3 GOVERNMENT SPENDING ON TRANSPORTATION

GOVERNMENT TRANSPORTATION EXPENDITURES

Transportation expenditures by all levels of government reached approximately $21.9 billion in 2004/05, an increase of $1.5 billion, or 7.3 per cent from the previous year. Table 3-1 shows these expenditures from 2001 on. Transportation spending by governments on a per capita basis also increased 6.3 per cent to $683. All levels of government contributed to this growth; however, the largest increase was by provincial/territorial governments, with an increase in their net spending of $1.1 billion or 13.4 per cent. Local governments increased their net spending by $25.8 million, or 0.3 per cent. Federal transport expenditures increased by $328 million, or 12.4 per cent, and are expected to increase by $338 million or 11.4 per cent in 2005/06. All government fees and tax revenues from transport users totalled $15.6 billion in 2004/05, up 1.5 per cent. Federal non-tax revenues from transport users are expected to be basically unchanged in 2005/06 at $789 million, following an increase of 0.9 per cent in 2004/05.

TABLE 3-1: GOVERNMENTS' ON TRANSPORTATION, 2001/02 – 2005/06

(Millions of dollars)
	2001/02	2002/03	2003/04	2004/05	2004/05 F
Transport Canada expenses (Gross) 1	1,529	1,352	1,382	1,431	1,499
Other federal expenses (Gross)	783	1,163	1,256	1,535	1,805
Provincial/Territorial 2	7,646	8,049	8,475	9,614	N/A
Local 3	8,421	8,671	9,278	9,304	N/A
Total gross transport expenditures	18,379	19,235	20,390	21,884	N/A
Gross expenditures per capita	591	612	642	683	N/A
Transport Canada revenues	371	423	334	365	397
Other federal revenues 4	37	460	449	425	392
Specific tax revenues from transport users 5	13,359	13,949	14,549	14,767	N/A

Notes: N/A = Not available. More yearly data are available on Transport Canada Web site (www.tc.gc.ca). Some figures from previous years have been modified and therefore do not match last year's report. Totals may not add up due to rounding.

1. Excludes transfers of $22 million to Crown corporations not involved in transport in 2002/03 and 2003/04.
2. Net of federal transfers as reported by the provinces.
3. Calendar year basis; net of federal and provincial transfers.
4. Revenues from Coast Guard services and small port users.
5. Federal excise fuel taxes, and provincial motive fuel taxes and licence fees.
6. Forecast at January 31, 2006, of full year.

Source: Main Estimates of the Government of Canada; Transport Canada, Finance Directorate; The Canadian Transportation Agency; Internal reports from several agencies and federal departments; Provincial/Territorial Departments of Transportation; Statistics Canada, Public Institutions Division, unpublished data

Figure 3-1 shows the trend in spending by level of government from 1996/97 to 2004/05. Up to 2000/01, total government expenditures averaged around $17.8 billion, but have increased slightly in each of the past four years. Net local expenditures rose every year over this period, other than a slight decline in 1998/99. Both net provincial/territorial and federal expenditures have had larger periods of declines. Net provincial/territorial expenditures reached $8.8 billion in 1999/2000, but then fell to $7.5 billion in 1999/2000. Only in 2004/05 did they surpass the previous peak. Federal expenditures fell from $3.5 billion in 1996/97 to $2.0 billion in 1999/2000 and 2000/01 after which they rose steadily to reach 3.0 billion in 2004/05. Total revenues have also risen each year after hovering around $13.7 billion until 2001/02.

FIGURE 3-1: GOVERNMENT EXPENDITURES AND REVENUES ON TRANSPORTATION, 1996/97 – 2004/05

(Billions of Dollars)

Source: Main Estimates of the Government of Canada; Transport Canada, Finance Directorate; The Canadian Transportation Agency; internal reports from several agencies and federal departments; provincial/territorial departments of transportation; Statistics Canada, Public Institutions Division, unpublished data

FEDERAL EXPENSES RELATED TO TRANSPORT FACILITIES AND SERVICES

The Government of Canada provides modal safety, security and policy services, and operates roads and bridges, airports, harbours/ports and marine navigational and rescue services (Coast Guard). From security and emergency preparedness to regulating and monitoring the transportation of dangerous goods, Transport Canada performs several multimodal activities. As Table 3-2 shows, total direct federal transport expenses in 2005/06 are forecast to fall by 3.4 per cent to $2.0 billion. The two main categories of government activity in transportation are: operations; and safety, security and policy. Expenses related to operations have been fairly constant for the past six years but are expected to decrease by $27.9 million (2.9 per cent) in 2005/06 to $950 million. Expenditures on safety, security and policy are also expected to decrease in 2005/06, falling by $51 million or 5.2 per cent to $930 million. Prior to this forecasted decline, spending in this category had risen by $628 million since 2000/01, peaking at $981 million in 2004/05. Major increases in recent years are related to commitments to security in the air sector, in particular, spending by the Canadian Air Transport Security Authority.

TABLE 3.2: FEDERAL OPERATING, MAINTENANCE AND CAPITAL EXPENDITURES, 2001/02 – 2005/06

(Millions of dollars)
	2001/02	2002/03	2003/04	2004/05	2005/06 F
Operations	945	934	924	978	950
Airports	75	56	75	59	47
Aircraft services	59	57	62	65	65
Coast Guard	475	498	505	543	548
Ports and harbours 1	117	118	126	137	116
Roads and bridges 2	208	193	149	163	164
Research and development	10	13	10	10	10
Safety, Security and Policy	446	686	791	981	930
Canadian Air Transport Security Authority	-	259	351	513	438
Air Safety and Policy 3	162	169	190	173	157
Marine Safety and Policy 4	56	59	58	105	126
Road and Rail Safety and Policy	46	53	48	49	51
Multimodal Policy and Safety 5	181	146	146	142	157
Corporate Services of Transport Canada	124	131	119	121	129
Total	1,514	1,750	1,834	2,080	2,009

Note: More detailed data are available on Transport Canada's Web site (www.tc.gc.ca).

1. Includes expenses for small fishing ports by Fisheries and Oceans Canada.
2. Includes contributions by Transport Canada to the Jacques Cartier and Champlain Bridges, and expenses of the National Capital Commission, Public Works and Government Services Canada, Parks Canada, and Indian and Northern Affairs Canada.
3. Includes expenses of the Civil Aviation Tribunal.
4. Includes statutory payments to St. Lawrence Management Corporation for Capital Cash Fund Requirements of $17.5 million in 2004/05 and $28.0 million in 2005/06.
5. Includes expenses for the regulation and inspection of the transportation of dangerous goods, Security and Emergency Preparedness, the Canadian Transportation Agency, and other multimodal safety, policy and analysis. Large increases in 2001/02 related to the purchase of explosive detection equipment.
6. Forecast at January 31, 2005, of full year.

Source: Transport Canada

FEDERAL SUBSIDIES TO TRANSPORTATION

In 2005/06, total federal direct subsidies, grants and contributions are projected to be $1,294 million, an increase of $409 million or 46.2 per cent. Subsidies to the air mode are expected to rise 7.0 per cent to $45.1 million. Marine subsidies increased 77 per cent to $250 million as port divestiture payments increased $44 million, there were expected to be new marine security payments of $33 million and there was a $35 million payment to the Toronto Port Authority for a litigation settlement. Subsidies to the rail mode decreased by $15 million, reflecting a $22 million drop in payments to VIA Rail. Highway mode subsidies are expected to rise by $310 million in 2005/06 although highway agreement payments are scheduled to drop $43 million, payments by Infrastructure Canada are forecast to increase by $344 million. Table 3-3 gives more details on these subsidies.

TABLE 3-3: DIRECT FEDERAL SUBSIDIES, GRANTS AND CONTRIBUTIONS BY MODE, 2001/02 – 2005/06

(Millions of dollars)
	2001/02	2002/03	2003/04	2004/05	2005/06 F
Air Mode
Airport (Operation & Capital)	50.6	35.3	38.4	30.6	43.2
Airport/airline assistance 1	123.9	25.4	4.5	-	-
Other	2.9	2.7	3.2	11.5	1.9
Total Air	177.4	63.4	46.0	42.1	45.1
Marine Mode
Marine Atlantic	36.8	46.4	41.6	72.9	70.2
Transfers to ports 2	21.6	22.1	65.7	27.1	70.7
Other ferry and coastal services	31.7	32.2	32.0	33.6	34.2
Marine security					32.8
Other 3	24.5	8.6	5.5	7.9	42.3
Total Marine	114.6	109.2	144.8	141.4	250.3
Rail Mode
VIA Rail	310.2	255.7	264.2	191.3	169.0
Hopper cars	16.4	16.0	12.9	12.3	12.0
Grade crossings	7.5	7.5	7.5	7.4	7.4
Other	8.3	8.6	8.9	20.1	27.2
Total Rail	342.5	287.8	293.6	231.1	215.7
Highway Modes
Transition programs 4	23.7	37.2	33.7	33.6	29.9
Highway agreements 5	69.0	101.4	116.2	205.2	162.7
Infrastructure program	7.4	33.7	45.9	133.1	477.3
Fixed link in Prince Edward Island	48.6	49.2	51.4	52.0	53.3
Other 6	11.3	13.2	15.8	10.3	17.9
Total Highway Modes	159.9	234.8	263.0	434.2	744.4
Transit Systems 7	2.4	66.3	53.7	29.4	28.4
Grand Total 8	797.7	763.0	803.4	885.6	1,294.5

Notes: More detailed data are available on Transport Canada's Web site (www.tc.gc.ca).
Transport-related expenditures by regional development agencies have been added, retroactively, to 1996/97. Totals may not add up due to rounding.

1. Includes air carrier assistance of $99 million in 2001/02 and a cabin security enhancement program of $28 million and $6 million in 2002/03 and 2003/04, respectively.
2. Includes contributions to the Port Divestiture Fund, a payment of $36 million to the Government of Quebec for the transfer of ferry wharves in 2000/01 and $64 million for the payment of a loan guarantee to Ridley Terminals in 2003/04.
3. Includes a payment of $21.4 million to Hamilton Harbour Commission in 2001/02 and a payment of $35 million to the Toronto Port Authority in 2005/06 for the settlement of a civil litigation.
4. Offset federal programs to the elimination of Western Grain Transportation Act programs.
5. Includes $33 million in 2002/03 and $78 million in 2003/04 under the Strategic Highways Infrastructure Program.
6. Includes in 2002/03 and 2003/04 the estimated road portion of the Toronto Waterfront Revitalization Project.
7. Spending included previously under Highway Modes.
8. Includes small amounts not classified elsewhere.

6. Forecast at January 31, 2006, of full year.

Source: : Transport Canada; Fisheries and Oceans Canada; Provincial/Territorial Departments of Transportation

DISTRIBUTION OF PROVINCIAL/TERRITORIAL AND LOCAL EXPENDITURE BY PROVINCE ¹

In 2004/05, provincial, territorial and local governments spent $18.9 billion on transportation net of transfers from the federal government. This was a 6.6 per cent increase over 2003/04. Spending by both levels of government is similar in magnitude. Net expenditures by provinces/territories increased by $1.1 billion (13.4 per cent) to $9.6 billion, reaching a new peak; while local net expenditures rose by $26 million (0.3 per cent) to $9.3 billion, also a new high.

At $6.6 billion in 2004/05, or 35.1 per cent of the national total, net expenditures on transportation by the provincial and local governments in Ontario were the highest of any province or territory. Next highest was Quebec with $4.2 billion (22.3 per cent), followed by British Columbia with $2.8 billion (15.0 per cent) and Alberta with $2.4 billion (12.8 per cent).

On a per capita basis, the territories spent the most. The Yukon led with $2,535 per person in 2004/05. Provincially, Alberta and New Brunswick spent the most per capita on transport, more than $700. The average for all jurisdictions was $590 per person. Addendum Tables A3-5 and A3-6 give further details.

Over the past five years (2000/2001 to 2004/05), provincial/territorial and local governments have spent an average of 3.1 per cent more per year on transportation. Nova Scotia, Quebec and Alberta all have average increases of more than five per cent.

Federal transfers in 2004/05 were equivalent to 1.9 per cent of transport spending by local and territorial governments. The Northwest Territories was the most reliant on federal transfers, with 27.3 per cent of its transport spending dependent on federal transfers. New Brunswick followed at 6.0 per cent.

Spending on highways and roads is the most important category of transport-related expenditures for all provinces. In 2004/05, it accounted for about 80 per cent of total net spending by provincial/territorial and local governments. Nationally, provincial spending and local spending in this category each accounted for about 40 per cent.

Other modes are significant for some provinces/territories. Marine transportation is important for Newfoundland and Labrador, where it made up nine per cent of total provincial and local government net transport spending in 2004/05. Spending on air transportation is significant for the territories, accounting for 20 per cent of transport spending in the Northwest Territories. Expenditures on transit are important in the most populous provinces: in Ontario they accounted for 18.4 per cent, in Quebec 14.8 per cent and in British Columbia 14.0 per cent.

¹ Detailed data are available in the Addendum to this report on Transport Canada's Web site (www.tc.gc.ca). Return

Government Transportation Expenditures

Total Transportation Revenues by Level of Government

Overview of Expenditures and Revenues by Mode