Canada's Parliamentary Budget Officer (PBO) has warned that construction costs for Alto, the federal government's flagship high-frequency rail project, could exceed the figures Ottawa has publicly projected, according to the Kelowna Courier.

The budget watchdog's assessment lands as the project transitions from planning into early works. Alto, the rebranded successor to the High Frequency Rail (HFR) initiative, will run along the Quebec City–Windsor Corridor, connecting Toronto, Ottawa, Montreal and Quebec City with dedicated passenger infrastructure.

The federal government transferred the project to a private development consortium, Cadence, in 2024. Cadence comprises CDPQ Infra, AtkinsRéalis, SYSTRA Canada, Keolis Canada and Canada Infrastructure Partners. Ottawa describes Alto as the largest rail infrastructure investment in Canadian history.

The PBO has previously flagged uncertainty around HFR/Alto cost estimates. Its latest analysis points to potential overruns depending on the procurement structure, scope and risk allocation between the public partner and Cadence. The watchdog's role is to inform Parliament on the fiscal implications of major federal undertakings.

Why are projected costs under scrutiny?

The project's "alternative financing and procurement" model places substantial design, build, finance, operation and maintenance responsibility on Cadence, with the federal government committing long-term payments once service begins. Such models can shift construction risk to the private partner, but they can also obscure final cost to the public purse if contract terms change or if scope expands.

The PBO does not set policy. It produces independent fiscal analysis for Parliament, including cost estimates for major infrastructure projects where Ottawa's published figures warrant independent review.

What service is Alto intended to deliver?

Operating on a dedicated passenger-only right-of-way, Alto will offer frequent, faster service than the current VIA Rail Canada offering, which shares track with freight operators Canadian National and Canadian Pacific Kansas City. Sponsors have promoted end-to-end journey times under four hours between Toronto and Quebec City — a target dependent on track geometry, station locations and rolling stock choices that affect overall cost.

The project will also require new or upgraded stations in Toronto, Ottawa, Montreal, Quebec City and other intermediate points. Station design and urban integration costs have featured in earlier PBO commentary on HFR.

What changes if costs rise?

A cost overrun would not necessarily alter the published service specification, but it would test the federal government's appetite for additional capital contributions or force scope reductions. Material overruns could also affect the financial case Cadence has put to its lenders and equity providers.

What is the procurement status?

Construction has not yet begun at scale. Cadence is progressing through development phases, with final investment decisions and construction milestones still ahead. The PBO's warnings will inform parliamentary debate as the federal government prepares the next stage of procurement and as Transport Canada and Infrastructure Canada continue engagement with Cadence on technical specifications, station planning and risk allocation.

The Alto project has attracted interest from rolling stock manufacturers, civil engineering contractors and station developers across North America, given the scale of works required.

Whether the PBO's projections materialise will depend on the terms ultimately agreed between Ottawa and Cadence, and on cost discipline during a multi-year build phase that the federal government has positioned as central to its passenger-rail renewal strategy.