PBO puts Alto high-speed rail construction at up to $113 billion

By Amara Osei

The Parliamentary Budget Officer estimates construction of Canada’s proposed Alto high-speed rail line at $75 billion to $113 billion, above Alto’s own preliminary range of $60 billion to $90 billion. The route would connect Toronto, Ottawa, Montreal and Quebec City, but remains in early-stage planning.

How strong is the historical cost record?

Oxford University researcher Bent Flyvbjerg has examined more than 1,000 transport megaprojects dating from the late 1920s to the present. He attributes recurring overstatements to “optimism bias”: “rail costs are typically underestimated, and ridership and fare revenues greatly overestimated.” His dataset shows that 86 per cent of the projects in the sample exceeded their initial budgets.

That is a measured sample result, not an Alto forecast. The analysis later applies Flyvbjerg’s average rail-construction overrun of 45 per cent to Alto, turning the historical finding into a funding scenario.

What does the air comparison establish?

The fastest Toronto-Ottawa journey is by air, with roughly two dozen flights daily. Canada’s aviation sector operates on a “user-pay” basis: passengers ultimately cover terminals, runways, aircraft purchases, daily operations and air traffic control.

The analysis says Canada routinely meets that standard, whereas United States aviation does not have it as a goal. It argues that Toronto-Ottawa and Toronto-Montreal do not need subsidized air service because competitive markets already meet demand. That is a policy premise, not a demonstrated Alto outcome; no comparative airfare, load-factor or subsidy figures are provided.

Which high-speed corridors cover their costs?

The analysis identifies only three routes worldwide that are generally believed to recover operating and capital costs from commercial revenue:

• Tokyo–Osaka, until recently the world’s most populous high-speed rail corridor.
• Beijing–Shanghai, which superseded Tokyo–Osaka.
• Paris–Lyon, described as Europe’s strongest high-speed rail corridor.

It says virtually every other high-speed rail service depends on taxpayers. No audited cost-recovery accounts are provided for the three examples, so “generally believed” is an important qualification.

What happened when scope changed?

England’s High Speed 2 network received final Parliamentary approval in 2017. Planners envisioned a Y-shaped system linking London with Birmingham, Manchester, Sheffield and Leeds, at an early estimate of roughly £30 billion in 2009 prices. Costs have since reached as much as £103 billion, equivalent to £45 billion in 2009 prices.

By 2026, government decisions had cancelled much of HS2. The remaining plan covers London to Birmingham; extensions to Manchester and Leeds have been shelved, reducing the network’s planned reach. Completion is now expected in the mid-to-late 2030s.

The London terminus remains unsettled. There is still no firm plan for reaching Euston, so passengers could transfer at Old Oak Common or take a taxi for the final seven kilometres. The shortened project therefore retains an unresolved connection into central London.

California’s proposed San Francisco–Los Angeles line originally carried an expected cost of $33 billion. Its authority’s 2026 business plan now estimates $126.1 billion for the San Francisco–Los Angeles/Anaheim project, despite major reductions in scope.

Those reductions include single track across most of the Central Valley and less fully dedicated high-speed infrastructure in the Los Angeles and San Francisco areas. The scope fell while the estimated price rose; major tunnels and other difficult, expensive sections still lie ahead, leaving further cost risk.

Can Alto’s ridership forecast support the fares?

Flyvbjerg finds that rail projects miss their ridership projections by more than 50 per cent. The resulting fare shortfall can leave deficits for taxpayers, according to the analysis.

Alto’s own forecast is “approximately 24 million annual riders by 2055,” equal to almost 68,000 a day. For comparison, Acela between Washington and Boston carries fewer than four million riders annually in a corridor with a much larger population.

That comparison makes Alto’s target demanding, but it does not prove it wrong. No comparable route lengths, fares, service patterns or population catchments are provided, so the Acela figure cannot settle Alto’s revenue case.

What would a 45 per cent overrun mean?

If Alto’s construction costs came to 45 per cent above the PBO’s $75 billion and $113 billion estimates, the added cost would be $34 billion to $51 billion. That equals an extra 1.0 to 1.5 per cent of GDP. This is a scenario based on the average overrun in Flyvbjerg’s research, not a prediction that Alto will reach it.

HS2 and California show why the upper end cannot be treated as a ceiling. The analysis also says governments worldwide have tried to make high-speed lines pay their own way and have overwhelmingly failed.

The commentary cites Wendell Cox, senior fellow at the Frontier Centre for Public Policy, who served three terms on the Los Angeles County Transportation Commission. It gives no separate finding or quotation from Cox, so his role in the cost analysis cannot be determined.

Alto’s funding case will remain unproven until its next planning stage narrows the cost range and substantiates the 24 million-rider forecast against comparable corridors.