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TRAN Committee Report

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Mr. Merv Tweed
Standing Committee on Transport,
Infrastructure and Communities
House of Commons
Ottawa, Ontario  K1A 0A6

Subject: Government Response to the Standing Committee on Transport, Infrastructure and Communities: Study on Transit in Canada

Dear Mr. Tweed:

On behalf of the Government of Canada, I am pleased to respond to the Standing Committee on Transport, Infrastructure and Communities’ Report on Transit in Canada. I would like to thank the Committee for its work on this study and express my appreciation to all of those who appeared before the Committee to share their views.

Public transit is a major contributor to the social and economic vitality as well as the environmental sustainability of Canadian communities. Many Canadians rely on transit as their primary means of transportation to work, to school, to health care and to social activities. Yet many of our cities are also facing growing congestion issues in their road networks. The economic competitiveness of our cities and the country as a whole is negatively affected by the lost productivity and increased cost to move goods caused by traffic congestion and gridlock. Public transit provides a potential solution. Effective public transit networks can ease congestion and reduce greenhouse gas emissions while moving commuters and residents efficiently in and out of downtown core areas, which can help Canadian cities attract investment and provide improved quality of life to residents.

The Government of Canada recognizes that provinces, territories and municipalities are in the best position to develop strategies that meet their specific public transit needs. However, we also understand the importance of public transit in making all of our communities more prosperous, safer and less polluting. That is the reason why the federal government is contributing, through a wide range of programs, to public transit.

Since 2006, the Government of Canada has directly committed nearly $5 billion toward public transit capital infrastructure. This includes federal investments of over $2.3 billion towards transit infrastructure under the $8.8-billion Building Canada Fund. Under the $4-billion Infrastructure Stimulus Fund, over $240 million was committed towards public transit projects. The Government of Canada also dedicated various funding envelopes specifically to public transit, such as the $400-million Public Transit Fund and a total of $1.4 billion under two Public Transit Capital Trusts. These investments have leveraged over $8 billion from other funding partners in transit systems across the country.

Furthermore, significant investments in public transit are being made through the federal Gas Tax Fund, which includes public transit as an eligible investment category. Since 2006, municipalities have used approximately $1.5 billion of their federal Gas Tax Fund allocations towards transit investments, which is over and above the $5 billion direct contribution cited above. Indeed, five of Canada’s largest cities—Toronto, Vancouver, Ottawa, Calgary and Edmonton—have directed either all, or materially all, of their federal Gas Tax Fund to the public transit investment category. On December 15, 2011, legislation received Royal Assent  to make the Gas Tax Fund permanent, at $2 billion per year, so that municipalities can count on this stable and flexible funding for their infrastructure needs now and in the future.

By developing a range of broad-based omnibus infrastructure funding programs, the Government of Canada has provided provinces, territories and municipalities with the flexibility to identify their own priorities from a broad range of asset categories and eligible sub-categories of investment. While some programs, such as the Major Infrastructure Component of the Building Canada Fund, generally support larger projects, other funds such as the Gas Tax Fund provide funding to both larger and smaller communities, providing them with a more flexible source of funding to address their own infrastructure priorities as they see fit.

It should be noted that these federal investments in public transit infrastructure have exclusively supported capital requirements for expansion, rehabilitation and replacement projects rather than providing funding for day-to-day operations and maintenance. This focus ensures that transit projects that receive federal support are necessary and are within the capacity of the owner to operate and maintain over the life of the asset.

The federal government also supports the consideration and use of public-private partnerships (P3s) by provinces, territories and municipalities in shared-cost capital infrastructure projects and acknowledges that the private sector can offer additional expertise in the provision of public transit from which many jurisdictions have already benefitted.

To build on the collaborative infrastructure investments made to date, the Government, in Budget 2011, committed to work with provinces, territories, the Federation of Canadian Municipalities (FCM) and other stakeholders to develop a long-term plan for public infrastructure that extends beyond the expiry of the Building Canada plan in 2014. To fulfill this commitment, on November 30, 2011, the Government of Canada launched a federally led three-phased engagement process, through which we will work with our partners to take stock of accomplishments to date, identify gaps and strategic priorities, and confirm the principles of the next infrastructure agenda. Key stakeholders, including the FCM and the Canadian Urban Transit Association (CUTA), have expressed their support of the engagement strategy and have indicated they are looking forward to discussing public transit infrastructure in this context.

I would like to thank the Committee members again for the important work they have done during the course of this study. The Committee’s recommendations and the evidence presented in the study will better inform the development of the long-term plan for infrastructure. Recognizing the importance of modern transit infrastructure for the long-term growth of large urban centres as well as smaller communities, the Government of Canada has made investments in public transit a national priority under the Building Canada Fund. The unprecedented federal investments in transit since 2006 have been made in partnership with provincial and municipal governments across Canada and we will continue to work closely with our partners to develop strategies for investing in public transit in the years to come.

Yours sincerely,

Denis Lebel, P.C., M.P.