International rail projects averaged 45 per cent cost overruns. For Alto, that could mean another $27 billion to $40 billion

The federal government’s Alto high-speed rail line, proposed to connect Toronto and Quebec City through Peterborough, Ottawa, Montreal, Laval and Trois-Rivières, remains in the early stages of planning. But one issue should already concern taxpayers: the projected $60-billion-to-$90-billion cost may substantially understate what Canadians will ultimately pay.

Evidence from high-speed rail projects around the world suggests that costs are routinely underestimated and ridership overestimated, potentially leaving taxpayers to cover the difference.

Bent Flyvbjerg, formerly of Oxford University, whose transport megaproject research covers more than 1,000 infrastructure projects from the late 1920s to the present, has documented a tendency toward “optimism bias” – the tendency for project forecasts to underestimate costs and overestimate benefits. He found that rail costs are typically underestimated while riders and fares are way overestimated. He also found that 86 per cent of rail projects exceeded their initial budgets. Alto’s cost and ridership projections should be considered in light of that record.

Three routes in the world stand out for their self-supporting high-speed rail service:

1. Tokyo–Osaka, one of the most heavily travelled corridors in the world,
2. Beijing–Shanghai, with its unparalleled corridor population, and
3. Paris–Lyon, which is the strongest high-speed rail corridor in Europe.

In contrast, virtually all other high-speed rail services are “taxpayer-pay.”

Two routes illustrate how badly overly optimistic plans can deteriorate into disasters: one in the United Kingdom and the other in the United States.

England’s High Speed 2 network (HS2) was proposed in the late 2000s. It was designed as a Y-shaped network linking London with Birmingham, Manchester and Leeds. Early estimates were around £30 billion to £35 billion in 2009 prices, roughly $53 billion to $62 billion.

By 2026, much of HS2 had been cancelled. HS2 is now essentially planned to run from London to Birmingham. Extensions to Manchester and Leeds have been shelved in the face of rapidly escalating costs.

In May 2026, the British government estimated the surviving HS2 program would cost between £87.7 billion and £102.7 billion. The government said much of the increase resulted from work that had previously been omitted, underestimated costs and inefficient delivery.

The first service between Old Oak Common in west London and Birmingham is now expected between 2036 and 2039. Completion through to London Euston is not expected until between 2040 and 2043.

Taxpayers are paying vastly more for substantially less railway than originally envisioned.

California’s proposed high-speed rail line linking San Francisco and Los Angeles was estimated in 2008 to cost about US$33 billion.

Costs have since risen dramatically, while the project has been repeatedly delayed. California approved a new business plan in June 2026 and is moving toward track installation for the initial Merced-to-Bakersfield segment in the Central Valley.

Finally, things could get far worse in California. The most difficult and expensive segments needed to reach San Francisco and Los Angeles, including major tunnels, remain ahead, increasing the risk of further, even more serious, cost escalation.

Cost is only half the risk. Flyvbjerg found that actual passenger traffic on rail projects averaged more than 50 per cent below forecasts. This can result in much lower fare revenues, a deficit that will, in all likelihood, be paid by taxpayers.

Already, “optimism bias” may be rearing its head in Canada. Alto projects approximately 24 million annual riders by 2055. This appears ambitious, given that Amtrak’s Acela high-speed train between Washington and Boston carried about 3.2 million riders in its 2025 fiscal year in a corridor with a much greater population. If Alto attracts substantially fewer passengers than projected, taxpayers could face both higher construction costs and lower fare revenues.

There are already questions about Alto’s cost estimates.

A 2023 internal analysis reportedly estimated infrastructure costs at $83.5 billion, plus about $2 billion for trains and another $62.6 billion to $67 billion for operations and maintenance over 40 years. Alto says the total should not be compared directly with its current $60-billion-to-$90-billion estimate because the latter covers capital costs, not decades of operating expenses.

But the $83.5-billion infrastructure estimate alone was already near the top of Alto’s current projected capital cost.

The fastest way to get from Toronto to Ottawa is by taking one of the couple of dozen daily flights. Canada’s air industry operates on a “user-pay” basis. This means that all costs, from building new terminals and runways to buying planes, daily operating costs and air traffic control, are ultimately paid by flyers.

In other words, there is no need for subsidized air travel between Toronto and Ottawa, or, for that matter, between Toronto and Montreal, because the competitive market is already meeting demand.

Governments around the world have attempted to deliver high-speed rail lines that pay their own way. They have been overwhelmingly unsuccessful. The issue is the costs, not the trains.

If Alto experienced the average 45 per cent cost overrun Flyvbjerg found among the rail projects he studied, the $60-billion-to-$90-billion capital cost estimate would increase by approximately $27 billion to $40 billion. But, as HS2 and California indicate, costs could be astoundingly higher.

Until Ottawa can demonstrate that Alto will avoid the cost overruns and ridership shortfalls that have plagued high-speed rail projects elsewhere, taxpayers should not be asked to assume the risk.

Wendell Cox is a senior fellow at the Frontier Centre for Public Policy, Unleash Prosperity (Washington), and the Center for Demographics and Policy at Chapman University, and is the author of Demographia International Housing Affordability.