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Liberal Government Fails Toronto on Transit

The latest in provincial waffling on a viable, sustainable, full-fledged transit policy.

Finance Minister Charles Sousa, introducing the 2014 budget. Photo by Christopher Drost/Torontoist.

One year ago, Kathleen Wynne invited a broad range of local media outlets to sit down for one-on-one interviews specifically on the subject of transit in the Toronto region. It was a gesture meant to indicate how seriously she took the city’s congestion, and her willingness to tackle the politically toxic issue head-on. In our conversation with her Wynne said, “my commitment is to work to build the consensus to take action on finding dedicated revenue streams, and that’s so we can build the transit that we need … This isn’t money we can find within the treasury right now.”

The Liberals’ proposed 2014 budget shows that the current government has neither the conscience nor the confidence to make good on those intentions. Making matters worse, neither opposition party shows any indication of offering a useful alternative.

The province’s expert agency created specifically to handle regional transportation, Metrolinx, has estimated it will take $34 billion to begin to meet our transit needs—and that’s just what we need to keep pace with population growth and maintain the status quo, never mind reducing congestion in and around Toronto.

The draft 2014 budget unveiled by Finance Minister Charles Sousa raises far less than we need, and the money it does raise largely comes from redirected revenue, borrowing without a strategy for repayment, and hopes that the federal government will come to the table. There are no new major funding sources and only vague talk of working with Metrolinx to prioritize some of the many projects on its list. The Progressive Conservatives, meanwhile, have glossy plans that call for building subways subways subways but no stated strategy to pay for them. The NDP speaks woefully of overburdened Ontario families and the need to close corporate tax loopholes, but is similarly short on a detailed plan to raise the requisite money. (Confusingly, they also generally fail to identify transit as a tool for increasing equity among Torontonians, ignoring the fact that transit deficits disproportionately affect lower-income residents.)

The Liberal plan calls for raising $15 billion over 10 years, as follows:

paying for transit provincial budget

Gas Tax and HST Revenue from the Gas Tax: $7.5 billion
The largest slice of the transit funding pie comes from earmarking revenue from the gas tax and the HST that’s levied on the gas tax. Because neither the gas tax nor HST rates themselves would increase, this isn’t new money, but a reallocation of existing funds—thereby creating a hole in the budget, which needs to get filled with other revenue sources. To offset this $7.5 billion, the government proposes to increase personal income taxes on individuals earning more than $150,000, which is projected to raise $745 million annually by 2017 (the proposed transit funding plan covers the next 10 years). The remainder would be offset with stricter enforcement measures for existing revenue sources, like capturing corporate tax avoidance and improving auditing measures.

Provincial Borrowing: $3.67 billion
The province has proposed raising funds for transit through new “green bonds” as well as traditional bonds, for a total of $3.7 billion. But this is a financing tool, not a new source of funding—it would add to the government’s debt, and need to be paid back over time. While raising funds through debt is a reliable tool for investing in capital projects, no repayment strategy is spelled out in the budget plan. The government has repeatedly stressed that it needs new funding sources to pay for transit; this borrowing, while reasonable, does not move the needle on that big-picture issue.

Selling Provincial Assets: $1.61 billion
The budget document refers to this section as “asset optimization,” but what it really means is selling existing capital assets to fund the new ones we want to build. The budget doesn’t commit to specific asset sales, but it does list some examples, including: the LCBO headquarters, the Ontario Power Generation headquarters, the Lakeview generating station in Mississauga, and the Seaton Lands in Pickering. While this may be dedicated funding, it is a one-time cash-in on current assets, and does not represent sustainable, ongoing funding.

Federal Funding: $1.48 billion
This funding comes from the Building Canada Plan, a $47 billion federal infrastructure fund. The money in this fund is not guaranteed: municipalities and provinces apply for funds and the projects are approved based on a list of criteria. However, there is a specific $2.7 billion allocation for Ontario infrastructure projects within the $47 billion total, and Ontario’s finance ministry believes their $1.48 billion target is realistic. While this would be dedicated funding, it is neither sustainable nor guaranteed.

Closing Loopholes and Increasing the Tax on Aviation Fuel: $760 million
Closing loopholes is a favourite proposal of risk-averse governments, because who could object to closing loopholes except the interests who benefit from them? Among the measures in this section are ensuring that big businesses do not claim the small business deduction (saving $50 million annually by 2017); increasing the tax on aviation fuel, which is a fraction of the tax on gasoline and diesel (generating $65 million annually by 2017); and a registration fee on road-building machines (generating $25 million by 2017). This pot of money would be split between the GTHA’s $15-billion transit fund and the province’s $14 billion for roads, bridges, and infrastructure in other municipalities. While these are specific, dedicated, new funding tools, they are nowhere near the scope that the region requires to meet its needs.

The Liberal government used to speak about our need for an honest conversation about how to fund transit and get the Toronto region moving. It stressed the importance of dedicated, sustainable, new funding tools that would make transit planning reliable and raise enough money to actually implement the plans experts recommended.

If this budget represents the platform the Liberals intend to campaign on in the next election—one which may be called in a matter of days—then its transit strategy shows a lack of conviction in the expert advice they themselves commissioned. The transit funding plan contained in this budget falls short of the standards the current government set for itself, and should fall short of the standards Torontonians should set for their provincial government.


  • OgtheDim

    The myth of efficiencies being enough to finance transit has hijacked transit discussions.

    Like it or not, the Libs can not use the phrase “revenue tools” without both the Tories and the NDP screaming at them about waste and boondoggles and being out of touch with middle class values…blah…blah…blah.

    One day, our politicians will act like adults again.

    Until then, none of the 3 options are decent.

    • tyrannosaurus_rek

      Have our politicians ever acted like adults? I’m pretty sure this is as good as it gets given the flaws inherent to our electoral system; everything from FPTP to transit planning being subject to popularity contests.

    • ljkolnick

      What we need is electoral reform so that parties can act in cooperation instead of fighting with each other.

      • tyrannosaurus_rek

        As long as parties can put their own interests ahead of the electorate’s or the nations, they will. What we need is to get rid of parties and representation entirely. In the age of twitter there’s no reason to continue using a system devised in a time when delivering feedback to your MP took weeks, and there’s certainly no excuse for a system in which the representative is free to vote however they want without informed input from their representees, or a system in which the majority of a riding is represented by someone they didn’t vote for (First Past The Post).

        • OgtheDim

          I’d plug for a provincial system that kinda mirrors the US congress and Toronto City council- elections every 3 years for local MPP’s with a seperate election for a Premier every 6 years where they are first among equals.

          • tyrannosaurus_rek

            I don’t think that solves any of the existing problems, and would only reinforce the “vote against”/strategic voting phenomenon.

          • OgtheDim

            It would make all politics local. Take the premiership out of the thinking, and you’d look at the local candidate more.

            As against a centralised hegemony focused within the Premier’s office.

            And we’d be able to get something like Amtrak.

  • eternaloptimist1971

    It’s high time that any party in power should show some balls and create a dedicated transit tax of 1% minimum to be added to the HST. We have to stop playing political games and do what’s needed to be done.

  • aplofar

    The endless plans, re-plans, consultations, and big announcements about transit in Toronto of the last decade are, I think, a fairly good indicator of why the GTA should not want or pursue federal (certainly) or provincial (generally) involvement in local transit funding and planning.

    I’ve often heard people deploring the fact that, apparently, Canada is the only wealthy industrialized country without a federal transit plan or dedicated source of transit funding. But to me, it seems like this is a good thing, on balance – federal interference has done enough damage in Toronto with regards to rapid transit in Scarborough, the “contribution” to extending the subway to Vaughan, shenanigans involving the Port Authority, etc. I don’t see why further federal involvement should be welcomed or pursued.

    As for provincial involvement, it seems to generate an environment where municipalities have to go petitioning to the province for capital funding, which is then disbursed based on who “deserves” it, or on what ridings are up for grabs – rather than whether the investment being funded will benefit the largest number of transit riders, or have the most positive impact on the performance of the transit network. There’s not much incentive for mayors and councils to focus on efficient investments when all the capital funding comes from provincial coffers – in fact, the opposite: the electoral rewards go to those who can bring home the most bacon.

    And efficiency isn’t rewarded either – I’ve got no grudge against Kitchener-Waterloo, or Hamilton, but their bus ridership numbers don’t really suggest that building light rail is necessary; unlike, say, on Steeles East or Finch West, where the buses are frequent, yet full-to-bursting. If K-W and Hamilton were coming up with their own funding, it would be of no concern to Toronto, but unfortunately, Provincial funding of these projects mean that they’re competing for a fixed pool of money (which is given begrudgingly if ever, and makes actual long-term planning nearly impossible.) No city is going to spend Provincial money as responsibly as they spend money that they’ve had to raise themselves.