Much Needed Stimulus: A Transportation Revolution for Canada

As the Liberals meet with the Conservatives to talk about the kind of stimulus package that needs to be included in the upcoming budget, there is a serious danger that what will be involved is low-level political maneuvering. The Conservatives will be aiming at a budget that contains enough stimulus to coax the Ignatieff Liberals into voting to support it and dump the idea of a Liberal-NDP coalition government. The Liberals will want to make it appear that they have won sufficient concessions to allow them to vote for the budget and survive the political onslaught from the centre and left for keeping Stephen Harper in power.

Over the next few weeks, it is essential to shift the debate to what Canada needs not only to safeguard Canadian wage and salary earners, pensioners, students, farmers and small businesses from the immediate crisis, but also to look to how we should restructure our economy for the 21st century.

There need be no contradiction between these two agendas. Indeed, the best way to protect Canadians today is for the government to invest for the future.

The Conservatives will want tax cuts and immediate bailouts to companies with few strings attached. The Liberals will want to point to a high dollar figure in the overall package that they can claim to have won.

What the nation needs is well thought out stimulus that will keep the public investments as much as possible inside Canada generating wages and salaries here. That way, the stimulus will not leak out in the form of additional demand for imports. Tax cuts risk generating higher imports and are the least effective form of stimulus.

One area (certainly not the only area) that requires imaginative thinking is the transportation sector. What follows is an introductory discussion of what needs to be done in that sector.


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With an inefficient fleet of automobiles, poor public transit, an ailing rail system, and airlines plagued with a host of problems, Canada is woefully ill prepared for the 21st century transportation revolution. For a country whose vast size and low population have always made transportation a vital matter, the lack of planning by governments and industry to prepare for change has been flagrant, not to say negligent.

No country will be more affected than Canada by the global revolution in transportation.

Sailing vessels and canoes drove the first Canadian economies, those of the fishery and the fur trade. In these vessels, Europeans journeyed to the Grand Banks of Newfoundland and along the great waterways of the northern half of the continent in the quest for profitable commerce. In the early decades of the 19th century, canals cheapened the passage of goods on the Great Lakes and the St. Lawrence and made Montreal the leading centre of Canadian commerce. In the middle of the century, railways revolutionized life and played an enormous role in the creation of a fledgling Canadian nation that spanned the continent. Railways underpinned the new Canadian state, an east-west economy and the export of wheat from the prairies to Europe, making Canada an economic success with a rapidly rising population by the first decade of the 20th century.

The first mass age of the automobile in Canada came in the 1920s, as provincial governments built the nation's initial highways. It was not until the 1950s, following decades of depression and war that the automobile became a means of transportation for most Canadian families. Over the space of a few decades, governments built superhighways and the Trans Canada highway. Suburbs exploded outwards from the cities, suburbs that relied on the automobile as the crucial form of transportation. Urban density fell as city dwellers shifted from public transit to their cars. Expressways, such as the notorious Gardiner Expressway in Toronto, which cuts the city off from its lake front were seen by the public as symbols of progress. It was not until the 1970s, not coincidentally a decade when the price of petroleum exploded, that city dwellers perceived the downside of expressways that tore up neighbourhoods and in Toronto public pressure stopped the Spadina Expressway.

This first era of skyrocketing petroleum prices lasted from 1973 to 1982. From that date when prices plunged until the early years of the 21st century, petroleum was once again cheap, and Canadians, in company with Americans, purchased vast numbers of SUVs, vans, pickup trucks, and recreation vehicles, all vehicles with poor gas mileage. The rising price of petroleum during this decade, coupled with the bursting of the global property price bubble beginning in the United States and the onset of a global economic crisis, have plunged Canadians into a new world where transportation is concerned.

Over the past four centuries, as the modes of transportation have evolved so too the role of Canadians in designing, manufacturing and deriving their employment from the building of ships, canoes, trains, airplanes and motor vehicles has been subjected to enormous changes with vast implications for the economy and jobs. Disruption, dislocation, and, hopefully, successful adaptation will be elements of the 21st century Canadian story.

Of necessity, Canada’s transportation revolution will unfold as a part of the global transformation in the ways people and goods move.

In 2007, the skyrocketing price of fuel, in conjunction with other factors, such as the shift to large scale production of ethanol and prolonged drought in Australia, provoked a severe increase in the price of food worldwide. In rich countries, the consequence was an annoying increase in the cost of living, in poorer countries, it meant real hardship and in the poorest regions of the world, populations faced starvation. At hand, was a multifaceted global crisis whose epicenter was transportation.

Then in late 2008, as the financial crisis dragged down the global economy, the price of petroleum plunged. The oil price decline, while affording consumers relief at the gas pumps and for home heating bills, did not signal a long-term downward trend. As in the 1970s, oil price increases slowed economic growth and this triggered declines in petroleum prices. The long-term trend in petroleum prices, as will be seen in lock step with eventual economic recovery will be upward.

The long-term trend toward higher fuel prices means that the movement of goods to markets will be much more costly and that the movement of people in their daily commutes or on their longer journeys will carry a higher price tag. The transportation crisis takes different forms in different countries. In the United States and Canada, the sale of pick up trucks and SUVs has plummeted in favour of a rising market for cars and crossover vehicles, along with heightened demand for hybrid vehicles. Tens of thousands of auto workers face the closing of the plants where they work and the loss of their jobs. Airlines in both countries have laid off thousands of employees and cut back the number of flights they offer. In the U.S., major airlines confront the prospect of financial failure.

In Spain, France, and the United Kingdom, higher fuel prices have provoked work stoppages, blockades and demonstrations by truckers who insist the new situation threatens them with bankruptcy. In France and Spain, fishermen went on strike to protest higher fuel costs for the operation of their vessels. In Europe, where the price of gasoline has been about double that in North America, the gas mileage of the European auto fleet is approximately twice that of its North American counterpart. The price of fuel, to which is added the high price of toll roads in many countries, has already dramatically altered the driving habits of Europeans.

In Asia, as markets for automobiles have expanded rapidly, an Indian manufacturer has launched the world's lowest priced automobile. To fuel its vehicles and to keep its industries humming, China has entered into deals with petroleum producing countries in Latin America, Africa and the Middle East, heightening its growing global rivalry with the United States.

In Brazil and the United States, in addition to other countries, the production of bio-fuels has added appreciably to the rising price of food.

Inextricably linked were the global petroleum and food crises and these drove the necessity to transform systems of transportation in virtually all regions of the world.

In Canada, what is needed is not a piecemeal approach to the transportation revolution, but an overall plan. The risk is that Ottawa will simply hand out money to the Big Three auto makers once the Americans have decided on the scale and terms of their bailout plan. All that does, at best, is to buy us a share of North American auto production and jobs.

Canada needs to be involved in designing and building the vehicles we need for the new age in which we live. Auto manufacturers, auto parts producers, other manufacturers, the Canadian Auto Workers, transportation specialists, municipalities, provinces and the federal government need to go to work on the new transportation plan. Of necessity, the transportation plan will have to be dovetailed with new plans for the design of our cities and urban transit systems.

The future of airlines in Canada, and of airports, needs to be dovetailed with the development of passenger rail service for the 21st century. One obvious idea, long-discussed and long-overdue, is to construct an intercity high speed rail system with dedicated lines to service the Quebec City to Windsor corridor to include services to Ottawa. A high speed line between Edmonton and Calgary ought to be in the works as well. Increasing the emphasis on rail and decreasing the number of short-haul flights is essential to save energy and move toward a green transportation system.

We have the design and manufacturing capability in Canada. Such a project will create thousands of jobs. This is both a stimulus project to create employment in the near future and an investment in reconstructing our transportation system to make it more cost effective and less polluting.

Let’s think big as we plan how to spending tax dollars. There is much more at stake than a struggle over which party or parties will hold office in the next couple of years.