REM tariffs: the first increase is already in sight

As soon as it is put into operation, the REM increases its fares.

Not less ! While the Réseau Express Métropolitain (REM) is scheduled to partially operate this fall, the price per passenger-kilometer will increase shortly thereafter from 1 January 2020ah next January.

This is foreseen in the agreement signed between the promoter and owner of the REM, the Caisse de dépôt et Placement du Québec (CDPQ), and the Autorité régionale de transport métropolitain (ARTM), the government agency responsible for the planning. Organization and financing of public transport in the Montreal metropolitan area.

Jean-Vincent Lacroix, spokesman for CDPQ Infra, explains the situation:

“The integration agreement with the ARTM provides that the fare payable of 72 cents per kilometer/passenger will be adjusted on January 1 of each year from January 1, 2022 to reflect the impact of inflation or deflation of the cost of entry. This impact is mainly calculated on the basis of the CPI (Consumer Price Index). »

Relatively strong increase

A relatively strong increase is therefore to be expected. In the latest Statistics Canada survey, inflation for the month of June reached an annualized rate of around 8.1%.

If the inflation trend continues and the inflation rate remains at around 8.1% for the whole of 2022, the current tariff (from 72 cents) would thus increase by 5.8 cents to 77.8 cents per kilometer/passenger.

Currently, the rate of 72 cents per kilometer/passenger is expected to be assumed as follows:

  • 21 cents per user, i.e. 29% of the bill for a REM ride
  • 11.4 cents from the municipalities supplied by the REM, i.e. 16% of the total bill
  • 39.6 cents from the Quebec government, or 55% of the bill

Incidentally, it’s important to remember that the rate of 72 cents per kilometer/passenger was set with the goal of allowing the Caisse to earn around 8% on its investment, which totals $3.53 billion to date.

NEW BILL

If the increase of 5.8 cents is applied pro rata, the new bill of 77.8 cents per kilometer/passenger can be assumed as follows:

  • 22.7 cents per user
  • 12.3 cents from municipalities
  • 42.8 cents from the Quebec government

The Caisse de dépôt forecasts that REM ridership will reach around 608.8 million passenger-kilometres in 2027.

FURTHERMORE

If inflation even increases at an annualized rate of 2.5% over the next four years from 2023 to 2027, the rate is expected to reach 85.6 cents per passenger-kilometer in 2027.

If so, the total bill will reach $521 million, including $151 million borne by users, about $83 million by local government and $287 million by the government of Quebec.

Allow me to draw your attention to the fact that the $287 million bill to be paid by the Quebec government under the REM beginning in 2027 equates to the 8% return that the Caisse is earning annually with from their investment in the REM.

In other words, the Quebec government, by far the largest depositor in the Caisse, annually subsidizes the rate of return that “their” Caisse will earn from the REM. At REM, the government of Quebec injected $1.3 billion in capital during construction itself.

And as icing on the cake, let me remind you that “our” REM, funded with our taxes and our savings, is powered by cars from India!

CONCRETE SPEAKING

For an average REM trip of 14.5 kilometers, the cost of travel would increase from $10.44 to $11.28 as of January next year, an increase of 84 cents when inflation is 8.1%. Fare Breakdown: $3.29 (+26 cents) for the user; $1.78 (+11 cents) for municipalities; $6.21 (+47 cents) for the Quebec government.

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