There was much anticipation before the federal budget was unlocked yesterday. Many of us were particularly interested in how much money would go towards transit investments in our region and whether the 33.3% x 3 percentage split for transportation infrastructure amongst federal, provincial, and municipal governments would be adjusted.
At first I was underwhelmed by the initial commitment of $370M for transit projects in Metro Vancouver. It doesn’t seem like much for the next 3 years. I have been assured by those in the know it’s a great start for the planning and design of projects in The Mayors’ Plan (pedestrian and bicycle improvements, subway and LRT, for instance) with more funding to come after that. That depends on re-election, of course.
The federal government also announced it will cover up to 50% of transit project construction costs. It seems to me, assuming the provincial portion remains at 33% and the max of 50% doesn’t depend on the provincial portion changing*, 100%-50-33=17% for municipalities – a long overdue improvement in the funding structure.
My federal budget scoop on Monday about The Mayors’ Plan, directing our regional requests for federal funds, continues to be good scoop. The Mayors’ Council put out a PDF statement on the federal budget yesterday. The federal Infrastructure and Communities Minister Sohi meets our Mayors’ Council tomorrow. My source tells me we will get more details after that meeting. Stay tuned.
 

Mayors Plan Metro Vancouver
The No vote rejected a sales tax payment option for now, not the whole plan. http://mayorscouncil.ca/transportation-investments/

*The BC provincial election is May 9, 2017: contact BC political parties now urging them to put sustainable transportation in their platforms.

Comments

  1. Indeed, $370M is a great start, and will certainly cover risk assessments, feasibility studies, detailed estimates, geotechnical investigations, detailed engineering, architectural design and public consultation costs — basically all the front-loaded, pre-construction activity. My understanding is that the follow up series of tranches will arrive after the next election and will be the biggest and will cover 50% of the construction costs.
    I would hope they will budget those remaining funds in advance of the election so (1) the funds and projects will be a big part of the local campaign, and (2) the projects will be ready to start the day after the election. Another strategy, although fairly devious, would be to put the projects out to tender and award the first set of contracts before the writ is dropped, and schedule several ribbon-cutting ceremonies during the campaign. That way, another party winning the government and wanting to cancel the projects would be required to illegally break the contracts and assume a resulting long battle in court with costs very likely awarded to the contractors. All the bad press won’t help either.
    The federal Libs are playing it quite intelligently by promoting both large rapid transit projects to Vancouver and Surrey at the same time. That, and their refusal to contribute to the Massey freeway project, is a signal that they believe in sustainable cities and will not pit central cities against cities aspiring to be more urban. Chantal Hebert made a comment yesterday that the mayors must be leaping for joy over this budget while the premiers are weeping into their pillows.
    The comment by the BC minister Fassbender on the idea that the province should up its 33.3% share was met with derision and the counter suggestion that any effort by the mayors to find the extra 9% beyond what they already get in tax revenue (a measly 8% once the province and feds finish feeding on the first 92%) will trigger another referendum. That was probably sour grapes over Massey. But those words may not be taken lightly by the feds who hold in their hands billions for other projects in BC, and if they are forced to up their contribution to 59% to cover what the cities don’t have because they are boxed in by the province, then they may feel they have the right to reduce funding elsewhere by an equivalent amount in future.
    The alternative is for the two cities, or possibly the entire Metro, to raise property taxes by hundreds of millions, or establish an additional transit levy on the tax bills for 35 years. All possible, but unfair when you consider the historic levels of involvement in transit by all other Western national governments where the costs are spread wider and thinner. Keep in mind that transit here recovers 50% of its permanent operating costs through the farebox, and the Broadway subway has so much unmet demand that it may exceed 200,000 riders a day in the first year and make a profit at that.
    Finance minister Moreau was completely right when he said this is a great time to borrow at not just historically low rates, but with the triple-A rating the public sector can attain, and invest partly in stuff that has a measureable permanent return, like transit. There is also much social justice to make up for from the Dark Decade of Conservative rule. Deficits and debt are not the only measure of economically responsible investment.

    1. You mean Golden Decade ? Was that a typo ?
      Trudeau used the oldest political trick in the books: vote for me .. I give you free stuff !
      Then offload the cost on the non-voter (under 18) or yet unborn. Brilliant ! This is “social justice” ?

      1. if you are this concerned about the plight of the under-18 regarding debt, you must be apoplectic about how the current generation is saddling them with the effects of global warming.

        1. “Man made global warming is a myth …..”
          That is, of course, the conclusion from Koch Industries College using the Republican scientific method, not a real climate scientist in 1,000 km.

      2. No, Thomas. The only regretful typo I made was to misspell finance minister Morneau’s name.
        In your own terms, which clearly indicate an ignorance of history, Harper had successive deficits totalling $138.9 billion by the end of 2014, including the biggest deficit in Canadian history of $55.6B in 2010. They started their run in 2007 with a $9.6B surplus handed to them by the previous Liberal government.

        1. Yes the previous Liberals under Chretien and Martin were actually quite fiscally responsible. The main reason for the massive Harper deficit was stimulus to bail Canada out of almost -5% GDP due to 2008/2009 financial crisis, and yes, it too was too high ever since.
          Unfortunately the Liberals in their incorrect big-government-is-better worldview will leave Canada enslaved in debt. Their bloated spending in a time where there is no recession is poor public policy that you grandchildren will pay for.
          Lowering CPP/OAS to 65, for example was neither announced nor necessary.
          $10B deficit was announced, now it is $30B.
          It is back to Trudeau Senior days of big spending, followed by bug tax hikes and/or bigger deficits. But hey, party now, pay later. That is what irresponsible progressive socialism is all about.
          Real wages have actually risen since 2000. This will now all be reversed as higher and higher debt and taxes will REDUCE actual wages.
          http://business.financialpost.com/fp-comment/terence-corcoran-liberal-budget-donald-trump-demagoguery

        2. It goes way beyond the meltdown, where I note Canadian banks did not require bailouts, just “vital” organizations like GM. The fiscal mismanagement under Harper also stems from cuts, cuts and more cuts, from the GST to the majority of proposed value added projects and all forms social housing in the nation. Their deficits in 2013 and ’14 could have been cancelled with the $14B a year they foolishly cut from GST revenue alone.
          The Harper government also did not have any sense of what constitutes long range planning to stimulate economic growth, beyond the discredited theories of Milton Friedman. Cutting taxes to the rich only makes the rich richer. The corporate tax cuts were largely pocketed by the proprietors and shareholders and not invested in new growth. Trickle Down was Soak Up in practice. There is no proof that the Harper government was anything but poor managers with no vision, who in the end concentrated power in one person and who were beholden to the racist social conservatives that form their base.
          Dark Decade indeed.

        3. If Justin Trudeau were honest he’d raise GST 2-3%. But he is not. He is just another liberal spender with no idea how the economy works and what is affordable. He is a lier. He should resign. Our taxes are too high, especially income taxes. We need to cut them far further to encourage work. Then raise GST, PST and/or property taxes (andother form of consumption).
          But no: we just lie, and borrow money and shove the bill to future generations. Also referred to as “sunny ways”. or “investment”.

    2. I’m honoured when a comment is better than the original blog. Brava(o). Great speculations.
      It did occur to me that the federal Liberals could try one of your strategies in a few years. I hadn’t heard Hébert’s comment; indeed it’s amusing; thank you for sharing.
      It will be another adventure while the municipalities come up with their share. Property tax increase, mobility pricing, or borrow?

  2. As a side note, it’ll be interesting to see what the usage data for U-Pass Compass cardholders will be and how those users contribute on a revenue basis versus the operating expenses of the services they use. (i.e. what the “discount” on cost recovery works out to be and how that might affect cost recovery on a Broadway extension.)

    1. [Remember: I don’t know what you know and what you don’t know already.] Do you mean Compass Cardholders in general? U-Pass is a specific program for students which is subsidized – doesn’t really pay for itself. Re-reading I think you do mean U-Pass for students’ usage. It’s not just students taking transit along Broadway to major job centres in the Cambie Corridor and to UBC. Overall, I believe tickets cover ~1/2 of operational costs.
      Transit is an investment with many benefits. Except for transit in Asia, it’s not expected to cover its costs via the fare box.
      Ooo! And I just found an outdated international chart on that:
      https://en.wikipedia.org/wiki/Farebox_recovery_ratio
      TransLink plans to restructure pricing. Apparently, they’re looking at time of day pricing. Hopefully they’re also thinking about distance-based pricing.
      I’m more interested in the usage data from Compass Card overall and how it may change routes and frequency. For the first time we’ll know how many got on/off and where. That’s why I try to tap off when using buses as well. Happy to tell them where I went!
      PS Blog about bikeshare and TransLink pricing coming soon.

    2. Last time I checked, about 35% of Broadway corridor transit users destinate to UBC, and 65% to the employment centres on Central Broadway. If a subway was built with a 100-year ultimate design capacity and high frequency service from Day One, I would expect induced demand will cause ridership to soar, especially considering Broadway’s connectivity in all directions and its status with UBC as having the second highest employment numbers and office space in BC outside of downtown.
      The fact Broadway has not been incorporated into the regional rapid transit system before really boggles the mind.

  3. In 2015 The Conservatives promised $700 million for the LRT in Surrey, alone.
    I’m not excited with less than $400 mil from the kid.
    The most important thing in the budget is the preamble that says that energy prices have tanked and we are all now deep in the doodoo until they go back up
    They also need the money for the $5 billion Champlain Bridge promised in Montreal.
    Justin must be laughing with his buddies, “In Vancouver they WANT to pay tolls, so they might as well pay for Montreal’s tolls too!. Ha, ha!”
    “New Champlain Bridge will be toll free
    Posted on 12/2/2015 2:51 AM by James Foster
    The new Champlain Bridge will be toll free, but you, and the rest of Canada will have to pay for it.
    In an interview with the Journal de Montreal, Amarjeet Sohi, Federal Minister of Infrastructure and Communities, said the Trudeau government will honour its campaign promise.
    Sohi said Prime Minister Trudeau gave him a clear mandate, no tolls no matter what.
    The tolls were a fundamental aspect of the financial framework of the contract signed by the Harper government and a consortium led by SNC-Lavalin.
    Sohi told the Journal the government will now use a renegotiation clause to open a new dialogue with the consortium, but admitted all Canadians will need to foot the bill.
    According to a study conducted by the parliamentary budget officer, a toll between $2.60 and $3.90 for each passage was needed until 2030 just to break even.
    Sohi did not give exact numbers on how much the move would cost Canadians, but promised the bridge would be completed on time and on budget.
    The new Champlain Bridge is expected to cost $4.2 billion, and should be completed in December 2018.”

  4. Kevin O’Leary? Are you kidding? He is a failed business man, so says some critics, who prefers bombast and rhetoric over well-reasoned analysis.
    The concluding paragraphs from a National Observer piece on O’Leary:
    Yet it was not long afterwards that some sharp-eyed experts on Bay Street found evidence that, in fact, O’Leary Funds was paying out dividends to investors with their very own cash – in other words, grinding their capital. “The issue is not do other people grind their own capital, it’s that he said he doesn’t do it,” says Mark McQueen, CEO of Wellington Financial. “And I found half a dozen of his funds where he had.”
    By 2012, investment advisers were pulling their money out of the O’Leary Funds simply because they were not performing as well as O’Leary had touted. And the funds continued to leak over the next three years before O’Leary finally folded his tent last fall, selling the entire business to Brett Wilson’s Canoe Financial.
    Meanwhile, O’Leary’s television career also began to flag. In 2014, he left CBC and Dragons’ Den and The Lang & O’Leary Exchange to become a gadfly at CTV. His profile in Canada has dimmed considerably since.
    In the end, O’Leary succeeded in becoming a millionaire. But more so because he learned how to turn himself into a celebrity and not because of his business acumen.

    http://www.nationalobserver.com/2016/01/26/news/real-and-shocking-story-kevin-olearys-business-career
    ***
    Let’s hear from some real economists instead.

    1. One of the few sane economic voices left in Canada. Another one is Brad Wall and a third our very own conservative spending hawk Christy Clark. We cannot spend and borrow our way into prosperity. Ontario now spends 11% of its budget on debt payment. The third biggest budget item after healthcare and education. That is green ? That is sustainable ? That is prudent ?
      Only when we encourage folks to work or private firms invest will the economy grow, and that is done by keeping taxes low. We discourage private investment right now. Real wages will fall.
      Yes to more infrastructure investment. No to all the other socialist wealth-destroying polices that we cannot afford. 1970’s policies for 1980’s problems.
      http://news.nationalpost.com/full-comment/andrew-coyne-federal-budget-2016-is-one-from-the-1970s-to-address-problems-of-1980s

  5. Ottawa’s plan was highly political. As one commentator has noted, it was a big kick in the gonads to the NDP.
    Mulcair campaigned on a balanced budget so Justin and the Liberals went out to the left and won. The NDP are no longer big spenders? OK, I’ll bite. Seems that now the NDP is close to single digits in polls again. If something doesn’t happen soon for the dippers they’ll be less popular than the Greens.
    There is always silver lining.

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