Improving the Competitiveness of Metropolitan Areas

Publication, Transportation, Wendell Cox

Executive Summary

1. A National Transit Strategy

There is much concern about the competitiveness of the nation’s metropolitan areas. Particular attention has been directed toward the generally longer commute times of Canadian workers and the diminished competitiveness that occurs as a result. New Democratic Party transport and infrastructure critic Olivia Chow has proposed a National Transit Plan, while organizations such as the Federation of Canadian Municipalities (FCM) and the Canadian Urban Transit Association (CUTA) have called for additional funding for transit to help reduce commute times and improve metropolitan competitiveness. This paper reviews the potential of transit to improve the economies of metropolitan areas and offers recommendations.

2. Metropolitan Competitiveness: The Situation

The Key: Improving Commute Times: Transport Canada has estimated that the costs of congestion in the largest metropolitan areas were as much as $3.27-billion in 2002. These costs were shouldered by households and businesses. The longer average commute (work trip) times drives these congestion costs, which hinder economic growth and competitiveness. Economic research generally concludes that greater economic and employment growth is likely where people can quickly reach their jobs in the metropolitan area.

Canada’s Long Commute Times: Consistent with research by the Toronto Board of Trade, new average commute time data from Statistics Canada indicate that the major metropolitan areas (those over 1,000,000 people) generally have longer commute times than high-income metropolitan areas in Europe, the United States and elsewhere. Toronto, Montréal and Vancouver have among the longest commute times among the 109 metropolitan areas for which data are available. Ottawa-Gatineau and Calgary have among the longest commute times of metropolitan areas with populations of a similar size. Only Edmonton has an average commute time that is among the shortest overall and is among the shortest in metropolitan areas with similarly sized populations (Table 1).

3. Improving Metropolitan Competitiveness

Much of the campaign to improve commute times assumes that expanded transit would be an effective strategy.

Transit Takes Longer: According to Statistics Canada, average commute times by transit are from 30 per cent longer to nearly double the average automobile commute times in the Toronto, Montréal and Vancouver metropolitan areas. Because of these shorter commute times by car, 58 per cent of car users (drivers and passengers) reach their work locations in under 30 minutes. Only 25 per cent of transit commuters reach work in less than 30 minutes. With commutes by transit taking longer, it is not likely that expanded transit would reduce commute times.

The Geography of Transit: Transit’s greatest strength is in providing access to the largest downtown areas. These areas have the greatest job densities (jobs per square kilometre) in their metropolitan areas and are typically well served by frequent, rapid and convenient transit service from throughout the metropolitan area. This combination of high employment density and superior transit service attracts nearly one-half of all downtown commuters to transit in the six metropolitan areas. Because of these factors, transit meets the needs of people who commute to down-town and is thus the rational choice for most of these commuters. However, down-towns contain only a relatively small share (14 per cent) of metropolitan area jobs.

Other areas lack this intense concentration of jobs, yet these areas account for the overwhelming majority of employment in the metropolitan areas. With their much lower employment densities (1/50th of downtown), areas outside the central business district generally lack transit service that is time-competitive with cars. As a result, the proportion of people using transit for the work trip to locations outside downtown is much smaller. For the overwhelming share of work trips to outside the downtown area, driving meets the needs of commuters. Thus, the automobile is the rational choice for most people who commute to locations outside downtown.

Emerging Demographics: Jobs and residences in metropolitan areas continue to disperse to areas outside the urban core. Transit is not well positioned to serve the very areas where job growth is the greatest.

Declining Transit Productivity: At the same time, there are concerns about transit productivity. The Conference Board of Canada has documented a 1.2 per cent annual decline in productivity for two decades. The same analysis found productivity in other transport sectors to be generally improving. Transit costs have risen well in excess of inflation, service levels and ridership. Rising costs seriously limit transit’s ability to increase its share of travel in metropolitan areas.

Transit’s Robust Funding Growth: Transit subsidies have been growing strongly. According to Transport Canada data, the rate of subsidy growth from 1999 to 2008 was more than 9.4 per cent annually. Over the same period, subsidies grew 83 per cent (adjusted for inflation), which is more than three times the 26 per cent ridership growth rate and 3.5 times the rate of general inflation. Transit’s declining productivity and its increasing revenue indicates that cost control should receive more attention than efforts to increase funding receive.

Funding for the Future: Transit’s declining productivity and the continuing disper-sion of jobs and residences are likely to make any strategy to materially expand its share of urban travel very expensive. If current expenditure trends continue, simply maintaining transit’s share of the urban travel market would require an increase from $6-billion to $13-billion in 2035 (adjusted for inflation). Increasing transit’s share of urban travel by 50 per cent would require an increase to $19-billion.

Policies that Could Make Metropolitan Areas Less Competitive: While the prospects for improving transit commute times are discouraging, some current strategies could increase traffic congestion, lengthen commute times and make metropolitan areas less competitive. Compact cities (also called smart growth) policies have been adopted across Canada in an effort to reduce automobile use and increase urban densities. International data indicate that higher densities are associated with greater traffic congestion, and data from U.S. metropolitan areas indicate that commute times are longer where employment densities are higher. Further, higher traffic densities are strongly associated with higher levels of air pollution. Finally, improvements in vehicle technology will make reductions in automobile use to reduce greenhouse gas emissions unnecessary, according to U.S. research by McKinsey & Company and by the Conference Board of Canada.

Improving Metropolitan Competitiveness: Strategies that reduce commute times can improve metropolitan competitiveness. Expanded telecommuting could help because it eliminates the work trip and thus reduces average commute times. There are also lessons to be learned from the international metropolitan areas that have been more successful in maintaining shorter commutes.

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