Transport Canada says it will pay more for passenger trains than ever before after the federal government announced a steep hike in the price of rail travel in 2017.
The hike will affect more than 2,000 major rail companies.
The ministry said Monday that it expects to spend $10 billion to $13 billion on passenger rail services in 2017-18, a 12 per cent increase from 2016-17.
It expects that figure to rise to $14.5 billion in 2019-20.
That’s up from $11.6 billion in 2016-18.
The government says it has a $2.5-billion deficit that needs to be paid by the railways to meet future commitments.
“These investments will ensure Canadians get the service they need to get around the country and to travel, and will save our railway industry billions of dollars,” Transport Minister Marc Garneau said in a statement.
The increase is the second in a year, after the rail industry agreed to a $1.6-billion hike in 2020-21.
The price of a train ticket will increase by 10 per cent.
The railway industry had asked the government for the hike to be offset by a 2.5 per cent reduction in freight costs, but that was rejected.
The federal government says the price increase is a cost-saving measure that is necessary to address the projected deficit in 2019.
Transportation Minister Marc Gagnon said in an interview Monday that he thinks rail prices will remain stable because of the government’s policies to increase the price tags on most of its products.
“We’re making the most of the money we have, and that’s what we’re going to keep doing,” he said.
The rail industry says the higher prices are needed to make up for a 7.5 cents-per-kilometre (about $1) hike in fuel surcharges and an increase in ticket prices.
The costs of passenger trains will increase from $1,600 in 2019 to $2,800 in 2020.
The cost of a ticket will rise by 8.5 to 11.5 cent.