMPORTANTLY, There are vital public policy issues that can be addressed with HSR:

Overheated real-estate market

Most commuters in Toronto are faced with an average commute of over an hour (one-way) while those travelling from the suburbs experience much longer commute times often closer to two hours. Conversely, with HSR, the commute times from areas further into the suburbs or rural areas, where real-estate is substantially less expensive, would be the same (or less) compared to existing commute times.

Put differently, people can travel from further distances in less time through HSR. This can
address the issues that many experience with the overheated GTA real-estate market.

Rural/urban divide

The growing social chasm between the ‘haves’ and ‘have nots’, as we saw with Brexit and the Trump Presidency, has significant political repercussions. There have been calls to reduce the rural/urban divide and relieve the rust belt issues currently facing many rural areas in Canada. With HSR, there would be massive economic benefits, through population growth and improved access to urban centres, to rural areas seeking to revitalize their economies.

On May 19th, 2017, Premier Wynne seemed to acknowledge the benefits and proposed a
HSR system, connecting Toronto and Windsor, a distance of 370km, by 2031 at a cost of $20 billion. Ironically, the national railway that connected our great nation, a total of 4,700km, was completed in four years (over 130 years ago from 1881 to 1885).

Comparing a more complex project, on May 25th, 1961, President John F. Kennedy announced that the U.S. would land an American on the moon, a feat never attempted before, prior to the end of the decade. On July 20th, 1969, eight years later, that promise was realized.

Clearly, laying 370km of track is not as challenging as landing a person on the moon. So, why have we been waiting 47 years and will continue to wait at least another 14 years for something that should have been implemented decades ago? There are several reasons:

1. Limited political interests

The election cycles in Canada are far too short to create any real interest among politicians. As a result, Canadian politicians do not seem to have the fortitude to invest in long-term visionary projects like the ‘one belt, one road’ trillion dollar infrastructure project that the Chinese
Government has unveiled.

2. Lack of private interests

Canadian citizens look to politicians to lead important change in our society. They rarely
consider visionaries from the private sector to lead these changes. However, if Canadian
politicians are unwilling to commit to longterm projects, they should step aside. Our best
and brightest industry leaders, those who have the proven expertise to implement visionary
projects, should then be incentivized to lead these projects.

3. Lobbyist efforts by Via Rail

There is a strong possibility that the near monopoly that Via Rail maintains could be made
obsolete by HSR. To counter this pressure, instead of HSR, Via Rail has been lobbying for funding to develop dedicated passenger lines, using outdated technology, at conventional speeds.

4. Ontario debt crisis

Recently, India awarded Japan a contract to lay their HSR technology on 508 KM of track.
This contract, to be completed in 7 years, involves a $12 billion loan at 0.1% interest
with a 15 year moratorium over a 50 year repayment period. Considering that Ontario
is the most indebted sub-sovereign region on the planet, a similar financial arrangement with
Japan Rail, an industry leader with 50 years of experience and best in the world at safety
and punctuality, seems ideal. To this end, we should be opening the bidding process up to
international tenders so that we can recruit the best partners. A partnership with Japan might
also help in resurrecting conversations around a much sought after Canada-Japan free trade
agreement.

For this project to ever materialize, there is a need to gather and integrate regional,
provincial, and national advocates. However, as a result of the 47 year debate and the proposed 14 year completion date, it is difficult to remain optimistic about the prospect of HSR in Canada.

At the dawn of our 150th anniversary, Canada is not a global leader, when it comes to HSR, we aspire to follow.

Dr. Jeffrey Overall is an assistant professor at Nipissing University where he teaches entrepreneurship and strategy. This article was originally published in the Canadian Business Journal.