The Canada Transportation Act Review and the Next Decade of Transportation Policy

Allison Padova
Social Affairs, Health and Infrastructure Section

An efficient transportation system is an important enabler of economic growth, higher standards of living and environmental benefits. It provides jobs, moves goods and connects people.

In Canada, the transportation sector moves more than $1 trillion worth of goods each year. Transportation and logistics industries collectively contribute more than 4% of Canada’s total gross domestic product; in 2013, they employed more than 860,000 people.

On 25 June 2014, then minister of transport, Lisa Raitt, launched a statutory review of the Canada Transportation Act and other federal legislation that pertains to the economic regulation of transportation.

The final report from the review was completed at the end of 2015 and will be made public in April 2016. The report is expected to guide federal policy for enhancing the performance of federal transportation services for many years to come.

Review aims to foster a more competitive system

Former cabinet minister David L. Emerson was appointed to head a panel of six Canadians who conducted the review.

Their report is expected to contain recommendations on how to foster a more competitive transportation system, that is, one able to maintain adequate service during, or recover quickly from, traffic surges and other disruptions.

To this end, it is expected to prescribe ways to:

  • encourage operators to invest more in advanced communications technologies that can help them manage disruptions better and make their services more reliable;
  • ensure a sufficient supply of skilled labour to design, build and operate the Canadian transportation system into the future;
  • enhance the competitiveness of federal airports and ports, which serve global as well as Canadian trade; and
  • balance public and private means of developing more capacity in the transportation system, particularly in remote areas of Canada.

Efficient transportation is vital to economic growth and quality of life

Rapid and reliable transportation services can result in lower costs for businesses and consumers, as well as lower vehicle emissions.

For Canadian exporters, initiatives that result in lower costs and/or faster and more reliable transportation systems can help increase their share of global markets. Importers as well as consumers also benefit from lower-priced and faster transportation.

In addition, improvements in the price and quality of freight transportation services can entice more manufacturing businesses that participate in international supply chains to establish in Canada.

Passenger transportation enhancements can allow Canadians to travel more and enjoy a higher standard of living. More extensive, higher frequency, lower cost and faster air and rail services facilitate business travel and other person-to-person meetings.

Business travel supports and attracts human capital intensive industries, such as high value-added manufacturing and services, and knowledge and creative industries, which provide well-paying jobs.

Efficient intercity and urban rail transportation can boost regional economic growth by expanding the supply of labour to urban centres. If train travel generates free time for commuters, higher levels of labour productivity and/or quality of life can also be realized, not to mention the widespread economic and environmental benefits of reduced road congestion.

Transportation services need to be even more reliable and economical

Shippers and travellers prefer transportation services that offer the shortest transit times and that have a reputation for respecting their schedule commitments. Rapid and reliable transportation services allow people to be more productive with their time and businesses to reduce their inventory costs.

With respect to freight, the Canadian transportation system’s share of the continent’s global traffic is small, despite its geographic advantage over the rest of North America for handling merchandise trade with parts of Asia.

In recent years, transportation capacity shortages have likely had a negative impact on the reputation of the Canadian transportation system and, by association, Canadian exporters. These shortages were related to sharp growth in volumes of certain commodities, such as oil and wheat, and disruptions in the system, such as labour unrest and weather events.

Canadian air and rail passenger transportation service providers have lost customers to competitors. Air travel in Canada is more expensive than elsewhere in North America; an estimated five million Canadians cross the border annually to access U.S. airports. The user-pay structure of the Canadian aviation industry – compared to the U.S. system, which receives some government funding – contributes to the price differential.

The demand for passenger rail services in Canada has declined over several decades as travellers have shifted to faster or less expensive modes of transportation.

In 2015, the World Economic Forum ranked the price competitiveness of the overall Canadian travel and tourism industry at 124th out of 141 countries. In terms of ticket taxes and airport charges, Canada was in 130th position.

Infrastructure investments will be necessary

To facilitate trade-led growth, stakeholders have noted that more transportation infrastructure is needed at Canada’s multi-modal coastal transportation hubs, major U.S. border crossings, and in northern and remote regions. Furthermore, the development of stranded mineral resources in Canada’s North will require better connections to the national transportation system.

In Canada, private railways and major public ports and airports pay for their own infrastructure. Highways, border crossings and large infrastructure projects that offer an uncertain or low rate of return on investment may require partial or full public funding.

Public-private partnerships (P3s), in which the private sector designs, finances, builds and maintains public infrastructure, are one way for the public sector to spread the costs of some very large projects over decades. The P3 procurement model is very complex, however, and is not suitable for every project.

Related resources

Jed Chong and Allison Padova, Public Infrastructure in Canada, Library of Parliament HillNote, Parliamentary Information and Research Service, 25 January 2016.

House of Commons Standing Committee on Transport, Infrastructure and Communities, Updating Infrastructure in Canada: An examination of needs and investment, 41st Parliament, 2nd Session, June 2015.

Garland Chow and Vijay Gill, Transportation and Logistics International Competitiveness: How does Canada Fare?, Canadian Transportation Research Forum, 46th Annual Conference Proceedings, May 29 – June 1, Gatineau, Quebec, 2011.

Canada Transportation Act Review Panel, Vision and Balance: Report of the Canada Transportation Act Review Panel, Ottawa, June 2001.