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Five Transit Take-Aways from this Year’s Federal Budget

Federal budgets are big, complex and (let’s not kid ourselves about this) boring documents. If you took a inspired, game-changing federal budget and put it beside a standard, steady-as-she-goes budget—you would be hard pressed to tell which one was which without at least a couple hours of analysis.

For urban transit, there are a litany of sections and sub-sections within the budget that may be relevant; from infrastructure investment and transportation regulations to environmental targets and innovation strategies. For these reasons, budget analysis isn’t the type of thing an average transit rider does for kicks in their spare time—but that doesn’t mean they aren’t invested in the initiatives contained in the fiscal document. On the contrary, what is laid out in the budget has a huge effect on the daily lives of Canadians and understanding these implications is very important.

So, was the March 22 federal budget game-changing or simply brain-straining for the transit industry? To answer this question, we have compiled the Five Transit Take-Aways from this Year’s Federal Budget. 

 

1. Long-Term Funding

For decades the transit industry has been looking for long-term and predictable funding for transit systems across Canada. In many ways, they now have exactly that. In it’s 2017 budget, the government committed $20.1 billion over 11 years for public transit systems across Canada as part of Phase II of its Public Transit Infrastructure Fund.

There are still many more details to be determined, but it’s expected Phase II will flow money to transit systems in a similar manner as Phase I. Unlike Phase I, however, only 15% of a system’s total allocation will be eligible for spending on repair and rehabilitation, the rest for new transit or expansion projects. Federal cost share through this fund will, for the most part, be between 40-50%, as well.

The next step for the Public Transit Infrastructure Fund will be for the federal government to sign bi-lateral agreements with each of the provinces and territories. Funding from this new program will begin in 2018/2019.

2. Removal of Tax Benefit

The budget announced some reforms to Canada’s fiscal framework including the elimination of the Public Transit Tax Credit. This credit lowered the cost of transit for many transit riders by allowing them to claim their monthly transit pass on their taxes. CUTA addressed a letter to Finance Minister Bill Morneau with regards to keeping the credit before the budget. In the absence of a credit, new measures may need to be found to keep transit affordable for Canadians.

The reason given for the elimination, which will begin after June 30, was that it had been ineffective in encouraging the use of public transit and reducing greenhouse gas emissions—the stated goal of the credit when created in 2006.

3. Canada Infrastructure Bank

The government will be creating a new Canada Infrastructure Bank to help spur private investment in Canadian infrastructure, including in transit. In fact, of the bank’s $35 billion of start-up cash, $5 billion will be ear marked for transit projects. Unlike the Public Transit Infrastructure Fund, which transfers money across Canada based on a formula, these transit investments will likely only be available for projects through a merit-based process. Given the bank’s mandate of encouraging private investment in infrastructure projects, many expect the bank to focus on larger and revenue generating projects. The exact process for transit projects to apply for funding, or how business cases will be assessed, is still unknown as the bank will not be formally established until later in 2017.

4. Innovation

One of the focuses of the 2017 federal budget was to make Canadian communities and industries more conducive to innovation. For example, the newly announced Smart Cities Challenge, worth $300 million over 11 years, will be a nation-wide competition to encourage governments, the private sector and others to collaborate to solve urban problems. A major focus of the fund is expected to be urban mobility.

A separate innovation initiative is the new “superclusters” strategy, which will try to build innovation hubs through knowledge partnerships, specialization and government support ($950 million over the next five years) in areas that have the potential to support economic growth. $75 million of this funding is in the Public Transit Provision of the Government’s Long-Term Infrastructure Plan. Transit relevant clusters could include: advanced manufacturing, clean technology, digital technology, clean resources, infrastructure, and transportation.

5. The Environment

Perhaps looking to meet its commitments through the Paris Agreement, the government’s 2017 budget put forward a variety of environment and GHG emission reforms and programs even beyond pricing carbon pollution. More details were released on the $21.9 billion Green Infrastructure Fund, a portion of this fund will be going to climate resilient infrastructure, which is a key transit industry focus.

Moving forward, the government is also developing GHG regulations, implementing heavy-duty vehicle regulations, as well as a clean fuel standard. Additionally, the government will be working with provinces and territories to set stronger air quality standards, monitor emissions, and provide incentives for investments that lead to cleaner air and healthier communities. All these initiatives could have a direct or indirect impact on the transit community. 

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