Alberta’s transportation infrastructure management philosophy and policies are outdated and need of fundamental change. They don’t apply in a pandemic economy, and they won’t apply in a post-pandemic investment climate. Modern investors expect to see sound reason and rationale behind infrastructure decisions and taxpayers should too. The Government of Alberta has committed to developing investment frameworks that recognize this expectation.

Commitment requires action and change. The ARHCA has prepared a background paper to highlight the need for change.

Background Facts

Alberta’s transportation system is fundamental to the provinces continued growth and prosperity from transporting goods to markets to maintaining our social well-being and quality.

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  • Alberta is a growing province. Over the past 20 years, Alberta has led all provinces in economic growth, with an average annual GDP growth of 3.2% per year.
  • Alberta’s population has increased by 1.3 million people since 2000, and is projected to add approximately 2.1 million residents over the next 29 years, reaching 6.4 million by 2046; an average annual growth rate of 1.4%.
  • This growth creates the need for additional and improved transportation infrastructure including municipal roads, highways, overpasses, and bridges to sustain economic and social benefits for Albertan.
  • There are over 226,000 kilometres of public roads in Alberta – approximately 22% of the total national network. Almost 165,000 kilometres of Alberta’s public roads are gravel, treated or earthen, largely falling under municipal jurisdiction.
  • The Government of Alberta manages more than 31,400 kilometres of highways, the greatest number of kilometres per capita in Canada. This includes nearly 4,500 bridges, interchanges and culverts.
  • Over the last 16 years, the physical condition of Alberta highways has deteriorated. The percentage of provincial highways in good physical condition has decreased by 12%. Today, over 13,500 kilometers or 43% of Alberta highways in fair or poor condition.
  • In 2008, the Government of Alberta introduced the province’s first 20-year plan for infrastructure which included the goal of developing a world-class integrated transportation system.
  • However the province has not provided dedicated funding to meet this goal. Furthermore projects may move in or out of the construction program based on emerging needs, changing construction schedules, or available funding which creates project uncertainty and funding instability.
  • Municipal funding programs that have supported the development and maintenance of municipal infrastructure including roads are coming to an end, and Alberta now finds itself without the long-term stable funding necessary to supports its infrastructure plan.
  • The finite nature of municipal infrastructure funding creates instability and uncertainty for long-term municipal planning.

Funding and Management of Roads

Alberta roads are financed from taxes collected by the government and funneled into a general revenue fund. With few exceptions, no explicit link exists between road related revenues and expenditures.

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This is a critical distinction that differentiates the treatment of roads in Canada from those in the United States. While fuel excise taxes, licensing fees and vehicle registration fees are collected in both countries, these charges cannot be considered true road user fees in Canada because the revenues they generate are not explicitly allocated to roads.

The current approach of funding our transportation projects stymies innovation and prevents rational, integrated, comprehensive planning. That is, although a region may need a mix of maintenance, public transit, and highway investments, these projects are funded separately using different formulas, and decision making is dominated by other determining factors rather than by adhering to logical regional or metropolitan plans or priorities.

Highways and the Economy

Highway infrastructure can affect the economy in a number of ways, nearly all of them related to increasing mobility. It can enable producers to reach markets more cheaply, to increase the size of their market area, and can increase the speed with which producers can reach markets or inputs, allowing them to hold lower inventories and carry out just-in-time production.

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Highway infrastructure can enable workers to choose among a wider array of employment opportunities and to live farther from their workplaces. It can enable consumers to have a more varied choice of goods, services, and prices.

Not all highway infrastructure produces these outcomes in the same way. Some transportation infrastructure serves purely local needs, whereas other infrastructure enables connections to national and international markets. Besides the longer-run effects, highway infrastructure also can boost economic activity through immediate construction activity that results from new highway infrastructure.

Highway infrastructure varies greatly in its economic effects, depending on a wide variety of system and geographic factors at the local and regional levels. Better targeting of highway investments could lead to better economic outcomes. With Alberta facing fiscal constraints, transportation spending can fulfill the policy aim of supporting better economic performance by focusing on projects that have positive net benefits dispersed over large geographic areas.

Alberta is Not Alone

Other governments in Canada and in other jurisdictions are facing infrastructure funding pressures have been looking for alternative funding and financing mechanisms that can support long-term investment need.

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European jurisdictions have evaluated new ways to structure and finance infrastructure programs. In 2007–2008, both Finland and Denmark established national commissions to determine whether major central government investments in local and regional infrastructure projects could be justified by their effect on national economic performance. As a result of these commission reports, both countries established new national funding mechanisms for a variety of transportation infrastructure projects deemed important to the national economy.

The best known study of this type is the Eddington Report, commissioned by the United Kingdom from Sir Rod Eddington, the former head of British Airways. The large and comprehensive study attempted to assess the state of Britain’s national transportation infrastructure and whether problems in the transportation network affected British productivity and economic performance. The Eddington Report concluded that major additions to the highway system were not required but that the national government should make sustained highway and other investments to improve the transportation network “in those places that are important for the U.K.’s economic success.”

Sir Eddington, later completed a similar study in Australia. As a result of that study, the Australian government has now established a national infrastructure fund and a new national agency to provide financing for local and regional transportation and other major infrastructure projects that were expected to improve national economic performance.

The Challenge

Changes to the funding, management and operation of the province’s road network is needed to ensure system-wide responsibility and self-sufficiency.

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Our transportation system policies are in need of fundamental change. Alberta needs a strategic plan to provide a long-term vision for an integrated transportation system to facilitate the safe and efficient movement of vehicles, products and people. A long-term provincial transportation strategy should:

  • Anticipate and account for the pressures of economic and population growth, social and environmental impacts, and technological advances on our transportation network;
  • Ensure Alberta has the essential roads and highways, utilities and facilities to support our quality of life and secure our province’s economic prosperity, now and into future; and
  • Guide government decision making including investments, policies, and programs for a safe, sustainable and reliable transportation network to support a growing and changing Alberta.