3 GOVERNMENT SPENDING ON TRANSPORTATION

GOVERNMENT TRANSPORTATION EXPENDITURES

For several years, government expenditures on transportation evolved within a $17 billion to $18 billion range. As Table 3-1 shows, however, transportation expenditures by all levels of government soared in fiscal year 2001/02 to $19 billion, an increase of $1.2 billion, or 6.4 per cent, over 2000/01. All levels of government contributed to this growth. The federal government added $259 million, mostly as a result of September 11, 2001. While federal transport expenses in 2002/03 are expected to increase by a further 9.2 per cent, non-tax revenues from transport users are expected to more than double. Combined provincial/territorial and local expenditures increased by $1.2 billion, or 6.9 per cent per cent, in 2000/01. Over the last four years, expenditures by provincial/territorial governments have decreased by $311 million; however, local governments have more than made up for this by increasing their spending by almost $2.2 billion since 1998/99.

Government fees and tax revenues from transport users continued to be relatively stable, reaching $13.8 billion in 2001/02, a marginal growth of 1.3 per cent over the previous year.

Note: N/A = Not available. More yearly data are available in the Addendum on Transport Canada’s Web site (www.tc.gc.ca).
1 Excludes transfers of $24 million to Crown corporations not involved in transport in 2002/03.
2 Large increases related to the creation of the Canadian Airport Security Agency.
3 Net of federal transfers as reported by the provinces/territories.
4 Calendar year basis; net of federal and provincial/territorial transfers.
5 Revenues from the airport security fee, and Coast Guard services and small port users.
6 Federal excise fuel taxes, and provincial motive fuel taxes and licence fees.
F Forecast at January 31, 2003, 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departments; Provincial/territorial departments of transportation; Statistics Canada, Public Institutions Division, Unpublished data

Federal Expenses Related to Transport Facilities and Services

The Government of Canada operates roads and bridges, airports, harbour/ports and marine navigational and rescue services (Coast Guard). It also provides modal safety, security and policy services. Transport Canada performs several multimodal activities, ranging from security and emergency preparedness services to the regulation and monitoring of the transport of dangerous goods. Table 3-2 shows that total direct federal transport expenses are forecast to reach $1.7 billion in 2002/03, 15 per cent more than the previous year. After several years of decline, these expenses had already showed a nine per cent increase in 2001/02.

These activities can be divided into two broad categories: operations; and safety, security and policy. Expenses related to operations declined in 2002/03 by 2.9 per cent to $960 million. Increases in federal expenditures on road and bridges reflect larger capital expenditures on the Jacques Cartier and Champlain bridges in Montreal. Expenditures on safety, security and policy are expected to reach $669 million in 2002/03, almost double that of 1998/99. Major increases in recent years are related to new commitments to security in the air sector.

Note: More detailed data are available in the Addendum on Transport Canada’s Web site (www.ca.tc.gc.ca).
1 Includes expenses for small fishing ports by Fisheries and Oceans Canada.
2 Includes contributions by Transport Canada to the Champlain and Jacque Cartier Bridges, and expenses by the National Capital Commission, Public Works and Government Services Canada, Parks Canada, and Indian and Northern Affairs.
3 Includes expenses of the Civil Aviation Tribunal.
4 Larger expenditures in 1998/99 related to the purchase of a ferry.
5 Includes expenses for regulation and the inspection of the transport of dangerous goods, Security and Emergency Preparedness, Research and Development, the Canadian Transportation Agency and other multimodal safety, policy and analysis. Large expenses in 2000/01 related to the purchase of explosives detection equipment.
F Forecast at January 31, 2003, of full year.

Source: Transport Canada

Federal Subsidies to Transportation

In 2002/03, total federal direct subsidies, grants and contributions are projected to drop to $789 million, almost $120 million, or 1.4 per cent, less than in 2001/02. The major sources of change are lower subsidies to VIA Rail, which dropped by $55 million, and the termination of the compensation program (almost $100 million) to air carriers for the closure of Canadian airspace after the events of September 11, 2001. Excluding these programs, federal transfers to transport would have increased by $139 million, mostly as a result of renewed funding of the Canada Infrastructure program. The major reduction of funding since 1998/99 can be traced to the cessation of payments to NAV CANADA and highway transition programs. Table 3-3 presents more details on these subsidies.

Notes: More yearly data are available in the Addendum on Transport Canada’s Web site (www.tc.gc.ca). Transport-related expenditures by regional development agencies have been added, retroactively to 1996/97. P.E.I.: Prince Edward Island. n.e.s.: not elsewhere specified
1 Includes air carrier assistance of $99 million in 2001/02 and a cabin enhancement program of $28 million in 2002/03.
2 Includes a payment of $36 million to the Government of Québec for the transfer of ferry wharves.
3 Includes a payment of $21.4 million to the Hamilton Harbour Commission for the settlement of a civil litigation.
4 Offset federal programs to the elimination of the WGTA and ARFA programs; Labrador ferry service buyout in 1997/98.
5 Includes a transfer of $62.3 million to the Toronto Transit Authority.
F Forecast at January 31, 2003, of full year.

Source: Transport Canada; Fisheries and Oceans Canada; Provincial/territorial departments of transportation

Distribution of Provincial/Territorial and Local Expenditures by Province¹

In 2001/02, provincial, territorial and local governments spent $17 billion on transportation; this was $0.9 billion, or 7.5 per cent, more than in 2000/01. Local expenditures increased by $0.8 billion (nine per cent). The provinces/territories spent $7.9 billion, 2.6 per cent more than in 2000/01, returning to the level of expenditures of the mid 1990s.

Since 1998/99, provincial/territorial and local governments have spent an average of four per cent per year more on transportation. Alberta, Saskatchewan and Quebec had the largest relative increases, while New Brunswick and the Northwest Territories had decreasing expenditures.

Federal transfers were equivalent to 1.1 per cent of transport spending by local and territorial governments in 2001/02. The Yukon was the most reliant province/territory on federal transfers, with some 30 per cent of its transport spending dependent on federal transfers.

Spending on roads and highways is the most important category of transport-related expenditures for all provinces, accounting for 37 and 42 per cent, respectively, of all net spending by provincial/territorial and federal governments. Other modes are also significant for some provinces/territories. Remoteness makes spending on air transportation more significant for the Northwest Territories, where it accounted for 15 per cent of transport spending in 2001/02. The relative importance of air transport spending in the territories has varied from year to year, reaching as high as 38 per cent in 1995/96.

Although Ontario's transit spending has fallen by $0.6 billion since 1998/99, its share of total transport expenditures, at 22 per cent, is the largest of all provinces. Local governments have replaced provincial governments as the main source of expenditures on public transit systems: in 2001/02, they accounted for 93 per cent of expenditures; in the 1990s, they averaged 46 per cent per year. Expenditures on transit are also significant in Quebec, British Columbia and Alberta.

Figure 3-1 illustrates the trends in the role of the provinces in non-federal transport expenditures over two periods, 1990 to 1997 and 1998 to 2001. The western provinces have increased their share of transport spending by almost 10 per cent each. For the central and eastern provinces, the pattern is reversed. In Atlantic Canada and Quebec, the declining importance of the provincial governments is marginal. The reduction of the provincial role is most evident in Ontario, where the share of transport expenditures dropped from 54 per cent in 1990 — 1997 to 29 per cent in 1998 — 2001. As a result, the Ontario government spent about half as much on transport in 2001/02 than it did in the mid-1990s.

FIGURE 3-1: PROVINCIAL SHARE OF LOCAL AND PROVINCIAL TRANSPORT EXPENDITURES, 1990 – 1997 AND 1998 – 2001

Source: Transport Canada

¹ For more detailed data, please see the tables for Chapter 3 in the Addendum on Transport Canada’s Web site (www.tc.gc.ca). Back to text

Government Transportation Expenditures

Total Transportation Revenues by Level of Government

Overview of Expenditures and Revenues by Mode