INVESTING FOR ECONOMIC GROWTH

The U.S. and other strong economies view transportation as essential to their economic growth and competitiveness. They have focused plans and dedicated funding to improve their national transportation networks. In 2005, the U.S. Congress adopted transportation legislation that provides $286.4 billion in funding to states for highways and transit over six years. That federal funding comes mainly-90%-from gas taxes that are returned to the state where they were collected.

Canada needs a long-term national program for investment in highways and transit similar to the U.S. plan. In Canada, both the federal and provincial governments collect significant revenues in fuel taxes. According to Transport Canada's Annual Report for 2004, provinces and territories have led the way by investing $6.2 billion, the equivalent of 92% of the fuel taxes they collect. (This is an average figure; some provinces invested greater than 100% of the fuel tax collected.) In addition, municipalities spent more than $6.9 billion on transportation from their own revenue sources and from provincial transfers. By comparison, in the same period, the federal government collected more than $5.1 billion in fuel taxes but spending on roads amounted to $441 million, only 9% of its fuel tax revenues.

Since 2003-04, the federal government has made significant advances in providing funding for transportation and other purposes from its fuel tax revenues. It has offered $5 billion over five years for environmentally sustainable municipal infrastructure, which can include projects for transit and the rehabilitation of roads and bridges. The federal 2005 budget also offered transit funding of $800 million over two years. The promise to renew existing infrastructure spending programs, and the launching of new Gateway programs that include support to transportation, are encouraging. More needs to be done.

The federal government must provide an adequate, long-term stable funding stream for transportation infrastructure.