Gridlock is costing Toronto up to $11 billion yearly—here's how to fix it

New research shows that eliminating Canada’s traffic nightmares would cause productivity, paycheques and property values to skyrocket.

(Photo: LandAir Aerial Photography)

(Photo: LandAir Aerial Photography)

Jason Lansdowne is the Toronto everyman. Some mornings, he watches two or three jam-packed subway cars go by before squeezing his way into one. “To leave before nine o’clock would just be silly,” says the 42-year-old technical writer. Lansdowne starts his day later in the morning and sometimes works from home, but he’ll suffer through the worst of it to get to an early meeting. “You just have to grin and bear it,” he says. Lansdowne is considering moving somewhere small, like Stratford, a two-hour drive from Canada’s biggest metropolis. The reason is gridlock. The average commute in Toronto now takes 40 minutes—52 minutes if you’re taking transit—according to a recent survey by Forum Research. “I’ve travelled a lot around the world,” Landsdowne says, “and Toronto is shockingly behind the times.”

Kathleen Wynne, Ontario’s Premier, agrees. She’s seen how much things have changed over the past half-century. The premier was just a year old when Toronto opened its first subway in 1954. Wynne grew up in Richmond Hill, a Toronto suburb, and no one used transit back then, she explains. “Everybody drove. That was just the assumption—that people would drive.” Now there’s a shift happening, she says. “It’s becoming so inconvenient to drive a car, people are looking around and saying, where’s the transit option?” Wynne is done waiting. Earlier this year her government revealed that it will implement new taxes and tolls for transit whether municipalities like it or not. “History will judge me,” she says, chuckling, “one way or the other.”

It’s not just the province’s history books that reflect the cost of inaction, but also its ledgers. Metrolinx, Ontario’s transit authority, pegged the cost for the Toronto region alone at $6 billion annually in 2008. That number was too modest. The figure could be $7.5 billion to $11 billion every year, according to new data supplied to Canadian Business by the CD Howe Institute. The higher price tag isn’t based on commutes getting worse over the past five years—although they probably have. Metrolinx’s numbers only considered the costs of gridlock, like businesses spending more to transport goods or having to pay their employees better to tolerate long commutes. But the CD Howe report also recognizes that easing gridlock would create new opportunities by increasing the size of Toronto’s talent pool and consumer base. By not acting, these lost opportunities become lost dollars from our bank accounts.

Every major municipality has a long list of underfunded transit projects that may never reach the end of the tunnel. Metrolinx has a 25-year, $50-billion plan to add new light-rail and subway lines to the Toronto region, but it’s short $34 billion. Plans to build a light-rail network in the Vancouver suburb of Surrey fizzled as B.C.’s government failed to cough up the money it promised. Calgary has only 30% of the funding needed for its 30-year, $13-billion plan for transit upgrades. If progress is going to be made, we need to stop looking at transit as something we pay for on a project-to-project basis and instead see it as akin to health care or education, a need that requires long-term, sustained funding. Investing in transit isn’t just about saving time—it’s about making money.

Carol Wilding, president and CEO of the Toronto Region Board of Trade, says her organization’s 10,000-plus members understand the link between healthy transit and healthy bottom lines. “They consistently rank this as the top economic and competitiveness issue,” she says. People turn down jobs because “they know the cost that it’s going to have on them personally in terms of changing their commute patterns, and therefore the impact that it also has on their family life. They’re just not prepared to make that kind of investment.”

PLAY: Ontario Premier Kathleen Wynne on Toronto’s transit crisis

Academic literature backs Wilding’s anecdotal evidence. People will spend up to 90 minutes commuting, and that’s effectively the end of a company’s talent pool, explains Benjamin Dachis, author of the new CD Howe study. As traffic moves faster, businesses can recruit from farther away, and a series of benefits begin to accrue. Employers, for example, find more suitable candidates. There’s also what Dachis calls knowledge spillover from having a larger talent pool within commuting distance of head office. “Phones and video conferencing just do not have the same effect as being able to walk down the hall or quickly drive to talk to you,” he explains. “That’s another key benefit.” Increased productivity would boost the little guy too; if the Toronto region were to double in size, the average worker would see her income go up 3.6%, according to Dachis’s calculations.

When people start moving faster, you get a bigger consumer base, as well. “We’ve got this huge mass of people who are all able to go to a baseball game or use a subway or an airport, who are all in the same labour market,” Dachis explains. If more people could quickly reach the Rogers Centre, for example, the Blue Jays would see an increase in ticket sales. Together, these benefits add up to another $1.5 billion to $5 billion, his study concludes, in addition to the $6 billion we already knew we were losing. Though he can’t vouch for the accuracy of Metrolinx’s figure, Dachis says the costs are definitely higher than we thought.

Even the feds are losing out. An improved economy would allow Ottawa to rake in more income tax—one of the ways in which transit investment offers a return to governments. Another is through property tax, as transit access has been shown to increase land value. A 2005 study in London examined housing prices after light-rail and subway lines linked previously unconnected areas of the city, and found houses within two kilometres of new stations rose in value by up to 12% more than those further away.

Canadians could glean these benefits as well, but that will first require a radical shift in how transit is funded. The current method—year-to-year funding drawn from the existing tax base—is flawed. Consider Edmonton’s dilemma. The city’s proposed $1.8-billion light-rail line will likely face delays due to a $515-million funding gap, despite politicians wanting the line running by 2019. But big construction and engineering companies won’t bid on the project without secure funding, according to Edmonton’s transportation general manager, Bob Boutilier. If the project proceeds in its current state, bidding will be less competitive. And every year the project gets delayed, inflation adds between $60 million and $80 million to the bill, project manager Nat Alampi told the Edmonton Journal. Until more funding is found, it’s a lose-lose situation. “You can’t build a project that’s going to take 12 years to complete…if all your funding is coming one year at a time,” says Metrolinx CEO Bruce McCuaig.

Local Vancouver politicians have reached the same conclusion. In the five years leading up to 2011, Surrey added over 70,000 people; in terms of size, it’s catching up with Vancouver, but the commuter community was “built around cars, not people,” explains Ian Bruce, manager of science and policy at the David Suzuki Foundation. Vancouver now has the second-worst gridlock in North America, according to GPS maker TomTom. But a $14-billion plan to improve transit around B.C. is foundering. Frustrated, Metro Vancouver mayors in February proposed five new revenue-raising tools, including a sales and a vehicle registration fee. (Vancouver already has a gas tax dedicated to transit.) They had reached a familiar conclusion: without sustained revenue, the problem would only get worse.

And yet, neither the federal government nor taxpayers seem particularly keen on finding new ways to pay for transit. A majority of Ontarians rejected every single revenue tool suggested by Metrolinx in a survey conducted by Forum Research in May. Metrolinx says a 1% hike in sales tax would generate over half the money it needs, but federal Finance Minister Jim Flaherty said he would block any attempt to hike the HST. Metrolinx’s recommended funding sources—which also included a gas tax, parking levy and higher development charges—would have cost the average family about $477 annually, the agency claims. If that sounds high, consider what that family pays because of gridlock: $1,619 every year, thanks to higher operating costs, such as having to buy more gas, and collisions caused by traffic jams.


There are places in the world that have overcome the public’s aversion to new transit taxes. In 2006, Stockholm introduced a congestion zone around its city centre, adding more buses and bike lines as an alternative. Drivers going through the zone had their licence plates snapped by cameras and were automatically charged. It began with a seven-month trial and a disapproval rating of 75%. But traffic fell by 22%, only to rise again at the end of the pilot project. When asked for their opinion when the trial was over, a majority of Stockholmians voted the tolls into law.

Other cities have made a similar choice. New York imposes a 0.375% regional sales tax and multiple business taxes. London has a congestion charge similar to Stockholm’s; motorists driving downtown during business hours pay £10 per day. Even Los Angeles, North America’s most congested city, is ahead of Toronto. In 2008, L.A. voters backed a 30-year regional sales tax of 0.5% to fund a $40-billion transit expansion.

Reliable revenue also allows for smarter spending. That was one of the lessons from Madrid, says Michael Fenn, the previous CEO of Metrolinx. During his tenure, Metrolinx studied the Spanish capital for lessons in building and financing. In Madrid, big purchases like tunnel boring machines were bought upfront and amortized—something you can only do when your money comes in predictable amounts. “Year in, year out, they keep boring,” he says. The result? Compared to Toronto’s last subway, the Sheppard line, the typical per-kilometre cost was less than half. And Madrid, which is roughly the same size as Toronto, has built more rapid transit in the past two decades than exists in Canada’s financial capital.

Indeed, sustained revenue has myriad benefits. In both London and Madrid, predictable funding helped expand the construction sector, and because work was regular, engineers and workers became more familiar with the processes and tools used for building transit; their improved expertise boosted productivity and further drove down costs. Road tolls also reduce gridlock precisely because people would rather not deal with them, says Dachis. Building more roads, meanwhile, does little to help reduce congestion. “When you increase the capacity of something without changing the price, demand usually just fills up that additional capacity.”

Taken together, the evidence suggests a clear course of action. “It’s such an urgent issue,” Wynne says. “I know it’s urgent because of the research that’s been done, I know it’s urgent because of what’s going on in other jurisdictions, and, fundamentally, I know it’s urgent because the people in this region talk about their quality of life.”

For those living in big cities, the proof is in the air. There are now more high-rises under construction in Toronto than anywhere else in the Western Hemisphere. Our municipalities are booming, but also bursting at the seams. Other great metropolises have shown us the way. Will we listen and do the right thing? Like Wynne says, history will judge us, one way or the other.