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Address by the Honourable Jim Flaherty, Minister of Finance, to the Canadian Urban Transit Association 2006 Fall Conference and Trans-Expo

It’s great to be here, and I’ve got to tell you how happy I am to be here because I know this is a conference about transit and not about taxes, so I’m relieved to be here, and there’ll be no tax announcements, I’ll tell the media right now. I’m not going to talk about taxes this morning, except how we can use some of our revenues federally to help out with respect to transit public infrastructure across Canada.

I thank GO Transit for getting me here this morning from Whitby, which I very much appreciate. Those of you who are from southern Ontario know the importance of public transit in the Greater Toronto Area and how it makes it work. In my community where my family and I live, public transit, especially the GO system, is vitally important for all of us. More than half the people that live in my community travel every day to work somewhere outside of our community, so public transit is something very close to our hearts in the Greater Toronto Area.

It is a pleasure to be here with those of you representing the Canadian transit industry—the managers and operators, and the suppliers and manufacturers, and the planners and the builders. I can tell you, as Minister of Finance of Canada, I appreciate the service you provide Canadians each and every day. You literally move millions of workers, students and seniors in communities from coast to coast to coast.

You help drive growth in the Canadian economy, which is also dear to my heart as the minister responsible for the Canadian economy, and we cannot underestimate the importance of that economic role of public transit in Canada.

Public transit has gained prominence at a time when Canada is struggling to come to grips with some daunting challenges. The unprecedented migration of families and businesses has led to bumper-to-bumper traffic in many urban regions across the country. Congestion has become the number one issue for a growing number of Canadians, especially here in the Greater Toronto Area. In fact, in a survey of Toronto CEOs last month, 37 per cent identified transportation issues as their top priority.

As a long-time resident of the GTA, I can certainly understand their concern. Traffic congestion is stretching out travel times, impeding business and harming the environment. The consequences are serious. The potential solutions are well documented. Study after study have identified the infrastructure needs, evaluated the alternatives and made countless recommendations.

Ladies and gentlemen, the time for study is over. This is the time for action. Canada’s New Government is setting out a course of action to cut the commute, clean the air and drive the economy. Let me take a few minutes to explain.

Mobility is something that many Canadians take for granted—the freedom to move unencumbered, to get to work, to get to school or simply to get away; the freedom to move goods to market on schedule, on time and at low cost. This freedom is being gradually eroded. Tremendous growth has restricted our mobility and we are falling further and further behind. Our current infrastructure was not designed to handle the huge influx of people and the resulting traffic in many parts of our country. There is no better example of that than right here in the GTA.

This area has become the destination of choice for many families, small businesses and corporations, making this region one of the fastest-growing economic centres in Canada. Every year, millions of trucks run along the 401 corridor from Montréal to Windsor directly through the heart of the GTA. According to transportation experts in Canada and the United States, the 401 Highway and Highway 400 is the busiest section of highway in the entire world. Because of 18-hour-a-day stop-and-go traffic, Highway 401 has been called a "linear warehouse," full of goods destined for millions of consumers worldwide seven days a week. We must ask ourselves, how much more traffic can the GTA handle?

There is overwhelming evidence to suggest that we surpassed our limit some time ago and are heading down a road that is neither desirable nor sustainable. The Toronto Board of Trade estimates that congestion in the GTA is now responsible for $2 billion in lost productivity, and that figure is bound to grow. A study by Statistics Canada indicates that Toronto residents spent 79 minutes per day commuting to and from work, which is the longest commute in Canada. According to U.S. census figures, the GTA has longer commute times than New York at 77 minutes and Los Angeles at 57 minutes. And it is estimated that an additional 2 million vehicles will be added to GTA highways and roads over the course of the next 25 years.

These challenges, of course, are not exclusive to the GTA but they highlight the urgency of the situation, not only here but in growing centres such as Vancouver, Calgary, Ottawa, Montréal and Halifax.

As the old saying goes, build it and they will come. The originator of that saying must have had highways in mind. We keep adding lanes and building new roads and highways, yet traffic congestion continues to get worse. In fact, the 407 ETR in the GTA has just completed an expansion from Richmond Hill to Vaughan. While similarly financed, built, operated and managed highway investments such as the 407 are certainly welcome, they are only part of the solution. Public transit must play a much more prominent role. Commuters need a viable, more environmentally friendly option to driving. It is essential if we are going to be able to absorb all of the expected growth without making a bad problem worse.

In major urban centres throughout the world such as New York, London, Paris and Hong Kong, public transit is attractive, affordable and an accepted mode of travel by the vast majority of people.

Now here in Canada we are making modest gains on the transit front. As your organization has pointed out, ridership in Canada has increased for the third straight year, with an all-time record in 2005. Ridership in the GTA, I’m told, has reached 550 million trips, accounting for 34 per cent of the national total. Transit has improved and Canadians are increasingly getting on board, but with about 55 transit trips per capita per year we have a long way to go. The Canadian Urban Transit Association, your association, has pegged the transit infrastructure deficit at about $20 billion over the next five years to maintain the current systems and to expand to accommodate growth.

These numbers are staggering but the need is without question. Public transit is not just about moving people and strengthening the economy. It’s about creating sustainable, functional and livable communities. Public transit is the backbone that in many ways connects society.

If you look at Yonge and Bloor streets in Toronto, if you look at Vancouver, the United States, cities like Portland, Oregon, Arlington, Virginia, Boston, Massachusetts, if you look at Bogotá in South America and Seoul, South Korea, where I was last month, in these places you will not only find rapid transit but also traditional "transit villages" growing around each station, places where people can walk in safety, where they can live, work and play without the need of a car. Communities where life revolves around transit, providing all that life has to offer within a few blocks.

It’s a concept that has recently taken root in British Columbia and in parts of the United States and is in its early stages of development in some urban GTA jurisdictions such as York Region. It’s an urban renaissance that is being repeated all around the globe. Our buses, trains, subways and streetcars are the catalyst for sustainable development. They are instrumental in getting cars off our roads. They will help us achieve our ultimate goal of cutting the commute. So the facts support the needs for future investment in transit. Canada’s New Government is taking a proactive approach and providing that support.

So in Budget 2006 our government introduced the public transit pass tax credit. There it is. It’s something I know your membership lobbied for—lobbying’s okay—lobbied for and supported wholeheartedly. In fact, at the time, you said, your organization said, and I quote, "The government’s tax credit for transit pass users is a strong signal that the government is committed to promoting transit use. It rewards transit customers for making smart travel choices." And I couldn’t agree more. It’s an initiative that was long overdue. We all know that public transit is vital to achieving a cleaner and healthier environment. Anything we can do to entice people to park their keys and take transit is certainly a step in the right direction environmentally.

Whether it has taken 10,000 cars or 50,000 cars from our roads, the success of the tax credit transcends the raw numbers. Clearly, there has been a significant public relations education factor. The tax credit has been a vehicle to promote the benefits of transit. It has been prominently featured in marketing campaigns across Canada, including the one unveiled here today. While taking the TTC recently, I noted the "transit is less taxing" tag line and it certainly is effective.

Another government initiative that I believe will be effective in improving the environment is Canada’s Clean Air Act, which was introduced last month by my colleague, the Environment Minister Rona Ambrose. And Rona was here with me on Friday in Toronto doing further environmental consultations with respect to implementation. The new Clean Air Act will complement the public transit tax credit by setting short-, medium- and long-term intensity-based greenhouse gas reduction targets. The Government is committed to achieving an absolute reduction in greenhouse gas emissions between 45 per cent and 65 per cent from 2003 levels by 2050. It’s important to note that these targets would exceed those proposed by the previous government.

It’s also important, I think, to note three things. One is we will regulate, the Government will regulate industries, all industries across Canada. For the first time, a national government will do that with all industries. And we’ve been working closely, as we were again on Friday here in Toronto, with the leaders and the CEOs in the auto sector, that sector being vitally important to the Canadian economy, vitally important to the economy of the province of Ontario. So there’s that regulation step, which is the first time that a national government has ever done that in this country.

We are also going to reduce air pollution, and that is the first time air pollution has been targeted. And, as I’ve already mentioned, we’re going to reduce greenhouse gas emissions not in Russia, not somewhere else in the world, not by trading credits, but here in Canada.

So over the next three years you’ll see new regulations, targets and timelines, which will be established in consultation with people across Canada, including many of you here in this room today. We believe these initiatives will lead to significant, long-term reductions in air pollution and greenhouse gas emissions from industry, consumer products, transportation and transit.

If we are going to clear the air in this country, you, in partnership with government, will play a vital role. Transit technology is constantly improving with the introduction of fuel-efficient rapid transit and hybrid vehicles. We all know it takes more than just wishful thinking. It takes the financial resources and it takes political will. I am pleased to say that we have now entered a new era of federalism in Canada—an era of partnership, determination, accountability and fiscal responsibility.

Canada’s New Government recognizes that governments must work together to address this transportation infrastructure challenge because infrastructure is not only key to moving people, it’s key, it’s critical in fact, to sustaining our quality of life, to strengthening our economy and improving our economic union as a nation. These areas are critically important to governments, including ours. If we are going to improve our competitive advantage in this fast-paced global economy, we will have to move decisively.

Ladies and gentlemen, I am proud to say that within 100 days of taking office, our government took significant steps to address this issue. In Budget 2006 on May 2nd, we committed significant dollars to transportation infrastructure and public transit. Over the next four years, we will invest a total of $16.5 billion in new infrastructure initiatives, including $3.5 billion in 2006 and $3.9 billion in 2007. The budget itself provided $2.4 billion over the next five years for a new Highways and Border Infrastructure Fund, which will be used to improve key infrastructure such as the Windsor-Detroit gateway. The Prime Minister and Minister Emerson recently announced $591 million for Canada’s Asia-Pacific Gateway and Corridor Initiative. Under the Canada-Ontario Agreement, the province will receive an additional $300 million for infrastructure. That’s $300 million that Ontario will be receiving that other provinces will not be receiving because of the particular provisions of the Canada-Ontario Agreement.

This fall, we provided $900 million to the provinces for public transit, which includes $351 million for Ontario alone. That was the money we put aside just before the budget. You may recall that that would be paid out if we had a sufficient surplus, and we don’t see the surplus numbers until September. But we saw them, and that money went out in late September. This, of course, is on top of the $1.9 billion for Ontario through the 2009–2010 year as a result of our gas tax sharing arrangement, and an additional $300 million per year in increased funds for Ontario municipalities as a result of increasing the GST rebate to 100 per cent.

So clearly, the dollars are very substantial and the commitment is genuine. But, as you and I both know, the current piecemeal approach to funding significant transportation infrastructure projects is no longer sustainable. As part of the discussions to restore fiscal balance in Canada, our government committed to adopting a long-term funding framework for infrastructure. The federal government has a huge stake in ensuring the flow of people, goods and vehicles. These are key to ensuring a vibrant and dynamic national economy, which is something of great concern to this government and to me in my job as Minister of Finance.

In today’s interdependent world of trade and security, modern, smart infrastructure is not a luxury, it is a necessity. So under the leadership of my colleague, the Minister of Transportation and Infrastructure, Lawrence Cannon, the Government has been consulting with the provinces and territories and reviewing the scope and the design of the various federal infrastructure programs to ensure they are accountable and strategic in approach. And I understand Lawrence is just wrapping up his work and he’ll be providing me with a report very shortly.

So I think you would all agree that it’s time to set out on this important journey to match the substantial investment by the taxpayers of Canada in public infrastructure, which has been announced, the long-term sustainable commitment that we’ve made to match that commitment with infrastructure, with transit projects that are of national importance to the economy of Canada. That is a proper role for the Government of Canada to show leadership on, and with respect to which the Government of Canada is anxious to participate.

It is time to blaze a trail to infrastructure renewal. It’s time to ensure that rhetoric never again takes precedence over action. The goals are too important and the consequences of inaction too severe. Over the past several months, my staff and I have been consulting with community leaders throughout the Greater Toronto Area. We have spoken to mayors, regional chairs, municipal councillors. We’ve met with the university and college presidents, police chiefs and various community groups. We’ve asked them to do several things: one, to share their ideas, to list their priorities and to provide us with insight into transportation projects that will benefit their communities now and years from now. At the end of the process, we compiled a list of vital projects that are worthy of priority consideration. I will have more to say on this in the not-too-distant future, not today.

Investing in transportation infrastructure is about more than bridges and roads, of course, and buses and trains. It’s about keeping our country moving, which is one of the reasons I’m here at this conference today. It’s about creating a seamless, modern and safe, secure transportation system. It’s about reducing unnecessary highway travel and providing transportation options so goods can get to market on time without massive losses in productivity. This is something very much on my mind as we prepare the fall fiscal update and an economic plan for Canada, that we must relate transportation, transit, the economy, the environment, security. All go together in creating a viable economic plan for Canadian prosperity going forward, which is our quality of life and our standard of living from generation to generation. It’s about using the human and financial resources of both the public and private sectors so that major infrastructure projects are built effectively and efficiently, with a minimum of taxpayer funding. That is, we want to maximize the effectiveness of the taxpayer funding in projects of national economic significance for Canada.

We are embarking on a journey that is not for the faint of heart. It will require substantial political will and as much cooperation as we can muster. It will require innovation, new approaches and new ways of thinking. It will require not only the resources and expertise of the public sector but the wealth and experience and knowledge accumulated by those in the private sector. We must engage those who have designed and constructed some of the most complex and successful transportation projects around the globe. We must rethink our approach so that we can take advantage of public-private partnerships, innovative financing and land value capture. It’s time not just to think outside the box but to reinvent the box. This is our path to a reduction in traffic congestion, improved air quality, better communities and a stronger local and national economy.

Now, my friends, I’ve gone on almost as long as it seems this morning. Let me conclude with former U.S. Senator Robert Kennedy was fond of saying, "Some men see things as they are and ask why. I dream of things that never were and ask why not." When it comes to improving transportation infrastructure, it’s a question, it seems to me, we should all be asking ourselves, and that question is, why not? We are not talking about a few luxuries that could make life a little easier. We are talking about major infrastructure investments that are long overdue and if neglected will have devastating consequences for families, for our environment, for our economy nationally. When it comes to being efficient, innovative and forward-looking, the question again is, why not? Jurisdictions around the world are light years ahead of us with respect to transportation infrastructure, and there is no reason why we can’t catch up and eventually surpass them. We have the knowledge and experience in Canada, we have the financial tools in Canada, and now we have the political will in Canada.

Finally, when it comes to working cooperatively in partnership with the other levels of government, again I ask, why not? We all have a common goal and it’s in the best interests of everyone to strive to achieve these goals, to cut the commute, clear the air and drive the Canadian economy.

Thank you for welcoming me here this morning.