Investing in An Urban Transportation Transit Infrastructure

Urban Development Institute/ Ontario Investing in An Urban Transportation & Transit Infrastructure Agenda For the Creation of Strong Cities UDI/Ontario Submission To The Canada Transportation Act Review Panel February 2001 TABLE OF CONTENTS EXECUTIVE SUMMARY …………………….………………………………………. 1 Urban Development Institute/Ontario ………...................................……. Introduction ..........................................…………………………………….... [A] [B] [C] 2 3 4 The Need for a National Infrastructure Investment Strategy ..………… Strain on Current Funding Sources …………………………………………… 5 The Significance of the GTA and Ontario to the Provincial and National Economies ………………………………………………………… 7 Goods Movement & Strong City Regions …………………………………… Impact of the Lack of Investment on Regions ……………………………… 9 12 [D] [E] [F] [G] [H] [I] Sustaining a Quality of Life …………………………………………………….. 13 The Need for Balance and Diversification …………………………………… Transportation Funding Models in the United States ……………………… 14 15 Conclusion – Vision, Leadership & Commitment …………………………… 16 Appendix 1 Summary of Submissions – Key Highlights & Recommendations UDI/Ontario Submission to the Canada Transportation Act Review Panel 1 Executive Summary • UDI/Ontario supports the need to ensure a strong transportation network exists to help promote growth, development and a strong economy. Immediate action regarding transportation investment is absolutely necessary in order to address the transportation infrastructure deficit, and the requirement to remain economically competitive. The Province of Ontario and the Federal Government have continually ignored their responsibilities for regional, large-scale transportation planning, policy and funding. UDI/Ontario recommends that the Federal government enter into cost sharing agreements and partnerships with provincial and local levels of government, in recognition that local governments require a sustainable funding source in order to address the long-term capital planning needs of urban transportation systems – and that this commitment be clearly indicated through the creation of a National Infrastructure Funding Framework. UDI/Ontario recommends that an amended Canada Transportation Act recognize that a healthy transportation network will enable goods and passengers to be efficiently carried between and within consumption centres, and in this respect, must acknowledge the contribution of Canada’s transportation network to economic development. The Federal government must recognize that transportation policy has to promote the seamless and harmonized international movement of people, goods and information. To support its policy of liberalised trade and the achievement of a globally competitive economy, UDI/Ontario recommends that the Federal government implement policies through an amended Canada Transportation Act that assures Canada’s position as an innovative leader in the transportation of people and goods. • • • • UDI/Ontario recommends that the federal government recognize the significant contribution of urban centres to the Canadian economy, that a sustainable source of transportation infrastructure funding is necessary to support their continued levels of efficiency, and is ultimately necessary to support the federal government’s “Strong Cities” Agenda. UDI/Ontario recommends that the national transportation legislation acknowledge the role of local infrastructure and services in providing a system that meets national needs for efficient and sustainable transportation. UDI/Ontario recommends that the Federal government initiative a collaborative and coordinated approach by all levels of government addressing all transportation modes, which is required to ensure the efficiency and sustainability of local transportation systems within a national transportation network, and that the Federal government take the lead in removing any regulatory obstacles to achieve this end. UDI/Ontario urges the Federal government to recognize that Ontario and Canada’s growing population requires a transportation policy which recognizes that the way to move masses of people is with a system that balances the needs of public and private travel. The Federal government must recognize that a healthy society and flourishing economy require the support of a sound, balanced and diversified transportation system. • • • UDI/Ontario Submission to the Canada Transportation Act Review Panel 2 Urban Development Institute/Ontario The Urban Development Institute/Ontario (UDI) has acted as the voice of the real estate development and building industry in Ontario for over 40 years. The Institute is a nonprofit organization supported by it’s members including firms and individuals that own sizeable land holdings, apartment units, and both industrial and commercial buildings. Our membership is engaged in all aspects of the planning and development of communities and the construction of residential, industrial and commercial projects throughout Canada and around the world. UDI serves as a forum for knowledge, experience, and research on land use planning, land development, and housing and industrial/commercial enterprises. Today, UDI’s members include: land developers, builders, land use and environmental planners, investors, financial institutions, engineers, lawyers, environmental scientists, surveyors, economists, landscape architects, marketing and research firms and architects. Together they constitute the collective forces guiding the creation and improvement of Ontario’s built environment. Our members are vital contributors to the GTA, Ontario and Canadian economies and their sustainable growth. Introduction UDI/Ontario Submission to the Canada Transportation Act Review Panel 3 The Canada Transportation Act Review Panel, constituted under Section 53 of the Canada Transportation Act, 1996, has initiated a comprehensive examination of the operation of the Act and related legislation. The panel will assess the overall effectiveness of the current legislative framework to provide the basis for the kind of transportation system which Canadians need. As the Canada Transportation Act Review Panel embarks to make recommendations as necessary relative to the national transportation policy and the legislation, UDI/Ontario requests the following comments and set of recommendations contained in this brief be considered. Problems are worsening as demands on the transportation system are escalating at a rate more rapid than that of system expansion. The Greater Toronto Area’s (includes the GTA and Hamilton) aging infrastructure can no longer meet today’s service needs, and may not be able to accommodate the anticipated demands of a global based economy demanding the efficient movement of goods and services and an expanding population. A healthy transportation network will enable goods and passengers to be efficiently carried between and within production and consumption centres. In this respect, transportation plays a critical role in the productivity performance of an economy. Its contribution to economic development cannot be overestimated. Immediate action regarding transportation investment in the GTA is absolutely necessary in order to address the transportation infrastructure deficit, and the requirement to remain economically competitive. The Province of Ontario and the Federal government have continually ignored their responsibilities for regional, large-scale transportation planning, policy and funding. The Canada Transportation Act Review Panel’s recommendations ought to stress that the absence of these key players will make it almost impossible to address transportation issues in the GTA. Currently, the Canada Transportation Act is lacking the mention of any national transportation framework for sustained infrastructure investment. The federal government must develop a national transportation policy and accompanying infrastructure investment program to ensure the integration and sustainability of national and local transportation systems. A funding program must include provincial, local and federal priorities related to trade corridors, border crossings, economic transportation corridors, inter-modal facilities and infrastructure as part of a broader investment strategy. This National Transportation Funding Framework should be clearly referenced and included as a declared commitment by the Federal government in the amended Canada Transportation Act. As development continues and population grows, there is no question that there will be many new motorists on our road network. UDI/Ontario supports the need to ensure a strong network is there to help promote growth, development, and the efficient movement of people and goods for a strong economy and, as such, UDI/Ontario is pleased to have the opportunity to present this submission as part of the Canada Transportation Act Review. [A] The Need for a National Infrastructure Funding Framework Recommendation: UDI/Ontario Submission to the Canada Transportation Act Review Panel 4 UDI/Ontario encourages the Federal government to demonstrate a greater commitment to transportation infrastructure by including a National Transportation Funding Framework as a declared commitment to a long-term and sustainable funding source in an amended Canada Transportation Act. The level of current investment by senior levels of government is nearly non-existent, making it nearly impossible to provide for the required expansion of the transportation system in order to keep pace with increased demands on the system arising from growth in goods movement, employment and population. The Canadian Urban Transit Association’s recent survey of November 1999 has revealed a $9.2 billion need for transit capital nation-wide over the next five years. This represents more than a $4 billion shortfall from what is realistically feasible from existing sources, primarily being municipal levels of government. From 1991/1992 to 1998/1999, local net expenditures on transportation increased by an annual average of almost 3%, compared with decreases of 1.5% federally, and almost 2% for the provinces.1 In comparison, to be later discussed, in the United States under the federal TEA-21 funding program, full authorization for highway and transit programs totals almost $218 billion. An American area the size of the GTA could expect to receive a minimum of $42 million annually under TEA-21 in base funding.2 Reported maintenance and expansion costs are also immense. The last report on the status of the National Highway System identified 38 per cent of the system as substandard, and a cost of $12 billion to bring it up to standard. According to the Council of Ministers responsible for Transportation and Highway Safety in the Canadian National Highway Policy Study, over the past ten years, these costs have escalated to $17.4 billion. Transportation spending over the next ten years falls short an average $800 million per year relative to the annual investments needed in the GTA for capital funding for improvements and expansions in order to reduce existing levels of congestion, and to provide significant improved levels of service for users of both the road and the transit systems.3 In the GTA, the current rail system is operating at capacity. GO Transit ridership will reach over 40 million in 2000, and by the year 2021, ridership is expected to increase by 80 per cent.4 The GTA Regions and local municipalities are limited in their ability to fund this entire transportation investment gap on their own, and neither development charges nor property taxes are feasible options. Development and growth in the GTA is inevitable and must be managed responsibly, in part through the effective implementation of an integrated GTA wide transportation network which includes a balance of road and transit. The government of Canada must develop and fund a comprehensive transportation infrastructure investment program that supports both national and local transportation needs. 1 2 Transport Canada, Annual Report, 1999. Urban Strategies Inc., Reinvesting in Toronto: What the Competition is Doing, March 1999. 3 IBI Group & Hemson Consulting, Funding Transportation in the GTA/H-W, April 1999. 4 Hemson Consulting, The Economic Value of GO Transit, May 2000. UDI/Ontario Submission to the Canada Transportation Act Review Panel 5 Stable and secure funding sources are needed both for new investments in service and infrastructure and for ongoing operations. The Provincial and Federal funds that actually are allocated, are directed towards maintaining the existing transportation infrastructure, and not to expanding the system. More attention must be focussed towards this lack of funding and the possible repercussions that will occur if changes are not made immediately. The federal government must come to the table with a sustainable long-term funding source, adopting a National Infrastructure Funding Framework that will include sufficient funding. [B] The Significance of the GTA and Ontario to the Provincial and National Economies Recommendation: UDI/Ontario recommends that the federal government recognize the significant contribution of urban centres to the Canadian economy, that a sustainable source of transportation infrastructure funding is necessary to support their continued levels of efficiency, and is ultimately necessary to support the federal government’s “Strong Cities” Agenda. The GTA area represents approximately 1 per cent of Ontario’s land mass, yet is home to over 5 million people, and approximately 47 per cent of the Province’s 1996 population.5 Although geographically very small in relation to Ontario and Canada as a whole, the GTA is Canada’s fastest growing region, and the major economic engine of Ontario and Canada. It is estimated that over 50 per cent of all economic activity in Ontario takes place within the GTA.6 The economic competitiveness of the GTA area is highly dependent upon its ability to move goods, services and people in an efficient and effective manner. The charts below illustrate that the Region contributes approximately 22% of the National GDP, and over 50% to the Provincial GDP.7 In recognition of the importance of this Region on both a Provincial and National scale, it is imperative that fiscal resources be directed to tackle the significant “infrastructure deficit,” as senior levels of government investment in urban transportation is severely lacking. Canada GDP $977 Billion GTA-H-W GDP Share GTA-H-W $215 Billion 22% (22%) Ontario GDP $408 Billion GTA-H-W GDP Share $215 Billion (53%) GTA-H-W 53% 5 6 Statistics Canada, Catalogue 91-213. Ontario Canada 47% IBI Group & Hemson Consulting. Funding Transportation in the GTA/H-W, April 1999. 78% 7 Hemson Consulting, The Economic Value of GO Transit, May 2000. UDI/Ontario Submission to the Canada Transportation Act Review Panel 6 The GTA is among North America’s largest and most rapidly growing urban regions. If current growth trends continue, almost two million additional people will live in the GTA by 2021, adding a population of between 50,000 to 100,000 new residents every year, thus increasing the population to 6.4 million people.8 The demands of this growth must be substantially financed effectively by all levels of government. The GTA is the economic engine of both Canada and Ontario. However, its ability to remain economically competitive is highly dependent upon a strong transportation network to facilitate the ability to move goods, services and people in an efficient and effective manner. Section 5(d) of the Canada Transportation Act, 1996, already allows for transportation to be employed as a regional economic development tool: “It is hereby declared that… (d) transportation is recognized as a key to regional economic development.” Therefore, UDI/Ontario recommends that the Federal government reemphasize its recognition that transportation is a significant contributor to a healthy economy, and that a greater emphasis must be placed on maintaining the health of Canada’s urban regions through an efficient transportation network. The GTA is a dynamic Region within the greater provincial and national context, with its own special needs, and being able to adequately address these needs will result in benefits for the entire country as our urban centres are clearly driving the national and provincial economies. [C] Goods Movement & Strong City Regions Recommendation: To support its policy of liberalised trade and the achievement of a globally competitive economy, UDI/Ontario recommends that the Federal government implement policies through an amended Canada Transportation Act that assures Canada’s position as an innovative leader in the transportation of people and goods. UDI/Ontario recommends the creation of a National Transportation Framework which emphasizes trade facilitation issues, recognizing Canada as a major competitor in a global economy. The need for funding can be echoed in the importance of preventing the deterioration of an infrastructure that provides for efficient goods movement in and around the GTA. The 8 1998 Forecasts by Strategic Projections UDI/Ontario Submission to the Canada Transportation Act Review Panel 7 1999 Report on Funding Transportation in the GTA found that over 70 per cent of the highway network is congested at peak periods, providing an unacceptable level of service to business.9 Related to this, the 1989 Toronto Goods Movement Study estimated that the annual cost of congestion to the goods movement industry in the GTA was $1.9 billion, or 30 per cent of the cost of moving goods. As reiterated by IBI Group and Hemson Consulting, “…the most direct and measurable economic impact of congestion occurs in the movement of goods. It affects virtually every economic decision made by companies and individuals and, in particular, limits free movement in labour markets affecting productivity and economic efficiency. Economic impacts of congestion and inadequate service levels can be considerable – has a direct cost on goods movement within and through the GTA/H-W. It also has a direct economic cost in reduced productivity through time wasted on a congested transportation system and through increased accident costs. Traffic congestion drives away existing businesses and deters new enterprises from coming to the GTA/H-W.”10 It is noted that from 1997 to 1999, employment growth in the GTA increased by 10 per cent. Increased employment and economic well-being cyclically translates into increased movements of people and goods as indicated by a rapid rise in journeys to work, more shopping and recreation trips. It is estimated that the number of person trips made in the peak period will increase by over 50 per cent between 1996 and 2021.11 As indicated in the table below, large increases in GTA population and employment are anticipated, highlighting the importance of a healthy transportation network to move this increase in people and goods. Population (millions) 1996 2001 2011 2021 5.10 5.55 6.40 7.25 % increase 8.8% 15.3% 15.3% Employment (millions) 2.53 2.98 3.52 3.96 % increase 17.8% 18.1% 12.5% (Source: Funding Transportation in the GTA/H-W, IBI Group & Hemson Consulting, 1999) Similar concerns have been expressed by the GTA Mayors’ Alliance. Ontario’s manufacturers and suppliers operate in a highly competitive market and transportation can represent as much as 17 per cent of the price of manufactured goods and up to 45 per cent of the price of products of primary industries. In 1997, the total value of shipped goods in the GTA exceeded $10 billion, and the total weight of all goods transported in the GTA exceeds 14 million tonnes annually.12 Transportation costs can represent up to 15 per cent of the final 9 IBI Group & Hemson Consulting, Funding Transportation in the GTA/H-W, April 1999. Ibid 11 Ibid 12 Ministry of Transportation, Strategic Overview of Goods Movement in the GTA, Technical Report No. 9 for the GTA Transportation Plan, 1997. 10 UDI/Ontario Submission to the Canada Transportation Act Review Panel 8 costs of goods sold.13 Combined with worsening traffic congestion, the cost to the economy could easily more than double in the next twenty years. Consequently, the projected economic growth has the potential to be significantly curtailed by the inadequate performance of the transportation system. The majority of truck trips from northern, eastern and central Ontario must travel through the GTA to access manufacturing facilities in central Ontario or United States markets. In terms of all Canadian daily truck traffic, the top 4 crossings to the United States are in Ontario (Windsor, Fort Erie, Sarnia, Queenston/Niagara), yet there are only two trade corridors that link Ontario to US trade, both leading through the GTA (QEW and Highway 401 –the Windsor-Quebec corridor). Delays in the transport of these materials increases the cost of goods, consequently leading to higher rates of inflation. In this global economy, trade now matters more than ever for growth and jobs. The significance of international trade to Ontario cannot be underestimated. Fifty per cent of Canada’s Gross Domestic Product depends on exports. Ten years ago, this value was less than 30 per cent.14 Exports account for over 51 per cent of the Provincial economy and support 1.6m Ontario jobs… jobs which tend to be of a higher quality, better paying, and more secure than average. As the diagram below illustrates, 92 per cent of Ontario’s exports travel to the USA. Trade with the United States is expected to double over the next five years. Ontario Trucking Association, 1999 All levels of government must understand that in order for the economy to meet its full potential, attempts must be made to relieve capacity on our commuter routes, which are also our major national trade routes, and emphasizes the need to eliminate this competition with general traffic. In order to maintain Canada’s primary trade routes as effective and efficient linkages with major markets in the USA, the Federal government must target strategic investment in transportation projects. 13 14 Statistic provided by the Ontario Trucking Association. Statistics provided by the Ontario Trucking Association UDI/Ontario Submission to the Canada Transportation Act Review Panel 9 With the rise of a global economy, transportation is going to play an ever increasing role in the economic success of the nation. Canada is the only developed country in the world where the federal government does not significantly participate in support of major highway links to improve inter-jurisdictional trade. The Federal government must recognize that transportation policy has to promote the seamless and harmonized international movement of people, goods and information. [D] Impact of the Lack of Investment on Regions Recommendation: UDI/Ontario recommends that an amended Canada Transportation Act include a National Transportation Framework which clearly recognizes that the quality of our transportation system is vital to the successful productivity and economic competitiveness of the entire province and country. The GTA Regions and local municipalities are limited in their ability to fund the transportation investment gap on their own, and neither development charges nor property taxes are feasible options. If the costs of the transportation infrastructure deficit were to be transferred to the property tax base, an increase across the GTA of greater than 10 per cent would be unavoidable. This is in addition to the existing costs assumed by the public for the operating costs of regional transportation. If the costs of the transportation investment gap were to be completely funded through development charges, this additional burden would be placed on the new homeowner, resulting in an average increase of upwards of $7,500 per residential unit. These two revenue sources combined would still not be adequate to meet the financial needs of the transportation system. Increases in development charges or property taxes will result in a flight of investment to other less taxed jurisdictions, resulting in a loss of employment activity and GDP output. The Federal government must recognize that these two options are neither sustainable over the long-term, nor are they in the best interest of the province and country. In addition, a consequence of the lack of sustainable investment in infrastructure and transportation funding from the Federal level has resulted in pressure by local municipalities to slow growth until strategic infrastructure services are in place, running contrary to the Provincial vision of promoting economic growth. Strains to the transportation network and the ensuing reductions in mobility have a significant impact on the provincial, national and even global competitiveness of business throughout the province. The federal government must clearly understand the relationship between an effective transportation network, economic prosperity and growth. The quality of our transportation system is vital to the successful productivity and economic competitiveness of the entire province and country. We cannot afford to allow traffic to run into roadblocks to the point that our businesses will relocate to other jurisdictions where they can succeed… to the point where UDI/Ontario Submission to the Canada Transportation Act Review Panel 10 our international competitiveness deteriorates… and to the point where the benefits received by every Canadian from a prosperous GTA begin to fade. An effective national transportation network is critical to the economic viability of the region and the country. [E] Sustaining a Quality of Life Recommendation: UDI/Ontario urges the Federal government to recognize that Ontario and Canada’s growing population requires a transportation policy which recognizes that the way to move masses of people is with a system that balances the needs of public and private travel, so as to contribute to the economic, social health and well-being of the residents of Canada. The Federal government must recognize that a healthy society and flourishing economy require the support of a sound, balanced and diversified transportation system. The transportation system in the GTA is vital to the economic, social and environmental health of this Region, to Ontario and to Canada. The inter-regional transportation system in the GTA has evolved over the last five decades as a multi-modal network of roads and rail facilities. Consisting of expressways, Regional roads, GO Transit, the Toronto Transit Commission (TTC) and local transit, these “pillars” of the transportation system have been built on sound social economic and environmental platforms that together support our quality of life.15 Many aspects of the quality of life depend on the transportation system. Broader effects on society arising from increased congestion are occurring in environmental and physical health. Increased physical stress due to increased congestion, the economic costs of emergency response, inadequate service levels, and time lost from work are becoming significant problems. Impacts through increased emissions affect air quality which, in turn, degrades the health of individuals, putting a greater strain on our health care system. Declining transportation service levels impact the quality of life by limiting individual choices related to residential and employment location, contributing to road rage, and restricting access to leisure activities. The Ontario Ministry of Transportation reports that the indirect costs of motor vehicle injuries in Ontario amounts to $9 billion annually (hospital stays, ambulances, etc.). The health impacts of emissions and the ecological impact of runoff from highways is also well known. Transportation represents the single largest source of Canada’s greenhouse gas emissions, accounting for almost 30 per cent of our total emissions.16 The benefits to senior levels of government arising from health care savings from reduced air pollution are estimated at $43 million annually and would increase to $60 million by the completion of a regional commuter rail system expansion in less than ten years.17 15 16 Hemson Consulting, The Economic Value of GO Transit, May 2000. Ibid 17 Ibid UDI/Ontario Submission to the Canada Transportation Act Review Panel 11 UDI/Ontario recommends that the Federal government, in an amended Canada Transportation Act, exercise their options and commit investments in a diversified transportation system, recognizing that transportation is a key enabler contributing to the social well-being of all Canadians. [F] The Need for Balance and Diversification Recommendation: UDI/Ontario recommends that the Federal government initiate a collaborative and coordinated approach by all levels of government addressing all transportation modes, which is required to ensure the efficiency and sustainability of local transportation systems within a national transportation network. Section 5 of the Canada Transportation Act, 1996, declares that: “… a safe economic, efficient and adequate network of viable and effective transportation service… that makes the best use of all, available modes of transportation… is essential to serve the transportation needs of shippers and travelers… and to maintain the economic well-being and growth of Canada and its regions….” UDI/Ontario recommends that the Federal government reemphasize and act on this declaration, recognizing that future transportation demand in the GTA will not be met by the existing planned road system, confirming the need for a greater role of transit and other modes. Protection of existing corridors for the immediate and future requirements of commuter rail service in the GTA is critical. The need for greater competition in the transportation industry is becoming apparent and the review of the Canada Transportation Act provides an opportunity for the Federal government to make improvements to existing legislation which would balance the interests of all parties. Transportation policy must be developed taking into consideration the multi-modal context and dynamic of the Canadian transportation network. Policy must recognize that modes of local, provincial and national transportation relate, connect and interface. Therefore, cohesiveness within this system must be considered in relation to policy decisions in order to achieve a balanced transportation system. The degradation of one element of the transportation network is surely to have a negative impact on another. The Federal government should address the significance of individual transportation infrastructure components to their respective modal networks, and their contribution to the national transportation system; recognizing that, in the broader sense, transportation in Canada is a total, interconnected system. The Federal government must recognize the effect each element has on the modal network and ultimately, the national transportation system. Infrastructure investment should be strategic and should capitalize on modal strengths without creating competitive distortions. The efficiency of the total transportation system is dependent on the way in which all parts are linked. The Federal government plays a UDI/Ontario Submission to the Canada Transportation Act Review Panel 12 significant role in this network, directly through legislation and regulation, and indirectly through government policies, and through subsidies to competitive entities. As such, through an amended Canada Transportation Act, UDI/Ontario recommends that the Federal government exercise this role by committing to policies in a National Transportation Framework which recognizes the importance and benefits of a balanced and multi-modal transportation system. [G] Strain on Current Funding Sources Recommendation: UDI/Ontario recommends that the Federal government enter into cost sharing agreements and partnerships with provincial and local levels of government, in recognition that local governments require a sustainable funding source in order to address the long-term capital planning needs of urban transportation systems – and that this commitment be clearly indicated through the creation of a National Infrastructure Funding Framework. Traditionally, governments have been the lead source for infrastructure financing. In 1985/1986, the Provincial Ministry of Transportation’s capital and operating expenditures represented 5% of Provincial spending. In 2000, this number was less than half.18 Of the needed $9.2 billion for Canada’s transit infrastructure needs, only $5.1 billion will be met with the existing funding sources, while $4.1 billion must come with new funding from senior levels of government.19 Only partial Provincial funding exists, basically for 400series Highways. Provincial assistance in these areas is uncertain, and there is no funding capacity in existence for new capital and operating initiatives in transit. According to the latest Canadian National Highway Policy Study, the Federal government funds only 6 per cent of the total expenditures on all highways in Canada, leaving Provincial governments 94 per cent of the costs. Only two funding sources remain for urban regions to fund transportation uses. In terms of the property tax base, taxpayers and local politicians will not support tax increases at the levels required to fund the capital needs required. Development charges should only relate to growth related infrastructure. Any increase in this funding source will ultimately be borne by the home or business owner, still not addressing the existing infrastructure deficit and remaining as a non-sustainable funding source. In their final recommendations, the Canada Transportation Act review panel must emphasize that the road and transportation infrastructure needs in the GTA should be met through dedicated and sustainable long-term revenue sharing agreements with the Provincial government, possibly encompassing existing gasoline taxes, driver and vehicle licensing and registration fees, and strategic investments by the Federal government. Funding mechanisms and tools currently exist and simply need to be accessed. A case in point is the prevailing gas tax. At 14.7 cents per litre, the Ontario fuel tax is one of 18 19 Transport Canada, Annual Report, 1999. IBI Group & Hemson Consulting, Funding Transportation in the GTA/H-W, April 1999. UDI/Ontario Submission to the Canada Transportation Act Review Panel 13 the highest in North America, compared to the prevailing state fuel tax rate in Michigan of 5.5 cents per litre (Can$) and 2.11 cents per litre in New York.20 Each year on average, the Federal government collects over $5 billion in fuel taxes, but spends less than 6 per cent of this money on highway maintenance. In 1999, Ontario motorists paid $3.5 billion in gas taxes and license and registration fees to the Provincial government, and paid an additional $3.5 billion to the Federal government in excise taxes and GST. Only $1.5 billion of these road user fees was returned to Ontario’s roadways.21 These funds should be allocated towards the improvement of mobility, affecting the region’s long-term economic competitiveness and the quality of life in the GTA. In 1998/1999, revenues collected from transport users as fuel taxes, permit and license fees by the province and federal governments totalled over $14b, an increase of almost 4% since 1997/1998, and almost the same amount spent by both levels of government on transportation.22 Fuel taxes make up the largest component of revenues collected from transport users, averaging 78 per cent of total government revenues from transportation from 1994/1995 to 1998/1999.23 The Canadian Taxpayers Federation reports that: “The province took in $2.045 billion in provincial gas taxes alone in fiscal year 1998-1999. And we can add in another $915 million in licensing fees to bring the total to over $3 billion. But only $1.35 billion was spent by the provincial government for all transportation expenditures … a mere 44% of what was collected. In 1994-1995, the Provincial government collected $2.8 billion on gas tax and licensing fees and dedicated over $2.3 billion to the expenditure side of the ledger. Federal and provincial gas taxes do not even include all the indirect taxes the oil companies and service providers pay, such as business tax, property tax, corporate income tax, payroll taxes, etc. A pump price of 70 cents per litre, taxes account for 43% of the total price. The federal tax component is 10 cents per litre, and Ontario tacks on its own provincial fuel tax of 14.7 cents per litre. In addition, GST is then applied as a component of the total price, essentially a tax on a tax.” The provincial and federal governments should share gasoline tax revenues with municipalities for transportation purposes and, as a user fee, should not be used for general operating revenue. The fuel tax is a user-fee imposed on the users of the transportation system and, as such, should be shared by those providing the service. Municipalities are currently responsible for approximately 90 per cent of Ontario’s road system, and should be granted access to the revenue generated from road user taxes and fees. The municipal sector is under severe financial pressure, as they currently invest $570 million annually in transportation infrastructure.24 This level is not sufficient to prevent further reduction in system performance. Neither the property tax system, given existing municipal responsibilities, nor development charges are capable of generating sufficient revenue to bridge the $800 million transportation funding gap.25 20 21 Canadian Taxpayers’ Federation Canadian Automobile Association, Brief to the House of Commons Standing Committee on Finance, 1998. 22 Transport Canada, Annual Report, 1999. 23 Ibid 24 IBI Group & Hemson Consulting. Funding Transportation in the GTA/H-W, April 1999. 25 Ibid UDI/Ontario Submission to the Canada Transportation Act Review Panel 14 [H] The Transportation Funding Model in the United States “The United States is building transportation “gateways” feeding border crossings; Canadians are merely thinking about what to do… Ottawa is doing next to nothing except collecting a whole bunch of money from road users without putting anything substantial back.” Globe & Mail, 1998, Jeffrey Simpson When comparing the GTA to other parts of the world, it is recognized that an increasing number of municipal levels of government are being granted new financial resources to address transportation demands. The financial assistance is taking the form of direct grants and new committed revenue sources for transit and other transportation projects. The relatively large percentage of public spending in hard infrastructure in the United States reflects the reality that transportation and transit expenditures are soundly funded by their Federal government. In the 1990s, federal transportation funding in the United States changed for the better. Greater amounts of funds were directed towards roads in need of repair, reducing impacts on the environment, and attempting to prevent road congestion by providing commuters with a wider set of transportation choices. Federal transportation funding and policy took a new turn in the early 1990s when the Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 unlocked federal transportation spending to use beyond road building. The States, in conjunction with their Departments of Transportation and in cooperation with Metropolitan Planning Organizations (MPOs), decide how to allocate these funding resources. ISTEA introduced new underlying principles to the existing federal transportation funding program. It allowed greater amounts of control over decision making to the state and local levels, a larger emphasis on public participation, new attention to providing citizens with alternatives to driving, and an increased commitment to maintaining existing roads before constructing new ones. These principles fundamentally altered the way transportation policies were formulated in the United States. Upon the expiry of ISTEA in 1997, Congress enacted a new spending program called the Transportation Equity Act for the 21st Century (TEA-21). TEA-21 continued the ISTEA policy framework, while increasing overall funding by more than 40 per cent,26 and TEA-21 providing guaranteed minimum levels of funding for highways and transit systems throughout the United States. As a guaranteed base minimum, this 6-year program is estimated to be funded at $198 billion. Full authorization for highway and transit programs totals almost $218 billion. Of this amount, about 4 per cent will be directed to the construction of new road infrastructure, and 17 per cent is to be allocated to transit expenditures. The total guaranteed transit funding under TEA-21 for 1998 to 2003 is $36 billion invested in various programs. To give a comparative scale, an American urban area 26 Surface Transportation Policy Project, Changing Direction: Federal Transportation Funding in the 1990s, March 2000. UDI/Ontario Submission to the Canada Transportation Act Review Panel 15 the size of the GTA could expect to receive $42 million annually under TEA-21 in base funding.27 The highway programs of the U.S Federal government and most states depend on motor fuel taxes as the principal source of funding. Unlike federal and provincial policies in Canada, federal funds from this source are deposited to the Highway Trust Fund (HTF) which funds highways, intermodal programs and mass transit. For each state, TEA-21 specifies the share of aggregate funding to be spent on interstate maintenance, the national highway system, bridge congestion mitigation and air quality improvement, surface transportation programs, metropolitan planning and high priority projects,28 ensuring an appropriate balance between highway and transit spending. The new federal transportation laws TEA-21 and ISTEA call on states and regional agencies to open up their decision-making processes, and to spend money in a more accountable way. The pivotal message relayed by the federal transportation policy of the 1990s is a new emphasis on choice. The era of one-size-fits-all transportation policy has been replaced by an emphasis on providing local governments with choices in how to spend federal money, and on giving citizens additional commuting choices. There are profound changes taking place in the world economy and in international trade. Methods of funding transportation used by our American counterparts illustrates their value and admiration for their City-States, which provides them with the tools necessary to remain economically competitive. UDI/Ontario recommends that such methods should also be made available to Provincial and local governments in Canada to ensure adequate infrastructure investment, and to prevent the GTA from losing its competitive advantage. [I] Conclusion – Vision, Leadership and Commitment Continuing at the current pace is surely to mean that sustaining provincial growth is at an unparalleled risk. This issue goes beyond being about local transportation demand. It involves smarter growth through a unified vision. The urban transportation vision needs to be redefined to include a balance in investment of all modes, and a vision that stresses the importance of leadership. The Federal government must provide a clear vision for transportation in Canada, recognizing the vital role of Canada’s transportation system to the economic and social wellbeing of Canadians. The Provincial and Federal government must come to the table and require an equal investment for the transportation vision. Leadership is the key towards building a vision that reflects how strong city regions equate to smarter growth and to strong economic prosperity. A sustainable source of transportation infrastructure funding is necessary to support urban centres and their continued levels of efficiency, and is ultimately necessary to support the federal government’s agenda for “Strong Cities.” 27 28 Urban Strategies Inc., Reinvesting in Toronto: What the Competition is Doing, March 1999. Ibid UDI/Ontario Submission to the Canada Transportation Act Review Panel 16 A long-term, sustainable funding source is required in order to maximize return on investment of the overall transportation infrastructure. Transportation policy needs a government with a vision and the political courage to affect that new direction. The time has come for the Federal government to recognize what is at risk and to promote a program of secure investment to help create a seamless transportation system, and to promote a program of sustainable investment to address the growing infrastructure deficit. Scarce dollars should not be invested in non-productive transportation schemes, and senior levels of government must be held accountable for their responsibility in providing an economically competitive and healthy transportation system for the GTA. If lessons are to be learned from our American counterparts, we must bear in mind that an appropriate balance between highway and transit spending is essential, that funding resources are available without “reinventing the wheel,” and that senior levels of government must open up their decision making processes to ensure that scarce resources are spent in an accountable way. UDI/Ontario compliments the Federal government on its initiative to address improvements to the major elements of the transportation network. Given UDI/Ontario’s ability to cooperatively work with municipalities and other levels of government, as well as the strength of its membership, UDI/Ontario would like to take a pro-active approach in offering assistance to the Federal government in any undertakings or initiatives that will sustain a quality of life and that will support continued economic growth for the benefit of all residents of the GTA, Ontario and Canada. APPENDIX 1 Summary of Submissions Key Highlights and Recommendations CANADA TRANSPORTATION ACT REVIEW Summary of Submissions – Key Highlights & Recommendations (Page 1 of 3) Recommendation/ Highlight Creation of a national transportation framework which includes a sustained and continuous infrastrucure investment program Recognize need for sustainable growth management Recognize that a national transportation infrastructure requires an effective local infrastructure Address growing competition between modes of transportation Implement policies that assure Canada’s position as an innovative leader in transport of people, goods and information Improve legislation so as to balance the interests of all modes of transportation Recognize need to maintain the environment and quality of life, and their dependence on a healthy transportation network Recognize investment and promotion made by other national governments Greater Vancouver Transportation Authority (Translink) British Columbia Chamber Of Commerce Canadian Urban Transit Association Greater Toronto Services Board ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ CANADA TRANSPORTATION ACT REVIEW Summary of Submissions – Key Highlights & Recommendations (Page 2 of 3) Recommendation/ Highlight Creation of a national infrastrucure investment program Recognize need for sustainable growth management Recognize that a national transportation infrastructure requires an effective local infrastructure Address growing competition between modes of transportation Implement policies that assure Canada’s position as an innovative leader in transport of people, goods and information Improve legislation so as to balance the interests of all modes of transportation Recognize need to maintain the environment and quality of life, and their dependence on a healthy transportation network Recognize investment and promotion made by other national governments Ontario Ministry of Transportation Association of Manitoba Municipalities Transport 2000 British Columbia Chamber of Shipping ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ CANADA TRANSPORTATION ACT REVIEW Summary of Submissions – Key Highlights & Recommendations (Page 3 of 3) Recommendation/ Highlight Creation of a national infrastrucure investment program Recognize need for sustainable growth management Recognize that a national transportation infrastructure requires an effective local inftastructure Address growing competition between modes of transportation Implement policies that assure Canada’s position as an innovative leader in transport of people, goods and information Improve legislation so as to balance the interests of all modes of transportation Recognize need to maintain the environment and quality of life, and their dependence on a healthy transportation network Recognize investment and promotion made by other national governments Canadian Bus Industry* Business Council of British Columbia Canadian National Canadian Chamber New Brunswick (CN) Of Commerce Ministry of Transportation ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ *NOTE: Submission by the Canadian Bus Industry – Collaboration including the positions of ‘Motor Coach Canada’, ‘Canadian Bus Association’, ‘Ontario Motor Coach Association’, and the ‘Autobus Association of Quebec.’