3. Transportation and Regional Economies

Regions which have increased their trade activities have also seen an increase in the relative share of transport activities in their economy.

The transportation industry is as important to regional economies as it is to the national economy. In each province, transportation plays two roles: one as an intermediary industry (for example, moving goods from factories to stores), and another as a contributor to economic consumption (for example, moving people to and from shopping centres). An efficient provincial economy requires a balance between supply and demand for transportation.

Four indicators provide clues to the transportation industry's importance to provincial economies: the value-added (note 1) that for-hire (note 2) carriers contribute; the employment that for-hire carriers create; total transportation demand(note 3); and investment(note 4) by business and government in transportation infrastructure and machinery.

The value-added of for-hire carriers can be compared to provincial gross domestic product (PGDP) - the standard measure of a province's total value of production. Total transportation demand can be compared to a province's final domestic demand (PFDD), a measure of the total amount of sales in the provincial economy. These two economic concepts are related in that PGDP is equal to PFDD plus the trade balance, where the trade balance includes both interprovincial and international trade.

Canada's provinces are grouped here into three regions: Eastern, including Newfoundland, Prince Edward Island, Nova Scotia and New Brunswick; Central, including Quebec and Ontario; and Western, including Manitoba, Saskatchewan, Alberta, British Columbia and the Territories. This section will follow that order.

Value-added of Transportation

The importance of for-hire carriers to provincial economies, and the transport mode that predominates in each province, is primarily determined by the province's geography, its economic structure and its interprovincial and international trade. Public transportation policy also has an influence.

The principal policies that have recently affected transportation's contribution to provincial economies are deregulation (for example, of the trucking industry) and commercialization or privatization of transportation infrastructure (for example, of airports).

Location is another determinant of the importance of for-hire carrier transportation to certain provincial economies. For example, provinces that border on Quebec or Ontario can act as hubs for transportation entering or leaving Central Canada.

Both Manitoba and New Brunswick exhibit the largest share of carrier transportation relative to the provincial economies of their respective regions. British Columbia also has a large carrier share, a result of its suitability as a staging area for trade with the Pacific Rim countries.

Eastern Canada

New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland have the smallest provincial economies. In each of these provinces, financial and other services (particularly government services) provide a relatively high contribution to the provincial economy, while the contribution of primary commodity production is moderately important. Another characteristic of these economies is the moderate rate at which they have grown. Table 3-1 shows the industrial structure of the provinces in the Eastern region, as well as their percentage of PGDP in 1996 and their annual growth from 1991 to 1996.

In terms of international and interprovincial trade, the economies of these provinces are characterized by large total-trade deficits, generated by large shares of imports, primarily manufactured goods, in each province.

The total-trade deficits are primarily generated by trade deficits in interprovincial trade, which occur principally with Ontario and Quebec. In Eastern Canada, the trend has been toward reducing trade deficits in both interprovincial and total trade - export growth exceeding import growth from 1991 to 1996. Table 3-2 illustrates trade in the Eastern region and its contribution to PGDP and annual growth from 1991 to 1996.

Four factors are generating moderately higher shares of for-hire transportation activities in Eastern Canada: the relatively large distance from markets in Central Canada; the geographic dispersion of the population relative to Central Canada; the high share of imports; and the moderate levels of primary commodity production.

As New Brunswick is the nearest Eastern province to both Central Canada and the United States, it acts as a staging area or hub for transportation to and from Eastern Canada. Consequently, New Brunswick enjoys the highest for-hire carrier share of all the Eastern Canadian provinces, and the second highest share (after Manitoba) of all provinces. New Brunswick exhibits the largest growth in for-hire carrier transportation activities of all provinces.

In each Eastern province, trucking is the most important mode of for-hire carrier transportation, with particularly high growth rates in Nova Scotia and New Brunswick. Rail is the second largest mode in all provinces, except Prince Edward Island and Newfoundland.(note 5)

The geography of the Eastern provinces influences the importance of other modes, notably in Newfoundland, where the levels of marine and air transportation are the highest of all provinces and territories - equivalent to British Columbia for marine transportation and to the Territories for air transportation. The other Eastern provinces, however, also have relatively high shares of marine transportation, although growth rates are relatively low or negative.

Table 3-3 shows the relative importance of commercial transportation in each of the provinces in the Eastern region, as well as its percentage of PGDP in 1996 and its average annual growth from 1991 to 1996.

Central Canada

Quebec and Ontario represent the nation's largest provincial economies, with the largest share of manufacturing and construction. They also share the lowest proportions of primary commodity production in Canada. The economies of both provinces exhibit modest growth, with their fastest growing sectors being utilities and trade. Ontario also exhibits growth in manufacturing and construction. Table 3-4 shows the industrial structure of Quebec and Ontario, their percentages of PGDP and their contribution to annual growth from 1991 to 1996.

With respect to total trade, Quebec exhibited a balanced trade situation, while Ontario showed a trade surplus of 9.4 per cent of its provincial GDP in 1996. The main source of Ontario's trade surplus is interprovincial trade. Its main trade trend is toward increasing international exports, while interprovincial trade remains relatively constant. Table 3-5 shows trade in the Central provinces.

Four factors are contributing to these provinces' relatively low share of for-hire carriers as a percentage of PGDP: their low share of primary commodity production; their relatively higher population density; their relative proximity to large American markets; and their high degree of intermodal freight competition (rail, truck and marine). In Quebec, for-hire carrier activities are growing at a rate exceeding that of the provincial economy, while in Ontario, their growth is below.

In Central Canada, the most significant mode of transportation is trucking, followed by rail, with both growing at a rate exceeding that of the provincial economies.

Rail has been growing since 1991 at a faster rate than trucking. The relatively higher growth rates for rail indicate the improved competitiveness of railways.

In the sphere of marine transportation, growth in Quebec is related to the increasing attractiveness of the Port of Montreal for container traffic. Ontario is showing a decline in marine transportation.

The main reason for the relatively low growth rates of total for-hire carriers in Central Canada since 1991 is the decline in urban transit and other public passenger modes, such as intercity buses. This decline reflects the ongoing national shift from public passenger transportation to cars. Table 3-6 illustrates the relative importance of commercial transportation to the Central provinces.

Western Canada

A heavy reliance on primary commodity production - particularly in Saskatchewan, Alberta and the Territories - characterizes the provinces and territories of Western Canada. Manitoba and British Columbia have relatively higher shares of financial and other services. The provinces of Western Canada exhibit moderate to high growth rates. The main impetus for growth throughout Western Canada is utilities and trade. In Saskatchewan and Alberta, growth is also high in primary commodity production. British Columbia's growth has come from financial and other services. Table 3-7 shows the industrial structure of the Western provinces, as well as their PGDP for 1996 and their annual growth from 1991 to 1996.

Small total-trade deficits characterize international and interprovincial trade in the Western provinces and territories, with the exception of Saskatchewan and Alberta. In 1996, Saskatchewan had a slight trade surplus of 0.3 per cent of PGDP, while Alberta's trade surplus was 12 per cent of PGDP. Interprovincial trade represents a relatively large proportion of trade in Western Canada, with all provinces and territories having interprovincial trade deficits, primarily with Central Canada. As in both Eastern and Central Canada, the primary trend in trade has been growing international exports, with some growth in interprovincial exports. Table 3-8 shows the impact of trade on the provinces of the Western region.

Western Canada's relatively high level of for-hire carrier transportation activities can be explained by its provinces' reliance on primary commodities production, their lower population density, and their larger distance from markets. However, the provincial locations of the workers and capital employed by the for-hire carriers is uneven. This uneven distribution has resulted in a greater proportion of for-hire carrier shares in Manitoba, British Columbia and the Territories, while Alberta's and Saskatchewan's for-hire carrier shares are relatively lower.

Manitoba, ideally located to act as a hub for Western traffic with Central Canada(note 6), has the largest for-hire carrier share of any province. British Columbia, ideally located in relation to the Pacific Rim countries, acts as a hub for Canadian traffic with that region of the world. British Columbia's advantage as a hub location, combined with its difficult geography, generates a relatively large share of for-hire carrier transportation.

Both Saskatchewan and Alberta(note 7) have relatively small for-hire shares, due to the concentration of transportation industry workers and capital in Manitoba and British Columbia.

The Territories exhibit a larger share of for-hire carrier transportation than all other provinces, due to their dispersed population and their distance from Southern Canada.

In all Western provinces except Manitoba, trucking is the largest carrier mode, with rail in second place. In Manitoba, rail places first - because the province has the highest share of rail of all provinces - leaving second place for trucking. Trucking is also the most important mode for the Territories, where air transportation fills the second-place position. In every Western Canadian province, the growth rates since 1991 for trucking exceed rail, yet both modes have grown since 1991 at a rate exceeding the rates observed in each Western provincial economy.

British Columbia and Newfoundland have the highest shares of marine transportation of all provinces, while the Territories and Newfoundland have the highest shares of air transportation.

As cars and other private transportation continues to take market share away from public road passenger modes, all Western provinces exhibit negative growth rates for urban transit. Table 3-9 illustrates the relative importance of commercial transportation in the Western provinces, its percentage of PGDP in 1996 and its annual growth from 1991 to 1996.

Provincial Transportation Employment

Employment in commercial transportation activities is another indicator of the importance of transportation to provincial economies. Overall, for-hire carrier employment has been growing at a lower rate than total provincial employment over the period 1991 - 1996.

Eastern Canada

Commercial transportation activities provide moderately high levels of employment in Eastern Canada. New Brunswick has the highest proportion of transportation employment in the Eastern provinces and the
second-highest total (after Manitoba) of all provinces. In all Eastern provinces, the growth rate of transportation employment has been, since 1991, below the growth rate in total provincial employment, with a negative growth rate in Newfoundland.

In every Eastern province except Newfoundland, trucking is the largest transportation employer. New Brunswick has the highest proportion of trucking employment of any province in Canada. In Newfoundland, air transportation provides the highest proportion of transportation-related employment, followed by trucking. In Nova Scotia and New Brunswick, the second most important mode is marine transportation. In fact, the provinces of Eastern Canada exhibit the highest proportion of marine employment of all provinces.

The principal growth in employment has been in air transportation, with high growth rates in Newfoundland, Prince Edward Island and New Brunswick. New Brunswick also exhibits high employment growth in trucking.

In each of these provinces, the principal declines in transportation employment have been in rail, urban transit and other transportation. Table 3-10 shows the importance of employment in commercial transportation in the Eastern provinces.

Central Canada

Quebec and Ontario exhibit relatively low proportions of employment in commercial transportation. In both provinces, the growth rate of transportation employment is below the growth rates for total employment. The principal employer is trucking, followed by urban transit.

Quebec and Ontario have the highest proportion of employment in urban transportation, a reflection of Central Canada's higher population density. Quebec's principal source of transportation employment growth has been marine transportation; Ontario's principal source has been air transportation. In both provinces, the principal declines were in rail, with Ontario also exhibiting declines in other transportation. Table 3-11 illustrates the importance of commercial transportation employment in Quebec and Ontario.

Western Canada

The provinces of Western Canada exhibit relatively high proportions of commercial transportation employment. Manitoba enjoys the highest level of all provinces, with British Columbia and the Territories also showing high levels, but Saskatchewan and Alberta are confined to lower levels. In each Western province, the growth rate for employment in commercial transportation services has been less than the growth rate of total employment.

Rail is the largest employer among the transportation modes in Manitoba, where rail employment is of higher relative importance than in any other province. In Saskatchewan and Alberta, trucking is the largest employer, while other transportation is the largest employer in British Columbia and the Territories.

In Manitoba, British Columbia and the Territories, the second largest employer is trucking, while in Saskatchewan, second place goes to rail. Alberta benefits from equal employment levels of air transportation, rail and urban transit. Manitoba and the Territories - along with Newfoundland - have the highest proportion of air of all provinces in Canada.

In every Western province, the air and trucking modes exhibit the highest employment growth. Declining employment is observed in rail and urban transit. Table 3-12 illustrates the importance of employment in commercial transportation in Western Canada.

Total Transportation Demand

The first two sections of this chapter examined two indicators of the supply side of commercial transportation services to provincial economies: value-added and employment. This section looks at the demand for total transportation.

"Total transportation" refers to a broader definition of transportation, because it also includes private spending on transportation, Total Transportation Demand(note 8) such as consumer purchases of cars, and government expenditures,(note 9) such as highway maintenance and construction, as well as sales of commercial transportation services.(note 10)

"Total transportation demand"(note 11) refers to transportation purchases by consumers, businesses and governments within a province. Total transportation demand can be compared to provincial final domestic demand (PFDD), defined as the total value of all goods and services sold in the provincial economy in one year.

The principal observation that emerges from assessing total transportation demand is the predominance of private transportation, which is the largest segment of total transportation demand in all provinces, although not in the Territories.

The principal component of private transportation demand is retail vehicle dealer sales through, for example, car dealerships. In every province, retail vehicle dealer sales are larger than any single modal commercial transportation activity.

In general, the demand for commercial transportation is the second largest segment of transportation demand, everywhere but in Prince Edward Island and the Territories. There are two principal differences between the provincial assessment of the for-hire carriers based on value-added (production) and the assessment based on demand. The first difference is the relatively greater importance of the air and marine modes; the second is the relative shift in the importance of provincial for-hire carrier transportation within Eastern and Western Canada.

When measuring the importance of transportation to regional economies from transportation demand, the relative greater importance of the air and marine modes is measured in relation to their importance under one of the other indicators - in this case, Canada's international trade deficits in these two modes.

A trade deficit implies a proportion of domestic demand satisfied by foreign carriers.(note 12) In terms of marine demand, the relatively higher importance is particularly noticeable in the provincial economies of Nova Scotia, New Brunswick, Quebec and British Columbia. The increasing importance of air transportation is more widespread, but particularly noticeable in Ontario, Quebec, Manitoba and British Columbia.

In general, government expenditure is the third most important segment of transportation demand, except in the Territories and Prince Edward Island, where it ranks first and second, respectively. Government expenditures on transportation are predominantly in road construction and maintenance. The trend in all provinces but Manitoba has been toward lower levels of government spending on transportation.

"Indirect fees on transportation" refers to government revenues earmarked for general taxation funds, of which the most significant tax funds are fuel excise taxes. While the level of indirect fees has remained relatively constant, governmental transportation expenditures have declined in all provinces. The level of government expenditures, net of indirect fees, has declined in all provinces as well. In 1996, Alberta and Saskatchewan had expenditures on transportation equivalent to the revenue of the indirect fees they collected from the sector in that year.

Eastern Canada

The provinces of Eastern Canada exhibit varying levels of total transportation demand, ranging from the lowest in Newfoundland to relatively high levels in New Brunswick and Prince Edward Island. The variations are directly related to private transportation sales and government transportation expenditures, which are low in Newfoundland and higher in Prince Edward Island and New Brunswick. In all Eastern provinces, the growth rate for total transportation demand exceeds the growth rate of PFDD.

The largest segment of total transportation demand is private transportation sales, of which the largest component is tied to retail vehicle dealers. The growth rates of private transportation sales exceed those for total transportation demand in Prince Edward Island and New Brunswick, are equal to those in Nova Scotia, and represent less than the growth rate of total transportation demand in Newfoundland.

In all Eastern provinces, commercial transportation services represent the second largest segment of total transportation demand. The growth rate of commercial transportation demand exceeds that of total transportation demand in all provinces.

Trucking represents the largest component of commercial transportation demand in all Eastern provinces except Newfoundland, where it is the second largest. Air transportation is the largest component in Newfoundland and the second largest in Prince Edward Island. In Nova Scotia and New Brunswick, marine transportation represents the second largest component. In all provinces, marine is the fastest growing component, followed by trucking. Declines are observed in rail in all provinces but New Brunswick.

In all Eastern provinces, government expenditures form the smallest segment of total transportation demand. Government expenditures are the second largest segment in Prince Edward Island, which exhibits the highest proportion of government expenditures on transportation of any province, due to the construction (during the period covered by this report) of the Confederation Bridge linking the province to the mainland.

In all Eastern provinces, road construction and maintenance forms the major component of government expenditures, although both total government expenditures and expenditures on road construction and maintenance are declining in all provinces.

In every Eastern province, indirect fees on transportation are composed primarily of fuel excise taxes. Indirect fees on transportation are also declining in all provinces, but Prince Edward Island. In the larger provinces indirect fees have declined at a faster rate than government expenditures, generating increasing levels of government expenditures on transportation, net of indirect fees.

Table 3-13 shows the importance of total transportation demand in each of the provinces in the Eastern region.

Central Canada

Quebec and Ontario have moderate levels of total transportation demand, primarily due to relatively low levels of commercial transportation demand. In both provinces, the growth rates of total transportation demand exceed that of PFDD.

The largest segment of total transportation demand in each province is private-transportation sales. The largest component of private-transportation sales is tied to retail vehicle sales. The growth rates of private-transportation sales exceed those for total transportation demand in both provinces, with private transportation sales the fastest growing segment of total transportation demand and retail vehicle sales the fastest growing component of private-vehicle sales.

In both provinces, commercial transportation represents the second largest segment of total transportation demand, but at relatively lower levels when compared with most Eastern and Western Canadian provinces. The growth rates of commercial transportation activities exceeds the growth rates of PFDD in both provinces. The growth rate of the for-hire carriers slightly exceeds the growth rate of total transportation demand in Quebec, and are less than total transportation demand growth in Ontario.

In both provinces, trucking is the principal mode, followed by air. The most significant growth is observed for marine, followed by trucking, with declines in urban transit in both provinces, and in rail for Ontario.

In both provinces again, government expenditures form the smallest segment of total transportation demand, with road construction and maintenance forming the major segment of government transportation expenditures. Total government transportation expenditures are also declining, while expenditures on road construction and maintenance are increasing in Quebec and declining in Ontario.

In both Quebec and Ontario, indirect fees on transportation are composed primarily of fuel excise taxes. Indirect fees have been increasing in both provinces, generating a falling level of net government expenditures on transportation.

Table 3-14 illustrates the importance of total transportation demand in Quebec and Ontario.

Western Canada

Provinces in Western Canada exhibit different levels of total transportation demand. British Columbia shows the highest level of all provinces. Throughout this region, the growth rate for total transportation demand exceeds the growth rate of PFDD. In British Columbia, the two rates are roughly equivalent. The geographic characteristics of British Columbia and the Territories determine their relatively high shares of transportation demand.

The largest segment of total transportation demand in all Western provinces is private transportation sales. They contribute to the second largest segment in the Territories. The largest component of private-transportation sales is retail vehicle dealer sales, in all provinces and the Territories. The growth rate of private transportation sales exceeds that of total transportation demand.

In every Western province, commercial transportation represents the second largest segment of total transportation demand, but it represents the smallest segment in the Territories. The growth rate of commercial transportation demand exceeds that of total transportation demand in all provinces and the Territories, except Saskatchewan.

Trucking represents the largest segment of commercial transportation demand in Manitoba and Alberta, and the second largest in Saskatchewan and the Territories. Rail is the most important in Saskatchewan and British Columbia, and second in importance in Alberta. Air transportation is the largest segment in the Territories and the second largest in Manitoba. Marine is the second largest segment in British Columbia.

The most significant(note 13) growth in trucking occurred in Manitoba, Saskatchewan and Alberta, while growth in marine is highest in British Columbia, and growth in air transportation highest in the Territories. Air transportation also showed notable growth in Manitoba.

Notable declines were registered in urban transit in Manitoba, Saskatchewan and Alberta, in rail in Manitoba, and in air transportation in Saskatchewan.

In all Western provinces, government expenditures form the smallest segment of total transportation demand, although it is the second largest segment in the Territories. In all Western provinces, road construction and maintenance forms the largest component of government expenditures, while in the Territories, the largest component goes to subsidies and administration. In each Western province but Manitoba and the Territories, total government expenditures are declining. Expenditures on roads are decreasing in Saskatchewan and Alberta and increasing in the two other Western provinces and in the Territories.

In every Western province and in the Territories, indirect fees on transportation are increasing. This increase generates a falling level of government expenditures on transportation net of indirect fees in all provinces.

Table 3-15 shows the importance of total transportation demand in the Western provinces.

Provincial Transportation Investment

Whether the investment is made by business or government, "transportation investment" can be defined as both new infrastructure construction, and purchases of new machinery and equipment. Transportation investment does not include repair and maintenance expenditures, which are expenditures on existing infrastructure, machinery and equipment.

A distinction is introduced here between investment in infrastructure such as roads, and in equipment. Transportation infrastructure investment is broken down into four categories: road, rail, marine and air.

Transportation investments are usually major expenditures and take place over a number of years. To account for this fact, investment is analysed using a four-year average of the four most recent years with investment information available, i.e., 1992 - 1995. Investment in transportation is then compared with total investment in provincial economies, excluding residential construction.

The principal observation derived from assessing investment in transportation is that in all provinces there is a predominance of road transportation investment, in terms of both road infrastructure and equipment. The question of transportation infrastructure investment is controversial. Some economists have suggested that public infrastructure investment, such as in roads, increases growth in the economy by more than the amount of the investment, due to spin-off benefits to the other sectors of the economy. Other economists argue the contrary - that economic growth generates the need for public infrastructure investment, with limited spin-off benefits. While both sides talk of a relationship between public infrastructure investment and economic growth, the debate centres on the question of causality, nature, and the importance of the relationship.

Eastern Canada

In Eastern Canada, transportation investments represented more than a quarter of all investments for three of the four provinces. In Newfoundland, the share of transportation investment was the lowest, at 15.2 per cent. Over the period, road investment predominated in all provinces. Prince Edward Island exhibited the highest level of investment, due to the construction of the Confederation Bridge.

The second most important mode in all Eastern provinces is marine. Nova Scotia has the highest proportion of marine investment of all provinces.

Table 3-16 shows the importance of total transportation investment in the Eastern provinces on average from 1992 to 1995.

Central Canada

Transportation investment in Quebec and Ontario between1992 and 1995 has averaged roughly one fifth of total investment. However in both Quebec and Ontario, transportation investments have been predominantly road-related investment, two thirds on the equipment side and one third on roads. The second highest level of transportation investment was observed in air, primarily in air transportation equipment. For Ontario, rail investments were as important as air, with relatively equal levels of investment in rail equipment and infrastructure.

Quebec's somewhat lower share of transportation investment reflects the lower growth rates of the Quebec economy relative to Ontario, which translated into relatively lower investment in road equipment.

Table 3-17 illustrates the importance of total transportation investment in Quebec and Ontario on average from 1992 to 1995.

Western Canada

Between 1992 and 1995, Saskatchewan and Alberta had the lowest share of transportation investment. For the other Western provinces, transportation investments accounted for one fifth of total provincial investments.

Road investment predominates in all Western provinces and the Territories, primarily investment in road transportation equipment in the Western provinces and investment on road infrastructure in the Territories.

Rail has the second highest level of investment in the Western provinces, as opposed to air for the Territories. British Columbia has the highest proportional investment in rail of all provinces, equally split between equipment and infrastructure. The Territories has the highest proportion of air investment, primarily air infrastructure.

Table 3-18 charts the importance of total transportation investment in the Western provinces on average from 1992 to 1995.

NOTES

1"Value-added" is an economic concept used for measuring the importance of an industry's production within an economy. In the context of this chapter, it refers to payments such as wages and profits made to the principal factors employed in production throughout the provincial economy, with the principal factors being labour and capital. Since value-added is determined by payments to labour and capital, using this concept means that the importance of transport to provincial economies is determined by the location of the workers and capital employed by for-hire carriers. Value-added is a measure of the production or supply of transport.

2 "For-hire" carriers can be defined as industries that transport goods and/or passengers for a fee. They form part of "total transport," which also includes private spending on transport, such as consumer purchases of cars, and government expenditures on transport, such as highway maintenance and construction.

3 "Total transport demand" measures transport sales to consumers, businesses and governments within the province. In contrast to value-added, total transport demand includes private and government expenditures on transport, as well as sales of for-hire carriers.

4 Whether made by business or government, "transport investment" can be defined as both new infrastructure construction and purchases of new machinery and equipment. It does not include repair and maintenance expenditures, which are expenditures on existing infrastructure, machinery and equipment. In this chapter, a distinction is made between investment in infrastructure such as roads, and investment in equipment. Transport infrastructure investment is broken down into four categories: road, rail, marine and air.

5 The share of rail in Newfoundland may be unrepresentative. The sole railway in Newfoundland is located in Labrador, where it transports iron ore from Labrador to Quebec for processing on the north shore of the St. Lawrence River. Neither the islands of Newfoundland or Prince Edward Island have railways.

6 An additional possible reason for Manitoba acting as central staging area is the relative differences in tax rates among the Western provinces, notably between Saskatchewan and Manitoba.

7 The for-hire carrier share of the provincial economies in Alberta principally, but also Saskatchewan, will considerably underestimate the importance of transport to these provinces as the principal and most valuable primary commodities produced (oil and natural gas) are generally transported by pipeline. In this report, pipelines were not included with transport.

8 Private transport spending refers to sales to consumers, businesses and government. It includes sales and services tied to automotive vehicles, parts and accessories; and automobile and truck rental and leasing services.

9 Government expenditures are estimated net of direct fees for services. Direct fees are distinguished from indirect fees, such as fuel excise taxes, which form part of general government revenues.

10 The definition of commercial transportation differs from that used in the section on value-added, which excluded travel agencies, tour operators, charter bus operators, freight forwarders and smaller carriers in air, trucking and marine.

11 Total transportation demand is a mixture of the intermediate and final demand goods and services, and should not be confused with the standard macro-economic concept of final demand. As the term refers to a mixture of intermediate- and final-demand goods and services, it contains some double-counting, and thus overestimates somewhat the importance of transport demand as a proportion of final domestic demand.

12 It is important to distinguish between the concepts of domestic demand used for purposes of transport regulation, and that used in

macro-economic accounting. For purposes of regulation, "domestic demand" refers to transport between two points within Canada.

In macro-economic terms, it refers to purchases of transport by domestic consumers, businesses and governments.

13 Significant growth refers to growth in transport demand that forms a major segment of provincial demand. For example, there is a small port in Churchill, Manitoba, which has high growth. Marine transport, however, does not constitute a significant portion of transport demand in Manitoba.