The mandate of the report is interpreted broadly: this first volume sets out to consider all significant aspects of Canada's transportation system. Government involvement in the sector is extensive, and a summary of current institutions serves to introduce the recent substantial changes in the government management of transport.

Mandate

This report is the first annual volume to be produced under the new Canada Transportation Act. It responds to the requirement in section 52 of the Act, which states: "Each year the Minister shall, before the end of May, lay before Parliament a report briefly reviewing the state of transportation in Canada in respect of the preceding year, including

(a) the financial viability of each mode of transportation and its contribution to the Canadian economy and the development of the regions;

(b) the extent to which carriers and modes of transportation were provided resources, facilities and services at public expense;

(c) the extent to which carriers and modes of transportation received compensation, indirectly or directly, for the resources, facilities and services that were required to be provided as an imposed public duty; and

(d) any other transportation matters the Minister considers appropriate."

The report is not limited to Transport Canada's operations, nor to federal jurisdiction, but describes features of transport activities, whether provided publicly or privately and whether jurisdiction rests with municipal, provincial, territorial or federal government. All aspects of transport systems, services, usage, funding, economic performance, and social or environmental impacts are potentially relevant, though practical limitations on availability of information and space dictate that the report focus on aspects of systems, performance and policy development of national significance.

In this broad scope, the report differs from the annual reviews produced by the National Transportation Agency between 1988 and 1994 under the previous National Transportation Act, 1987. The provisions of that act required the Agency to review the operation of the new legislation, including effects on prices and levels of service provided to users, changes in structure and performance of the carrier industries, and some specific aspects of rail operations (such as competitive line rates and abandonments). The reviews did not include private vehicle use, most aspects of transport infrastructure, government spending, safety, or environmental effects, all of which are included in the current report as elements of the "state of transportation."

The broad scope of the report also begins to address the need expressed by expert commentators for a comprehensive summary of transport activities and institutional developments, and for interpretations of performance and clarification of government accounts. ^{note 1}

The major constraint on the report's ability to meet these various requirements is the availability of information: current statistics do not address fully the size and complexity of the activities, so certain important aspects of performance cannot be described. National transport statistics collection and analysis, done primarily by Statistics Canada, centre on surveys of the traditional transport industries - the commercial carriers - and focus on obtaining financial and operating statistics. Supplementary information is also obtained, for example, from airports, ports and Canada Customs. The various survey procedures involve some substantial time lags, which often delay publication of annual data by one or two years beyond the reporting period. Moreover, neither the national statistics efforts nor those of other levels of government provide information on private passenger vehicle use or privately owned commercial vehicle use, which are the largest components of transport. These remain as major gaps, preventing compilation of national aggregate travel or freight measures or intermodal comparisons of traffic, safety, energy use, emissions, and so on. And, finally, descriptions of government spending on transport and compilations of national totals across jurisdictions are inhibited by the complexity of accounting systems among provinces, territories and municipalities, and the lags in their presentation.

It is intended that future volumes of this annual report will benefit from improved data. The extent and speed of reporting from current sources is being improved, notably as a result of the application of new regulations under the Act, requiring submission of data to Transport Canada by carriers and other companies providing transport facilities, such as airports, ports, the Seaway, and the commercialized air navigation system corporation, Nav Canada. Further, a new program surveying road vehicle use, currently under development, will provide a major addition to transport activity statistics.

It is also intended that the report will become a reference for transport analysts and interested observers, featuring indicators of performance that will be updated annually. Work will be undertaken for future versions of the report to develop more direct measures of performance for the transport system and its services, notably of system capacity, access to services, and such aspects of service quality as speed, reliability and safety. Practical and affordable means of obtaining such measures will be sought, and suggestions from any reader would be appreciated.

Direct consideration of the contribution of transport to regional development, identified in the Act as a requirement for the report, must also await further development of methodology and data. Regional activities are mentioned in a number of sections in the report, and all of the treatment of economic and financial aspects of transport deals in a broad sense with the contribution of transport to the economy and development. However, none of the chapters in this first volume explicitly addresses transport's contribution to development of the regions. The links between transport activity and economic development have been identified unequivocally only through detailed analyses of individual capital investment projects, involving thorough cost-benefit analyses of their effects. The impacts of aggregate changes in regional or national public investment in transport on development remain the subject of academic debate and research, ^{note 2} while the combined effects of changes in public and private spending, regulations and policies add even greater complexity and uncertainty. These cannot be resolved in this volume, and efforts will be made to investigate practical methods and data sources in future volumes.

Design of the Report

The structure of this first report is as follows: Six main chapters provide information on different modes of transport - namely air, marine, rail, trucking, bus and private passenger vehicles - discussing differences in technology, markets for commercial carriers, and regulatory structures. For each mode, descriptions are provided of the legislative and institutional framework, the networks of facilities and control systems, the services provided and the traffic experienced.

A separate chapter deals with the road network, as it is common to three of those modes, but does not belong in any of their chapters alone. Another deals with intermodal freight, summarizing features of the provision of freight services through combinations of modes.

The remaining chapters include all modes, reporting on important aspects of institutions or performance across the modes.

Safety and environmental impacts, two key aspects of performance, are dealt with in two of the main chapters.

Economic and financial aspects of transportation are dealt with explicitly in four separate chapters.

The first (Chapter 2) offers an overview of the extent of transport activities in Canada and assesses their place in the national economy and in economic and social activities; some aggregate indicators of transport spending are included. The next (Chapter 3) is a summary of government spending on transport, with outline accounts for all levels of government, and details of federal spending and revenues by mode, including subsidies.

A separate chapter following the modal chapters reports on the financial viability of each mode, providing standard measures of financial performance of the carrier industries.

The final chapter reports on trends in price and productivity.

The report concludes with two brief, primarily graphic, summaries of statistics describing transport's relationship with trade and with tourism.

The intention of the report is to provide information in summarized form, with some brief tables and charts to aid interpretation of main characteristics and trends. Most of the data are available in publications, identified throughout the report, but for ease of reference the detailed statistics on which the tables and charts are based are also available from Transport Canada as a data compendium. (Requests should be sent to one of the addresses at the end of this chapter.)

Institutional Context in 1996

Public institutions play a central role in the provision of transport facilities and services, a role that has evolved and changed over time and that has recently been radically reshaped. Much of the report is therefore devoted to describing the institutions and changes in them, and only a brief general introduction is offered here.

Under Canada's Constitution, responsibility for interprovincial and international transport "undertakings" lies with the federal government; otherwise it rests with the provinces and territories. In practice, this has meant that the federal government has become responsible for most aviation activities, most railways, international and domestic marine transport, and interprovincial bus and truck transport. Provincial and territorial governments have been responsible primarily for roads, most aspects of road vehicles and users, intra-provincial railways, bus services and trucking, and municipal transport. In practice, they have also been responsible for economic regulation of interprovincial bus and truck transport, by delegation in federal legislation. Much of the responsibility for municipal roads and transit services and traffic policing is delegated in turn to municipalities by provincial governments.

The involvement of governments has been varied. They act as:

 

• direct providers of transport facilities;

   

• direct operators of carrier services;

   

• funders of facilities and services provided by others;

   

• funders of transport users; and

   

• regulators of facilities and services provided by others.

Through much of this century, the various governments have been the major providers of infrastructure and the main operators of carriers. A decade ago, the federal government provided and operated the main airports, the ports, the St. Lawrence Seaway, the air and marine navigation systems, and the marine ice-breaking services. It owned and operated the larger of the two national rail carriers (Canadian National Railways), the largest national airline (Air Canada), the national passenger rail carrier (Via Rail), and the major East Coast ferry company (Marine Atlantic) and provided subsidies to other carriers. Provincial and territorial governments provided and operated the main highway network and operated some regional passenger rail carriers, airlines, ferry companies and inter-city bus companies. Municipal governments provided local and regional roads and operated transit companies.

Over the past decade, a revolutionary restructuring of government management of transport has begun. Most advanced at the federal level, its central themes have been the deregulation of commercial transport and the commercialization and decentralization of government operations. Deregulation has meant the elimination or substantial relaxation of controls on market entry and pricing in domestic aviation, rail freight and trucking. This restructuring had its start in the National Transportation Act,1987 and the Motor Vehicle Transport Act, 1987 and was expanded through the Canada Transportation Act proclaimed in July 1996. Commercialization has included:

 

• full privatization of Air Canada and CN Rail;

   

• the creation of a new, not-for-profit private sector corporation whose function is to own and operate air navigation services - Nav Canada Inc.;

   

• the leasing of major national airports to local operating authorities, and the divestiture of regional and local airports to local public agencies or private interests, all to be self-sufficient financially; and

   

• the reduction of subsidies to other federal operators and private carriers.

The leasing and divestiture of airports and the subsidy reductions are still being implemented and are being extended to ports and marine carriers through policy and proposed changes to relevant legislation. In addition, the Coast Guard was transferred in 1995 to Fisheries and Oceans Canada, where it, too, is undergoing rationalization and commercialization of its services.

At the provincial and territorial levels, some publicly operated carriers have undergone similar restructuring or privatization, some subsidies have been reduced, commercial practices have been introduced to manage and fund road construction and operation, and more such realignments are being sought. Municipal governments are also requiring greater cost efficiency in road and transit operations.

The role of governments in transport is changing rapidly. The functions that are now at the core of government involvement include negotiation and administration of the remaining economic regulations - particularly of international market access, but also of some conditions of domestic inter-jurisdictional access - and the regulation and enforcement of safety and environmental protection. Since they remain responsible for the success of restructuring and deregulatory policies, governments will continue to oversee and evaluate developments in the transport sector.

In both economic and safety regulation, the federal actions involve bilateral and multilateral international negotiation, aimed at facilitating market access and harmonizing international practices. A number of international institutions are involved, since some are mode- specific and others cross-modal. International transport issues in all modes are potentially subject to multi-lateral trade negotiations under the General Agreement on Trade in Services (GATS), implemented through the World Trade Organization (WTO). Canada's major bilateral trade agreement with the United States, the Free Trade Agreement (FTA), has implications for transport services, as does the Canada-US-Mexico North American Free Trade Agreement (NAFTA). Continuing intergovernmental harmonization of standards for air services is pursued at the International Civil Aviation Organization (ICAO), while inter-corporate agreements on conditions of air services are dealt with by the International Air Transport Association (IATA). Intergovernmental agreements on marine services are negotiated through the International Maritime Organization (IMO) and codified in Conventions. Various committees of the United Nations (UN), the Organization for Economic Cooperation and Development (OECD) and Asia Pacific Economic Cooperation (APEC) also bring together governments to examine and exchange information on policies and measures to improve transport safety and fair access to markets. Canadian participation in all of these activities is extensive, as is evident in the report.

Comments, queries and requests for the data compendium should be addressed to one of the following: