Thank you very much, Mr. Chair, for inviting us to make a presentation.
My name is Michael Roschlau. I am the president and CEO of the Canadian Urban Transit Association. I'd like to talk today about the state of federal transit investment in Canada.
Over the past several years, Canada has seen a lot of improved federal investment in transit. In fact, there's been a doubling of annual capital investment since 2001, which represents the growing recognition that sustainable transit systems are now demanded by the public at record levels. In that context, I'd like to make four key points.
First, let me point out that Canadians want improved transit infrastructure. Polls demonstrate that over 90% of urban Canadians think that public transit makes their community a better place to live, and 73% feel that it benefits them personally. Canadians are choosing transit at unprecedented levels as more and more people understand the importance of their travel choices in reducing emissions and easing traffic congestion. Public transit ridership for 2008 showed an increase of 3.5% nationally, for another all-time record, with 18.2 billion trips—astonishing growth that represents a 16% increase over the five-year period since 2003.
Second, Canada lags behind the rest of the world in this area. We still lack a long-term predictable approach to transit investment, leaving us alone among members of the OECD. Modernizing Canada's approach to transit funding is a significant opportunity for the federal government and the Canadian public.
What are other countries doing? Most Canadians would be amazed to find out that the Canadian government's investment in public transit lags well behind the federal leadership and funding for transit in the U.S. The U.S. federal government funds about 80% of capital projects and ensures consistency with federal program goals. Such an approach is sorely needed here in Canada.
Third, the infrastructure needed to meet demand is enormous. CUTA’s most recent report on Canadian transit infrastructure needs has estimated the total requirements, over a five-year period from 2008 to 2012, at $40 billion. Additionally, a study commissioned by CUTA last year showed that an economically optimal level of transit supply would involve a 74% increase in annual transit service compared with 2006 levels, which in turn would generate more transit demand among existing users. It showed that over a 30-year period, reaching this optimal level would generate a long-term internal rate of return of 12.5%. Most of these benefits would accrue from reductions in congestion, vehicle operating costs, collisions, and emissions.
Finally, we must view transit as an economic stimulus. As well as modernizing Canada's infrastructure, these investments have a powerful effect on the economy. Over the past two years, governments from all G8 nations have placed an unprecedented level of attention on proactive economic stimulus. Transit investment's effect on employment is very significant. Every billion dollars invested in transit infrastructure can generate at least 11,000 full-time equivalent jobs for one year.
While stimulus has been significant, there has never been a more pressing need for intelligent infrastructure spending. Increasingly, policy-makers have come to realize that accelerated spending on “pothole filling” is no match for investments in sustainable infrastructure. In this context, at CUTA we're making the following three pre-budget recommendations.
First, the federal government should create a new permanent program of direct transit-specific investment to meet current and future needs related to infrastructure expansion and renewal.
Second, infrastructure investment mechanisms that can support major rapid transit projects, such as the Building Canada Fund, are vital to transit's future success and should become a permanent fixture of the federal-provincial-territorial financial landscape. Transit projects should continue to be an eligible category, and local governments should have maximum flexibility to select priority projects.
Third, the federal government should give tax-exempt status to employer-provided transit benefits. This would complement the current federal tax credit for transit pass purchases and encourage employers to financially support transit commuters, levelling the playing field, so to speak, with employer-provided parking benefits, which are generally currently not taxed.
Those are our three recommendations. Thank you very much for your attention.
Thank you very much.