Evidence of meeting #4 for Transport, Infrastructure and Communities in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was municipalities.
A recording is available from Parliament.
Conservative
Jeff Watson Conservative Essex, ON
How long of a timeframe, with respect to a federal program, are you looking for? Would it be like a renewal of the Building Canada plan, like another seven years? Or are you asking for longer?
And in terms of federal funding, are we looking at the continuation of the way it's typically funded now, or is there a place for interest-free loans? Should it be on a grant basis? What do you consider on that?
Director of Public Affairs, Canadian Urban Transit Association
An overall policy framework would be there, ideally, for a very long time. Now, if you go into a funding program in particular, then we can look at something like five to seven or up to ten years. For instance, when we do our infrastructure needs assessment, we look at the next five years. That's really what we're looking for.
Conservative
NDP
Isabelle Morin NDP Notre-Dame-de-Grâce—Lachine, QC
You talked about some elements we would need to complete what we currently have—we could not call it a strategy—in order to spend the billion dollars available.
What would we need to be able to say we have a public transit development strategy?
Director of Public Affairs, Canadian Urban Transit Association
In the case of many infrastructure funding programs, all the funds have expired. We therefore currently have no long-term program, except the Gas Tax Fund, which is not dedicated funding, though a large part of it goes to public transit. We therefore need long-term, predictable and sustainable dedicated funding.
We are also discussing measures to support research, development and innovation in the area of public transit. We are going to examine policy integration measures in different departments. For example, a team assigned to urban transportation policy was at Transport Canada and is now at Infrastructure Canada. We want to see how they integrate the other departments' teams. Applied urban planning is being discussed, notably in Italy, in France and in Germany, but not here. There is the example of what was suggested in 2007.
In any case, I will send the document to the chair and to the clerk.
Director of Technical Services, Canadian Urban Transit Association
In the end, a responsibility is recognized and shared by the partners. The federal government cannot be dictating to municipalities the way they plan their cities. However, the federal government can ask that cities submit plans to support the investments they ask for infrastructure and public transit.
NDP
Isabelle Morin NDP Notre-Dame-de-Grâce—Lachine, QC
I'd like to go back to a part of the question my colleague asked earlier.
Could you tell me about a country, for example a G8 country, whose public transit strategy is working well and tell me what elements of that strategy we should add to ours?
Director of Public Affairs, Canadian Urban Transit Association
We look a lot at what is done in the United States, but they have a totally different system of government than we do. We have to be careful when we make comparisons. However, they have a marked advantage because of the Federal Transit Administration, which has a clear role and which also exerts a lot of pressure regarding policies to be passed. Think of the Buy American Act. The president of the FTA appeared before the committee of the United States Senate and said that the Obama administration planned to increase from 60% to 100% the American content in public transit systems. It shows that, even within the administration, they have a very strong tool to advance their position.
My colleague was telling me that in North America 60% of buses are made in Canada. It is therefore a key sector of our economy. For this reason a great deal of pressure could be brought to bear by the United States.
Regarding the bigger infrastructure projects, such as bus or train rapid transit—some people were talking about high-speed rail, for example—there is a lot of interest, because it will be long-term funding, over a number of years. That changes things.
NDP
NDP
Laurin Liu NDP Rivière-des-Mille-Îles, QC
Thanks, Mr. Chair.
Would a strategy help municipalities make infrastructure choices based on life-cycle costs?
Director of Technical Services, Canadian Urban Transit Association
Ideally, yes, because you'd have predictable funding so you can plan your maintenance, plan your rolling stock renewal, plan the maintenance of your heavy infrastructure, and you're not continuously deferring it, and you're ensuring a smooth, efficient operation of the system.
Conservative
The Chair Conservative Merv Tweed
I'm sorry, but that's your minute.
I would like to note about those buses you referred to that I think more than half of them are made in Manitoba.
Mr. Poilievre, final comments.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
It seems that you're an advocate of a “Buy Canada” strategy for procurement. Was that what you were trying to get at by making the comparison to the United States?
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
Okay, good. That's all I need to know on that.
Mr. Sullivan mentioned earlier on the fact that the private sector alone cannot operate at a profit public transit in Canada because the population densities do no permit such a return on investment. Mr. Leung pointed out that he's only aware of Hong Kong as an example of a profitable privately administered, privately run, mass transit system. So our expectations have to be realistic in terms of the ability to recover costs through the fare box.
I know this is a complicated question, and it's difficult to boil it down, but in many disciplines we boil thousands of complicated factors down into one formula, equation, or ratio—everything from E = mc2 in physics, to real estate investors using the capitalization rate to determine if an investment is a good one, to stockbrokers and equity buyers looking at price-to-earnings ratio or price-to-book ratio, depending on their investment philosophy. The most sensible ratio to determine the economics of a project seems to me to be the fare box recovery rate. In Canada, what do you think is a minimum threshold for a fare box recovery rate of a project before it should go ahead?
Director of Technical Services, Canadian Urban Transit Association
If you're looking at a project, we usually refer to the return on investment. From a purely operational point of view, when you're counting fares compared to what it costs to actually operate the system, it's what we call the RC ratio, the revenue to the cost. Right now, in Canada, on average, we're hovering at around 60%, as I mentioned. It's one of the highest ones, if not the highest, in the G-8. The transit systems here in Canada heavily rely on fares for their operations.
What is an acceptable level? Usually those are set by the local municipalities that operate or have jurisdiction over that.
Conservative
Pierre Poilievre Conservative Nepean—Carleton, ON
I understand that, but when we're looking at an investment and we want to determine.... The reason the farebox recovery rate is a great indicator of the value of a project is that if a project is useful, people will be prepared to pay for it with fares. If you were to build a mass transit system in the Northwest Territories, I suspect your farebox recovery rate would be next to zero, because there isn't population density. If you build it in downtown Toronto, it's closer to 80%.
As one of the calculations we consider in making an investment, should there not be a threshold that we say if we can't recover 30% or 40% or 50% of operating costs, it's not a good investment? Have you done any work as an organization into what that number might be?
Director of Technical Services, Canadian Urban Transit Association
No, we have not done any work on what that minimum threshold would be.
Conservative
The Chair Conservative Merv Tweed
We have just a couple of minutes left, so I'll thank our guests for being here today. We appreciate it.
For the information of committee members, the website also gives you access to the report up to 2040, so if you're not inclined to take the paper copy, you can do it on the Internet.
Thank you very much.
Committee, just a heads-up that on Wednesday we have one confirmed witness and we're working on the second. Please watch your notes as they are distributed as to what's going on.
The meeting is adjourned.