News Release

Backgrounder

Gas Tax Agreement for Ontario

Agreement in Principle - Public Transit (PDF)

June 17, 2005

PROGRESS ON NEW DEAL FOR ONTARIO
AGREEMENTS SIGNED UNDER THE NEW DEAL FOR CITIES AND COMMUNITIES
TWO AGREEMENTS SIGNED

RICHMOND HILL, Ontario -Prime Minister Paul Martin, Minister of State (Infrastructure and Communities) John Godfrey, Ontario Municipal Affairs and Housing Minister John Gerretsen, Mr. Roger Anderson, President of the Association of Ontario Municipalities (AMO), and Toronto Mayor David Miller have concluded two agreements under the New Deal for Cities and Communities that will benefit Ontario’s communities and its residents.  One agreement will see $1.87 billion in gas tax funds flow to Ontario cities and communities over the next five years. The second agreement provides the framework for Ontario’s share of additional funding for public transit, committing up to $310 million over the next two years. 

Prime Minister Paul Martin congratulates Minister John Godfrey during the Ontario Gas Tax Announcement in Toronto, Ontario. Photo by Dave Chan - PMO.

Prime Minister Martin remarked: “The New Deal is a national project for our time. It is a cornerstone of our commitment to govern not only for the Canada of today, but for the Canadians of tomorrow. It is about making the lives of Canadians better by making the places they live better.”

“This agreement recognized our municipalities for what they are: mature, accountable governments that can be trusted to use gas tax revenues to improve the quality of life in their communities," said Ontario Premier Dalton McGuinty.  “The bottom line is strong communities that can do an even better job of serving people.”

“On behalf of the Premier, I am very proud to sign this agreement in which Ontario has taken an historic approach by enabling municipalities and the federal government to work together directly to decide the best way to share federal gas tax revenues,” said Minister Gerretsen.  “This funding, together with $680 million of the provincial gas tax that Ontario has already started to flow to municipalities, will give our communities with the tools they need to grow stronger and enjoy a higher quality of life.”

Infrastructure and Communities Minister John Godfrey added, “Today we see a shining example of the type of transformation that the New Deal brings to Canadians in their communities.  Bringing Canada, Ontario, AMO and Toronto to the same table shows that the New Deal is about so much more than money.”

The gas tax agreement between the Governments of Canada and Ontario, AMO and the City of Toronto outlines how the funds will be used in Ontario to support environmentally sustainable municipal infrastructure. Ontario has had no role in the allocation of federal gas revenues to municipalities; municipalities have had direct negotiations with the federal government.

Included in the agreement is regular reporting on the outcomes achieved. In addition, the agreement also provides a framework for work on other elements of the New Deal, including how municipal governments can participate in discussions on national issues most important to municipalities. It also commits to a framework to promote the economic, cultural and social sustainability of Ontario’s cities and communities making them the vibrant and healthy places Ontarians are proud to call home. 

“Today's agreement establishes an historic relationship between Canada and the communities that form the economic and social foundation of this nation,” said AMO President Roger Anderson. “By sharing federal gas tax revenues with municipal governments, Canada is demonstrating that the environmental and economic sustainability of our communities is an important national interest. We look forward to developing additional ways that all three orders of government can better serve our communities.”

In signing the second agreement, on public transit, the Government of Canada is using the New Deal framework to recognize the important role public transit plays in the everyday lives of people living in Ontario’s communities. This investment in public transit will support environmental objectives such as reducing air pollution and limiting emissions that contribute to climate change. People who travel by public transit create far fewer greenhouse gas emissions than if they were to travel by car.  In addition, by reducing traffic congestion and supporting the mobility of people and businesses, public transit is a major factor in keeping Canada’s cities liveable, attractive and more competitive.  This agreement will see funds be allocated to eligible municipalities based on transit ridership. This will mean, for example, $197 million for Toronto.  The total amount of support available for transit will depend on the available surplus in the current fiscal year and in 2006-07. 

“This new funding will allow Toronto to make long overdue investments in its transit system,” said Mayor Miller. “This announcement also recognizes that Toronto's success helps all of Ontario - and all of Canada - to thrive.”

In order for both the gas tax and the public transit funds to flow, the Budget bills currently being considered by Parliament must pass.

Today’s announcement reflects the hard work and negotiations taking place between the Government of Canada and all provincial and territorial governments for the benefit of Canada’s cities and communities.  Canada’s commitment to share $5 billion in gas tax funds over the next five years – ramping up to $2 billion in year five and indefinitely thereafter – complements $12 billion in federal funding committed over the last decade though the Canada Strategic Infrastructure Fund (which has made considerable investments in transit in Ontario), the Municipal Rural Infrastructure Fund, and the Border Infrastructure Fund.  In Budget 2005, the Government of Canada committed to renew these funds. 

Budget 2005 builds on the achievements of Budget 2004 – which gave municipalities the Goods and Services Tax (GST) rebate worth $7 billion over 10 years, and accelerated the $1-billion Municipal Rural Infrastructure Fund. The $800 million over two years that will be made available for public transit builds on over $1.2 billion in other Government of Canada commitments to public transit projects across Canada over the past five years. 

The Ontario government has already committed to provide an ongoing share of provincial gas tax revenues.  Over the next three years, this will amount to $680 million being invested in transit systems, which will benefit 105 municipalities. 

Three gas tax agreements, with British Columbia, Alberta and Yukon have already been signed. Today’s agreement is the fourth gas tax agreement and the first transit agreement.  The Government of Canada expects to be signing more gas tax and public transit agreements in the coming weeks and months.

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Contacts:

Mark Rus
Office of the Minister of State
(Infrastructure and Communities)
(613) 850-5795

Patti Munce
Minister’s Office
Ministry of Municipal Affairs and Housing
(416) 585-6333

Brian Lambie
AMO Media Contact
(416) 729-5425

Patchen Barss
Office of Mayor David Miller
(416) 338-7134

Infrastructure Canada
Communications and Promotion
(613) 948-1148

Web site:
www.infrastructure.gc.ca

BACKGROUNDER

The New Deal for Cities and Communities

Ontario

The Governments of Canada and Ontario, the Association of Municipalities of Ontario and the City of Toronto, have been working together to develop a consensus – a “Made in Ontario” approach - around how to use federal gas tax funds in a way that responds to the needs of Ontario’s cities and communities, large and small, urban and rural. This has resulted in the development of a new relationship between all parties that has been cooperative, respectful, trusting and progressive. 

As part of its New Deal for Cities and Communities, the Government of Canada is investing $1.87 billion in gas tax funding over five years for the benefit of Ontarians in cities and communities, large and small.  Funding will reach $746.2 million in year 5, remaining at that level thereafter.  These investments will provide significant environmental benefits, like reduced greenhouse gases, cleaner air and cleaner water.

On top of the initial commitment of $1.87 billion of the federal gas tax for Ontario communities to invest in environmentally sustainable municipal infrastructure, an agreement for the transfer of additional funds for public transit has been reached.  Under the New Deal for Cities and Communities, the share for Ontario municipalities of an additional $800 million identified for public transit will total $310.3 million. 

In the last Speech from the Throne, Prime Minister Paul Martin announced $5 billion in new, stable funding to be provided over five years through sharing of federal gas tax revenue with municipalities.  Starting in 2005, Ontario’s overall share of the $5 billion over five years from federal gas tax revenues, the distribution to communities, will be more than $1.87 billion.  When fully ramped up in year 5, the province can expect to receive $746.2 million, continuing at that rate each year thereafter.  This is in addition to existing infrastructure programs.  Furthermore, Ontario’s share of the $800 million in additional funding for public transit will be $310 million over the next two years. 

This Ontario agreement signals the willingness of all four parties to work in a true partnership to make cities and communities more sustainable, and it underscores the strong cooperation among the governments of Canada and Ontario, the Association of Municipalities of Ontario, and the City of Toronto.

Gas tax money will flow to the Association of Municipalities of Ontario and the City of Toronto. This is a reflection of the reality that communities are mature levels of government fully deserving of a seat at the table.  The parties have agreed to establish committees to maximize the effectiveness of this partnership and to ensure that there is accountability for money spent.  Canadians will know how this money is invested in Ontario’s cities and communities.

This agreement will see the federal and provincial governments working together with communities to ensure they have the capacity to plan for a more sustainable future. The agreement is transformative because, unlike other federal programs, funds are being flowed directly to the City of Toronto and to all of Ontario’s other cities and communities, via the Association of Municipalities of Ontario.  These new funds will enable the cities and communities of Ontario to pool, bank and borrow money so that their environmentally sustainable municipal infrastructure projects are pursued within the context of long-term plans. 

Gas tax funds will support environmentally sustainable municipal infrastructure to help ensure cleaner air, cleaner water and reduced greenhouse gas emissions. Eligible project categories include public transit, water, wastewater, solid waste, community energy systems, capacity building and local roads and bridges in small communities that enhance sustainability outcomes.

Allocation of gas tax funds to all Ontario communities, as determined by Canada in consultation with AMO and the City of Toronto, will be based upon population, using 2001  National Census data made available by Statistics Canada.

Gas tax investments will not require matching funding by the province or the municipality.  The amount of the gas that  Ontario’s communities will be receiving, excluding Toronto,  will be on announced by AMO’s website at www.amo.on.ca.  Communities will also receive this information directly from AMO.

Negotiations with provinces and territories on the New Deal for Cities and Communities build on year-long work with provinces, territories, the Federation of Canadian Municipalities, mayors and stakeholders.  This is the fourth gas tax deal to be signed, following an agreement in British Columbia, Alberta and Yukon. A governance framework for federal funding, including gas tax sharing, was announced with Prince Edward Island on April 27. A series of agreements with other provinces and territories will come over the next weeks and months.

Other important achievements under the New Deal

• The Prime Minister created the Infrastructure and Communities Portfolio, demonstrating the priority the Government of Canada places on the cities and communities agenda. 

• Minister of State (Infrastructure and Communities) John Godfrey has met with hundreds of mayors, officials and stakeholders from communities large and small – in all 10 provinces and the 3 territories.   He joined Finance Minister Ralph Goodale in formal pre-budget consultations with municipal leaders from across the country.  As part of the New Deal’s pledge to build stronger partnerships, the Government committed to make this a permanent feature of the federal budget development process.

• The Prime Minister’s External Advisory Committee on Cities and Communities was formed with a mandate to define a 30-year vision for cities and communities in Canada.   Ratna Omidvar, Executive Director of the Maytree Foundation, and David Pecault of the Boston Consulting Group, both of Toronto, are on EACCC.

• In addition to the gas tax, the Government of Canada’s investments in cities and communities include Budget 2004’s GST rebate worth $7 billion over a 10-year period. This money is now flowing back to cities and communities.

Key Projects:

• The Canada-Ontario Municipal Rural Infrastructure Fund (COMRIF) is a partnership between the Government of Canada, the Government of Ontario, the Association of Municipalities of Ontario and Ontario communities. On April 25, the governments of Canada and Ontario announced investments of up to $249,178,024 in 120 communities through Intake One.  Together with municipal contributions, the total investment in local infrastructure improvements for Intake One will be over $370 million. Over five years, the governments of Canada and Ontario are each contributing up to $298 million to COMRIF. With municipal investments, this program is expected to stimulate up to $900 million in capital investments in Ontario over five years.

• The Windsor Gateway project will improve road safety, speed up the flow of cross border traffic and support the local economy.  A total of $150 million in federal funding is committed to Windsor for all phases.

• Improvements to highways, bridges and border crossing infrastructure in the Sarnia, Niagara and London areas are being supported through a $154 million contribution.

• The governments of Canada and Ontario have each committed up to $200 million to the Ottawa Light Rail Transit North-South line.  The City of Ottawa will match this funding and invest the balance of the project’s costs.

• An additional $385 million in federal funding is being provided for GO Transit, supporting 12 projects that will expand the rail and bus system in the Greater Toronto Area. Total funding from all partners: over $1 billion.

• York Region's bus rapid transit system is being improved thanks to a $50 million contribution.

• The Government of Canada has also announced its intention to provide up to $25 million toward the Toronto International Film Festival Group’s Festival Centre, a global centre to celebrate film and the moving image.

• The Government of Canada is investing $426 million in the Toronto Transit Commission.
  
• Allocations to Municipalities / Transit Agencies.

Ontario’s share of the $800 million identified for public transit will total $310.3 million

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