Transit in Canada at a Crossroads

Public transit in Canada has traditionally had a strong reputation internationally. This had been due partly to robust ridership, efficient operations and high service levels, but also to major milestones that have made a mark for Canadian transit innovations over the years. Examples of these, in the North American context, are: the first post-war subway (Toronto, 1954); the first rubber-tired subway (Montréal, 1966); the first modern light rail line (Edmonton, 1978); the first fully segregated bus rapid transit network (Ottawa, 1983); the first fully automated rapid transit line (Vancouver, 1986); and the first diesel-powered light rail transit line (Ottawa, 2001).

In the early 21st century, however, public transit in Canada finds itself at a crossroads of significant proportions.

Canadian transit maintains high performance levels

In the second half of the 20th century, Canadian cities retained vibrant central areas, with a less pronounced exodus of residential development to the suburbs than in the U.S. Strongly integrated planning allowed for seamless coordination between rail and bus systems in the larger cities, resulting in user-friendly service that attracts and retains high levels of ridership. While average household car ownership rates remained below those of the U.S., the economic recession of the early 1990s resulted in some staggering ridership losses from which many systems have yet to recover. These were, in many provinces, accompanied by substantial cutbacks in provincial funding that left municipal systems with little choice but to gradually trim service levels and raise fares.

In spite of, or perhaps in some cases because of, this experience, Canadian transit systems are in most cases able to significantly outperform their American counterparts. For example, average per capita transit ridership in Canada stands at about 80 trips per person annually, compared to a U.S. figure of about half that amount. Furthermore, the proportion of Canadian transit operating costs covered directly by customer fares stands at an average of 63%, compared to the U.S. equivalent of 36%. Some systems, such as the Toronto Transit Commission and GO Transit, are covering over 80% of their operating costs from fares. That's partly because fares are high, and partly because ridership is dense, making for very efficient systems. 

These figures are a backdrop, however, to a unique and highly constrained financial framework. Much to the frustration of Canada's public transit industry, there is no equivalent to the U.S.'s TEA-21. In fact, Canada's federal government has no serious involvement in transit funding at all. Even provincial involvement is limited, to the point that municipalities shoulder 70% of capital and 95% of transit net operating costs, most of which comes directly from property taxes. Canadian municipalities, and their transit systems, do not have the opportunity to impose local or regional sales taxes, gas taxes or other levies, as their U.S. counterparts do.

In fact, earmarked taxes of any kind are not in the Canadian tradition, and have only recently been reluctantly embraced by a few provinces. 

Exports dominate the Canadian transit supply industry

Given these fiscal realities, it is all the more remarkable that Canada supports a strong and highly competitive private sector transit supply industry. This includes such household names as Bombardier and Ballard, as well as New Flyer, Novabus and Orion. But it also includes some lesser-known names that dominate the software development sector, transit consulting and transit-specific training services. Even in the global marketplace, Canada is a major player, with a well-respected track record across Europe, Asia and Australia.

The Canadian presence was in evidence last fall at the triennial International Public Transportation Expo, held in Las Vegas and organized by the American Public Transportation Association (APTA). Canada's own Trans-Expo, an annual bus and transit trade show organized by the Canadian Urban Transit Association (CUTA) last November in Calgary, also showcased many Canadian transit products and services.

Canada's bus and railcar manufacturing industry has long been a strong suit for this country. Over the years, many affiliated suppliers have grown, and naturally turned to the U.S. market for an increasing share of their sales. This includes component suppliers, software developers, engineering, planning and design consultants, as well as CUTA's own education and training services. These various subsectors have operated in a synergistic fashion, helping each other build a broad U.S. market, partly out of opportunity and partly out of necessity.

"Without major exports, Canada could barely support one major urban bus manufacturer, let alone three," said CUTA Chair Eric Gillespie, general manager of the St. Catharines Transit Commission and launch customer for New Flyer Industries' new Invero urban transit bus. But three major urban bus builders do exist in Canada, with plants in Québec, Ontario and Manitoba. Together, they directly employ over 2,000 people, with over 80% of production going directly to the U.S.

These three companies are among the top suppliers of city buses in the U.S. and together account for well over half of all buses produced by the six major North American builders

The other major development in terms of bus design application has been the introduction of the double-deck bus, albeit fully imported from overseas, to Canadian urban transit service, in both Victoria and Kelowna, British Columbia. The double-deck concept provides a cost-effective alternative to articulated vehicles in environments where seating capacity is more important than rapid boarding and alighting.

Since setting up its training and professional development function in 1984, CUTA has made a name for itself as the preferred supplier of training services to the North American public transit industry. With programs in areas such as transit management, leadership for transit supervisors, transit planning and scheduling, labor relations and maintenance management, the breadth and quality of these programs has made them a preferred choice. CUTA's flagship training initiative has been a customer service process called Transit Ambassador, whose objective is to impart a strong customer orientation throughout an agency, through an organizational development intervention and training of front-line staff. Transit Ambassador has been adopted by over 120 transit agencies in Canada, Europe, Australia, the Middle East, the Caribbean and in the U.S., including such large urban systems as Los Angeles, Detroit, Chicago, St. Louis, Miami, Houston, Minneapolis and Buffalo.

CUTA also has been at the cutting edge with the introduction of transittraining.com, an online learning service that combines the best of traditional classroom programs with the benefits of the Internet.

"E-learning opens up a whole new world of possibilities to transit professionals and allows them to benefit from the quality of our programs at a very low cost, regardless of where they may be located," said CUTA's Manager of Education & Training Scott Ruddick. It also has allowed the association to develop hybrid programs that combine classroom and distance education to get the best of both approaches.

Major funding challenges lie ahead

But the biggest challenge facing the Canadian public transit industry is securing long-term sustainable funding sources. Investment in Canadian public transit by all levels of government has declined markedly over the five-year period from 1996 to 2001. Many municipalities have been left with little choice but to increase fares and limit service expansion, or in some cases even to reduce service, thus making transit less attractive and less competitive.

In spite of these realities, ridership has risen some 10% over the same timeframe, heavily straining existing infrastructure and capacity.

While the provincial governments of British Columbia, Alberta and Quebec have introduced new financing initiatives, including dedicated portions of the provincial fuel tax, and Ontario announced a return to limited provincial support in 2001, there is currently no significant federal involvement. In fact, Canada is the only G-7 country without an urban transit investment program at the national level.

In recognition of this anomaly, and in order to work toward putting public transit firmly on the federal policy agenda, CUTA began devoting significant efforts in this direction in late 1999. Prior to this, public transit was not an issue on the federal government's radar screen. It was a topic rarely discussed in the House of Commons and on the minds of very few government committees or departments. Public transit was not a federal responsibility, and therefore not a priority. Any federal involvement was largely limited to indirect regulatory matters through provincial agencies that are mandated with intra-provincial, municipal and regional transportation issues.

CUTA's first involvement was through a coalition set up to promote a tax exemption for employer-provided transit benefits. Designed to level the playing field between parking and transit benefits, this group performed a true advocacy role at the federal level and launched the first grassroots campaign across Canada. The Transportation Climate Change Table, established to assist the federal government in developing a strategy to meet its Kyoto Protocol commitments on greenhouse gas emissions, presented the next opportunity. Through input from CUTA, transit was highlighted as a critical component of any serious attempt to reduce emissions from the transportation sector in urban areas.

The last three years has seen a gradual but significant increase in the profile of transit in Ottawa.  Through meetings and advocacy activities with ministers, members of Parliament as well as staff in the departments of Transport, Environment, Natural Resources, Finance, Health and Industry, CUTA has succeeded in linking transit issues to the federal policy agenda. Transit is being advanced as a solution to issues surrounding the urban economy, climate change, air quality, access and mobility, industrial competitiveness, human health and overall quality of life. Enhanced media relations activities, both on a national and local level, have developed public support and provided increased visibility for transit that actively supports government relations activities.

In January 2002, CUTA launched the first-ever Canadian public awareness program to enhance the visibility and image of transit. In conjunction with APTA's (PT)2 program, the Canadian initiative is called "VIP" (Visibility, Image and Positioning) and uses print advertisements in national media and prime television airtime to run TV ads that promote the benefits of public transit.

The campaign has adopted the slogan "Wherever Life Takes You," which has already developed into a well-recognized brand for the public transit industry.

Public support is strong and political support is growing

As part of a preliminary evaluation of the impact of the VIP campaign, a public opinion survey of Canadians found people support public transit because it offers mobility, access, choice and freedom. Transit provides people with choices and access to everyday needs, including employment, education, health care and recreation. Public transit provides Canadians with the mobility and freedom to participate in their communities--and roughly half of Canadians support public transit in general, compared to one-third in the U.S.

According to the same poll, 92% of Canadians agree that public transit makes a community a better place to live, and 73% see a personal benefit even though they may not use public transit themselves.  Furthermore, some 60% agree that their personal taxes should be invested in transit, even if they don't use it.

On the subject of federal and provincial investment, 92% of Canadians feel that both upper levels of government should contribute to public transit in cities. This confirms the belief that the public does not expect municipalities alone to shoulder the large burden of transit funding. Indeed, all levels of government have a responsibility to ensure high-quality public transit in our cities. The federal government is beginning to recognize this, and three independent but related activities will strongly influence federal policy development as it affects public transit in the coming years: the Canada Transportation Act Review, the Transportation Blueprint, supported by three major studies on urban transit undertaken by Transport Canada and the Prime Minister's Task Force on Urban Issues.

The Canada Transportation Act Review calls for "unprecedented federal action and funding" for public transit. It proposes that federal fuel tax revenues be transferred to provinces and territories on condition they deposit them in newly established roads and transport funds, for which urban transit would qualify. Transport Canada's studies on a federal role in public transit suggest that, in order to reduce dependence on the private automobile and significantly improve transit's role in urban mobility, an increase of nearly 50% in transit ridership is envisioned over the next 20 years. Achieving this vision would require a 60% increase in the nation's transit bus and urban rail car fleet, a 45% increase in annual service hours and significant expenditures in new facilities.

In its final report, the Prime Minister's Task Force on Urban Issues recommended the establishment of a National Transit/Transportation Program that would provide long-term sustainable funding for public transportation systems.

Finally, the words in the recent Speech from the Throne and in the government's Climate Change Plan also call for a new federal role. If the target of a 10% reduction in car use is to be achieved, this can only be done through a new approach to public transit funding. What is clear is that the federal government can play an important leadership role by supporting public transit and by making all Canadians aware their collective standard of living, and Canada's competitiveness as a nation, ultimately depends on the efficient functioning of its cities. 

The truth will be in the actions taken as a result of the next and future federal budgets, however, and there will be much competition with other demands, such as health care, defense and security, education and poverty.

Nonetheless, urban transportation issues have made their way to the center of the federal policy agenda. What remains to be seen is the extent to which this prominence translates into real investment. So far, a variety of piecemeal programs have appeared, in addition to a one-time infusion of capital dollars for a few transit systems.  Canadian public transit is at a crossroads, and the next few years will determine whether we choose the road to a stronger role for transit and increased benefits for society, the economy and the environment, or the road to declining ridership, greater overall government spending on transportation, increased traffic congestion and deteriorating air quality.                TME