3 GOVERNMENT SPENDING ON TRANSPORTATION

GOVERNMENT TRANSPORTATION EXPENDITURES

Combined, all levels of government spent approximately $24.2 billion in 2005/06. This is an 11.4 per cent increase from 2004/05, or $2.5 billion. Table 3-1 shows government expenditures on transportation since 2002/03. Transportation spending by governments on a per capita basis also increased 10.3 per cent to $747. While all levels of government contributed to this growth, provincial/territorial governments had the largest increase in net spending at 21.2 per cent, or $2.0 billion. Local governments increased their net spending by 0.3 per cent, or $31.8 million. Federal transport expenditures increased by 15.0 per cent, or $442.1 million to $3.4 billion, and are expected to increase by 4.8 per cent in 2006/07, or $161.2 million. All government fees and tax revenues from transport users were up 0.5 per cent in 2005/06, totalling $15.7 billion. Federal non-tax revenues from transport users are expected to increase by 3.2 per cent in 2006/07 to $831 million, following an increase of 2.2 per cent in 2005/06. Addendum Table A3-1 shows gross and net expenditures on transportation by governments from 1996/97 to 2005/06.

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.

¹Excludes transfers of $22 million to Crown corporations not involved in transport in 2002/03 and 2003/04. Return

² Net of federal transfers as reported by the provinces. Return

³ Calendar year basis; net of federal and provincial transfers. Return

⁴Revenues from Coast Guard services and small port users. Return

⁵ Federal excise fuel taxes, and provincial motive fuel taxes and licence fees.Return

^F Forecast at January 31, 2007, of full year.Return

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departments; Provincial/Territorial Departments of Transportation; Statistics Canada, Public Institutions Division, unpublished data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 2005/06. Up to 2000/01, total government expenditures averaged around $18 billion, but over the past five years have increased with increasing growth rates over the past three years. Other than a slight decline in 1998/99, net local expenditures rose every year over this period. 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 $7.6 billion in 2000/01. Only in 2004/05 did they surpass the previous peak. The chart shows the strong growth (21.1 per cent) in net provincial/territorial expenditures in 2005/06. Federal expenditures fell from $3.5 billion in 1996/97 to $2.0 billion in 1999/2000 and 2000/01, after which they have risen steadily to reach 3.4 billion in 2005/06. 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. It also operates roads and bridges, airports, harbours/ports and marine navigational and rescue services (Coast Guard). Transport Canada performs several multimodal activities, ranging from security and emergency preparedness to regulating and monitoring the transport of dangerous goods. Total direct federal transport expenses in 2006/07 are forecast to rise by 4.6 per cent to $2.2 billion after remaining almost unchanged in 2005/06.

There are two main categories of government activity in transportation. The first is operations, the second safety, security and policy. After decreasing by $9 million, or 0.9 per cent, in 2005/06, expenses related to operations are expected to increase by $48.6 million, or 5.0 per cent, to $1,017 million in 2006/07. Expenditures on safety, security and policy are expected to increase by $33.6 million, or 3.5 per cent, to $990 million, resuming the steady increase after the pause in 2005/06. Major increases in recent years are related to commitments to security in the marine and air sectors, particularly by the Canadian Air Transport Security Authority.

Table 3-2 shows federal expenditures on transportation from 2002/03 to 2006/07. Table A3-2 in the Addendum shows expenditures by the federal government from 1996/97 to 2005/06.

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

¹Includes expenses for small fishing ports by Fisheries and Oceans Canada. Return

² Includes contributions by Transport Canada to the Champlain and Jacques Cartier Bridges, and expenses of the National Capital Commission, Public Works and Government Services Canada, Parks Canada and Indian and Northern Affairs Canada. Return

³ Includes expenses of the Civil Aviation Tribunal. Return

⁴Includes statutory payments to St. Lawrence Management Corporation for Capital Cash Fund Requirements of $17.5 million in 2004/05, $28.0 million in 2005/06 and $20 million in 2006/07. Return

⁵ Includes expenses for the regulation and inspection of the transport of dangerous goods, Security and Emergency Preparedness, the Canadian Transportation Agency, and other multimodal safety, policy and analysis. Return

^F Forecast January 31, 2007 of full year.Return

Source: Transport Canada

FEDERAL SUBSIDIES TO TRANSPORTATION

Total federal direct subsidies, grants and contributions are projected to be $1,380 million in 2006/07, an increase of $66 million, or 5.0 per cent. This is much less than the 49 per cent increase in 2005/06. Subsidies to the air mode are expected to be $46.5 million, up 14.6 per cent. Marine subsidies are forecast to drop $84.9 million, or 37.7 per cent, to $140.5 million. This drop reflects a reduction in planned payments under the Port Divestiture Fund of almost $60 million and the absence of the onetime payment in 2005/06 of $35 million to the Toronto Port Authority for a litigation settlement. Subsidies to the rail mode decreased by $29.0 million, or 13.2 per cent, to $190.7 million. While payments to VIA Rail are expected to remain constant, other categories of rail expenditures are expected to fall. Highway mode subsidies are expected to rise to $964.1 million, an increase of $262.8 million, or 37.5 per cent, in 2006/07, the second year of similar sized increase. Highway agreement payments are scheduled to drop $73.6 million, the second decrease in a row. Payments by Infrastructure Canada for highways are forecast to increase by $347.9 million, following an increase of $306.1 million in 2005/06. Subsidies for transit systems are forecast to total $18.4 million in 2006/07, down from $116.1 million. Table 3-3 gives more details on these subsidies. Table A3-3 in the Addendum gives the same information over a greater time series.

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.

¹ Includes a cabin security enhancement program of $28 million and $6 million in 2002/03 and 2003/04, respectively. Return

² Includes contributions to the Port Divestiture Fund and $64 million for the payment of a loan guarantee to Ridley Terminals in 2003/04. Return

³ Includes a payment of $35 million to the Toronto Port Authority in 2005/06 for the settlement of civil litigation. Return

⁴ Offset federal programs to the elimination of Western Grain Transportation Act programs. Return

⁵ Includes $33 million in 2002/03 and $78 million in 2003/04 under the Strategic Highways Infrastructure Program.Return

⁶ Includes in 2002/03 and 2003/04 the estimated road portion of the Toronto Waterfront Revitalization Project. Return

⁷ Spending included previously under Highway Modes. Return

⁸ Includes small amounts not classified elsewhere. Return

^FForecast at January 31, 2007, of full year.Return

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

DISTRIBUTION OF PROVINCIAL/TERRITORIAL AND LOCAL EXPENDITURE BY JURISDICTION

Provincial/territorial and local governments spent $20.8 billion on transportation net of transfers from the federal government in 2005/06, up 10.8 per cent from 2004/05. While spending by these two levels of government was of a similar magnitude in 2004/05, provincial/territorial governments spent about $2 billion more than local governments in 2005/06. Net expenditures by provinces/territories increased by $2.0 billion (21.1 per cent) to $11.5 billion, while local net expenditures rose by $31.8 million (0.3 per cent) to $9.3 billion.

Local governments accounted for 45 per cent of total provincial/territorial and local government expenditures, down from the average of 51 per cent for the previous five years.

In terms of net expenditures on transportation, the provincial and local governments in Ontario spent the most in 2005/06, at 6.9 billion, or one third of the national total. Quebec spent the next most, at $4.9 billion (23.6 per cent), followed by British Columbia at $3.3 billion (15.8 per cent) and Alberta at $2.8 billion (13.2 per cent).

On a per capita basis, the territories spent the most in 2005/06: the Northwest Territories at $3,966 per person, Yukon with $2,814 per person and Nunavut at $1,583 per person. Provincially, Alberta and British Columbia spent the most, at $833 and $768 per person, respectively. The average for all jurisdictions was $643 per person. Addendum tables A3-5 and A3-6 give further details.

Over past five years, 2001/2002 to 2005/06, provincial/territorial and local governments have spent an average of 5.7 per cent more per year on transportation. All the territories as well as New Brunswick and Quebec have average increases of more than seven per cent.

Federal transfers in 2005/06 accounted for 1.9 per cent of transport spending by local and provincial/territorial governments. Federal transfers were most important for the Northwest Territories and Saskatchewan, where it was equivalent to at least 10 per cent of transport spending.

Spending on highways and roads is the most important category of transport-related expenditures for all provinces/territories. In 2005/06, it accounted for about 80 per cent of total net spending by provincial/territorial and local governments. It has remained about this percentage for the past five years. Nationally, provincial and local spending in this category accounted for about 38 and 42 per cent, respectively.

Other modes are significant for different provinces/ territories. In Newfoundland and Labrador, marine transportation is important, making up 10 per cent of total provincial and local government net transport spending in 2005/06. In the Northwest Territories, spending on air transportation accounted for 23 per cent of transport spending. In the most populous provinces, expenditures on transit are important, accounting for 20.0 per cent in Ontario, 17.3 per cent in British Columbia, 15.0 per cent in Quebec and 12.9 per cent in Alberta in 2005/06. In the other jurisdictions, transit expenditures only accounted for an average of 5.0 per cent of transport spending.

Government Transportation Expenditures

Total Transportation Revenues by Level of Government

Overview of Expenditures and Revenues by Mode