Section I: Departmental Overview

Minister's Message

As Canada's Minister of Transport, Infrastructure and Communities, I am pleased to submit Infrastructure Canada's Departmental Performance Report for the period ending March 31, 2008.

Strong, modern public infrastructure is a key factor in driving our economy and is a priority for this government. On November 6, 2007, the Prime Minister unveiled the details of the Building Canada plan — a federal investment of $33 billion over seven years. This is the largest single federal commitment to public infrastructure ever. We will deliver Building Canada in a way that provides the very best value for Canadians' hard-earned tax dollars.

Building Canada is about results that matter to Canadians — supporting a stronger economy, and providing cleaner air and water, safer roads, and shorter commutes. Building Canada is advancing well; framework agreements to implement Building Canada in each province or territory are now in place. We have also launched the "communities component" of the Building Canada Fund in several provinces, moving forward on projects in smaller municipalities.

With key agreements signed, this Government will continue to make important investments and will accelerate infrastructure funding. Last year alone, we put $2 billion to work in infrastructure projects. As well, through Budget 2008 we announced that the Gas Tax Fund — just one component of the Building Canada plan — will ramp up to $2 billion a year and become permanent in 2014, providing long-term predictable funding.

Building Canada is the blueprint for a modern and prosperous Canada — a Canada truly equipped to meet the challenges of the 21st century. I invite you to read this report to learn more about the department's achievements over the past year. To find out more about Building Canada, please visit www.buildingcanada.gc.ca.

The Honourable John Baird, P.C., M.P.
Minister of Transport, Infrastructure and Communities

Management Representation Statement

I submit for tabling in Parliament, the 2007-2008 Departmental Performance Report for Infrastructure Canada.

This document has been prepared based on the reporting principles contained in the Guide for the Preparation of Part III of the 2007-2008 Estimates: Reports on Plans and Priorities and Departmental Performance Reports:

• It adheres to the specific reporting requirements outlined in the Treasury Board Secretariat guidance;
• It is based on the Department's approved Strategic Outcome(s) and Program Activity Architecture that were approved by the Treasury Board;
• It presents consistent, comprehensive, balanced and reliable information;
• It provides a basis of accountability for the results achieved with the resources and authorities entrusted to it;
• It reports finances based on approved numbers from the Estimates and the Public Accounts of Canada in the DPR.

Name: ________________________________________________________
Louis Ranger

Deputy Head
Infrastructure and Communities

1.1 Summary Information

Canada needs to remain competitive and productive while sustaining and improving the quality of life of Canadians. World-class public infrastructure, including safe and reliable water systems and efficient transportation systems that allow goods and people to move freely, is critical to meeting these objectives.

The Government of Canada understands that Canada needs strong and modern infrastructure in order to continue to grow and prosper. No single level of government can address the country's infrastructure needs alone. That is why the Government of Canada is working with provinces, territories, municipalities, the private sector and various stakeholders to implement the Building Canada plan.

The $33-billion Building Canada plan represents an unprecedented and long-term federal commitment to public infrastructure. The plan will help build a stronger Canada by funding projects and initiatives designed to deliver results in three areas of national importance:

• A more competitive and productive economy, which can be supported by better infrastructure that, for example, facilitates the flow of goods and people, promotes interprovincial and international trade through gateways and corridors, and increases the use of e-commerce.
• A cleaner environment, which can be supported by modern and sustainable infrastructure that, for example, improves water treatment and access to safe drinking water, contributes to a reduction of air pollutants, and encourages efficient land management.
• Safer and more prosperous communities, which can be supported by quality infrastructure that, for example, enhances the vitality, safety and quality of life of Canadian communities.

By implementing the Building Canada plan and continuing to manage existing funding programs, Infrastructure Canada coordinates several infrastructure initiatives while continuing to develop policies, knowledge and partnerships to support them.

Infrastructure Canada is responsible for delivering the following key elements of the plan:

• $8.8 billion for the new Building Canada Fund, which will go towards major projects as well as projects in smaller communities.
• $25 million a year in provincial-territorial base funding, for a total of $2.275 billion over seven years.
• $11.8 billion for the Gas Tax Fund.

Infrastructure Canada continues to administer four established infrastructure investment funds that improve the state of Canada's public infrastructure and, in turn, enhance the economic, social, cultural and environmental quality of life of Canadians. These "sunsetting" funds are the: Municipal Rural Infrastructure Fund (MRIF); Canada Strategic Infrastructure Fund (CSIF); Border Infrastructure Fund (BIF); and, Public Transit Fund (PTF).

This Departmental Performance Report (DPR) presents information on the activities and achievement of Infrastructure Canada in fiscal year 2007-2008 against the expected results described in the Report on Plans and Priorities for 2007-2008.

1.2 Reporting Structure

Consistent with guidance provided by the Treasury Board of Canada Secretariat, this 2007-2008 Departmental Performance Report and the accompanying financial tables are presented using the Government's Program Activity Architecture (PAA) Framework. The PAA structure, as it existed in 2007-2008, is being used by Infrastructure Canada to present information on accomplishments against its plans and priorities. The PAA is summarized in Figure 1.

A new strategic outcome statement for Infrastructure Canada was recently approved by Treasury Board: Quality, cost effective public infrastructure that meets the needs of Canadians in a competitive economy, a clean environment and liveable communities.

Infrastructure Canada is currently reviewing its Program Activity Architecture to ensure that it reflects the new departmental priorities, including the new approved Building Canada Fund.

Under the PAA, Infrastructure Canada has three Program Activities: Infrastructure Investments; Policy, Knowledge and Partnership Development; and Departmental Administration:

1. Infrastructure Investments: This Program Activity consists of all infrastructure programming delivered through transfer payments, as well as the related program management and monitoring functions. The Activity contributes to the construction, renewal and enhancement of public infrastructure in Canada and, in partnership with others, builds capacity for addressing infrastructure and communities issues.
2. Policy, Knowledge and Partnership Development: This Program Activity consists of activities undertaken in policy, knowledge, research and analysis and partnership development. The Activity develops policies based on research and strong partnerships to address existing and emerging challenges and opportunities.
3. Departmental Administration: This Program Activity encompasses several corporate support services, including information technology, management and oversight, evaluation, internal audit, information management, public affairs/communications, human resources management, legal and financial management. The Activity promotes excellence in program and corporate management in support of Infrastructure Canada's priorities.

Section II provides details on departmental performance under the first two of these program activity areas. Background information on the third activity area, departmental administration, is presented in Section IV of the report, Other Items of Interest.

Figure 1: Infrastructure Canada PAA

* This is Infrastructure Canada's Strategic Outcome as it existed for 2007-2008.

1.3 Summary Table

Reason for Existence

Infrastructure Canada seeks to help build sustainable cities and communities where Canadians benefit from world-class public infrastructure.

Financial Resources ($ thousands)

Human Resources (full-time equivalents)

Departmental Priorities

Program Activities by Strategic Outcome

Explanatory Notes:

• The variance between total planned and actual spending in 2007-2008 is due mainly to two factors:
  •  Finalization of contribution agreements for programs such as CSIF, BIF and PT Base took longer than originally anticipated, therefore delaying the initiation of reimbursement of project claims to recipients.
  •  Reduced cash requirements by recipients for the current year, based on cash flow projections for MRIF, BIF and CSIF.

1.4 Summary of Departmental Performance

1.4.1 Progress by Organizational Priorities

Priority 1: Delivering Approved Program Funding

Through investments in public infrastructure, Infrastructure Canada seeks to maximize economic and environmental benefits for Canadians and to strengthen communities. It does this in partnership with the provinces and territories, municipalities, First Nations and stakeholders. Infrastructure Canada delivers or coordinates a suite of infrastructure funding programs in cooperation with its federal delivery partners, with each program responding to distinct aspects of Canada's priority infrastructure needs.

Infrastructure Canada works with its partners to identify planned spending requirements and to match its program delivery requirements with Parliamentary appropriations. When 2007-2008 planned spending requirements were identified, there was significant uncertainty regarding: the timing of requirements identified by the federal delivery partners for projects under the Canada Strategic Infrastructure Fund, Border Infrastructure Fund and Municipal Rural Infrastructure Fund programs; the timing of final Provincial/ Territorial Base Fund agreements; and, the final submission of Gas Tax Fund annual expenditure reports from recipients. Infrastructure Canada's 2007-2008 planned spending estimate of $2.8 billion reflected the expectation that the department would need to provide for delivery of the above items before the end of the fiscal year. However, this scenario was not realized, and actual spending in 2007-2008 was approximately $900 million less than planned, as shown in the summary table. Programs will continue to be delivered since the lapsed contribution funding will be carried forward to future years in order to align with recipients' cash flow requirements. Nevertheless, Infrastructure Canada continues to work with its partners and with central agencies to better match its planned spending and program delivery requirements.

Building Canada Plan

The Building Canada plan was developed following extensive consultations with provinces, territories, municipalities and stakeholders. It comprises a suite of streamlined initiatives designed to simplify the infrastructure funding process and provide enhanced and predictable funding as well as greater flexibility for governments to address national priorities and to respond to local needs.

Building Canada is the blueprint for the Government of Canada's commitment announced in Budget 2007 to provide an unprecedented $33 billion in total infrastructure funding through to 2014. This is the largest single federal commitment, over the longest period of time, for provincial, territorial and municipal infrastructure in Canadian history.

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The Building Canada plan includes:

• $17.6 billion in base funding for municipalities until 2014, including a full GST rebate (administered by Canada Revenue Agency), and $11.8 billion for the Gas Tax Fund;
• $25 million a year in provincial-territorial base funding (for a total of $2.275 billion over seven years) to help address their infrastructure priorities;
• $8.8 billion for the new Building Canada Fund which will go towards strategic projects as well as projects in smaller communities;
• $2.1 billion for the new Gateways and Border Crossings Fund (managed by Transport Canada);
• $1 billion in funding for the Asia-Pacific Gateway and Corridor Initiative (managed by Transport Canada);
• $1.25 billion for the new national fund for public-private partnerships (P3), managed by Finance Canada.

Building Canada will fund projects designed to deliver results in three areas of national importance: a growing economy, a cleaner environment, and stronger communities.

The Building Canada plan provides an integrated and flexible suite of programs to address key national priorities while reflecting different needs across the country. Over one-half of the plan is provided as base funding to provinces/territories and municipal governments to meet their local infrastructure needs. The balance of funding is targeted to specific projects on a merit basis.

Infrastructure Canada oversees and coordinates the implementation of the Building Canada plan and is also directly responsible for the implementation of three initiatives: the Building Canada Fund, the Provincial/Territorial Base Fund and the Gas Tax Fund. An Infrastructure Framework agreement is to be signed with each province and territory. Under the agreement, an Infrastructure Framework Committee of senior officials is established to oversee implementation of the Building Canada plan in each jurisdiction.

Building Canada Program Funding

Building Canada Fund

The Building Canada Fund (BCF), the cornerstone of the $33 billion Building Canada plan, has been designed to support federal objectives of economic growth, a clean environment, and stronger and safer communities. It includes three components: (1) the Major Infrastructure Component (MIC), which focuses on larger projects of national or regional significance; (2) the Communities Component (CC), which focuses on projects in smaller communities with populations of less than 100,000; and (3) the National Infrastructure Knowledge Component (NIKC). The NIKC has two sub-components: Strategic Research and Partnerships, to support research, knowledge and capacity-building; and Feasibility and Planning Studies, to support collaborative feasibility and planning studies on public infrastructure projects. Through the NIKC component, the BCF will provide an opportunity to enhance and strengthen infrastructure knowledge generation and create more flexibility to move forward in supporting world-class infrastructure for Canada through applied research focussed on current and future government priorities.

The BCF will address both large strategic infrastructure projects as well as smaller-scale municipal projects, recognizing that infrastructure needs may vary depending on the size and location of the communities where the project will be. There are 17 categories of eligible projects to support the construction, renewal or material enhancement of public infrastructure that fosters economic growth, supports a cleaner environment, or promotes stronger and safer communities. Five of these categories (Water Infrastructure, Wastewater Infrastructure, Public Transit Infrastructure, Core National Highway System Infrastructure, and Green Energy Infrastructure) are considered National Priorities under the MIC. As such, the federal government's objective is to target 67% of MIC funding on a national basis to these categories. A complete list of eligible project categories under BCF can be found on the Building Canada website: www.buildingcanada.gc.ca.

For large-scale projects covered under the MIC, infrastructure priorities are discussed between the federal and provincial/territorial governments. For community-based initiatives falling under the CC, there will be a formal application process with parameters set out in an agreement that will be negotiated with each province.

Building Canada Base Funding

The Provincial/Territorial Base Fund

The $2.275 billion Provincial/Territorial Base Fund (PT Base Fund) represents a predictable funding stream that provides each province and territory with $25 million per year for seven years. Under the PT Base Fund, each jurisdiction will receive $175 million over the seven year period¹. This fund is designed to contribute to the restoration of the fiscal balance while at the same time contributing to the enhancement of Canada's public infrastructure system.

Provinces and territories provide an annual capital plan, to which the federal government contributes $25 million each year. Infrastructure improvements can include areas covered by the Building Canada Fund, as well as non-core national highway system improvements, safety related infrastructure and municipal infrastructure.

The Gas Tax Fund

Budget 2007 extended the Gas Tax Fund (GTF) from 2010 to 2014 at $2 billion per year. The Gas Tax Fund extension is the largest component of the $33 billion Building Canada plan. As a result, by 2014, municipalities will receive $11.8 billion in stable predictable funding through this mechanism. Budget 2008 announced the GTF as a permanent measure beyond 2014, at $2 billion per year, which will make it the first ongoing program of its kind. Municipalities can pool, bank and borrow against this funding, providing significant additional financial flexibility. This funding enables municipalities to make investments in infrastructure projects that address local needs and help to produce the shared national outcomes of cleaner water, cleaner air and reduced greenhouse gas emissions.

The eligible categories of investment for the GTF include public transit, water and wastewater infrastructure, community energy systems, the management of solid waste, and local roads and bridges that enhance sustainability outcomes. The GTF also provides funding to increase the capacity of communities to undertake long-term planning. Funding for planning capacity is complemented by a requirement for communities to develop Integrated Community Sustainability Plans (ICSPs), which are long-term plans aimed at improving sustainability outcomes in Canada's communities. To ensure accountability to Canadians, communities report on their use of the funds on an annual basis.

The GTF involves agreements with all provincial and territorial governments, two municipal associations and the City of Toronto. The jurisdictions report on an annual basis for the previous fiscal year. Therefore, the current financial reports available are based on the 2006-2007 annual expenditure reports submitted by the signatories.

The major accomplishments related to the Building Canada plan during 2007-2008 include:

• Developing and implementing a comprehensive plan for providing a long-term policy framework to support predictable and long-term infrastructure funding;
• Developing a policy framework and program terms and conditions for infrastructure funding and programs announced in Budgets 2006 and 2007;
• Securing Cabinet approval of the plan and overall policy framework to allow signing of framework agreements with provinces and territories;
• Securing Treasury Board approval of the terms and conditions for the Building Canada Fund, the provincial/territorial base funding and the Gateways and Border Crossing Fund;
• Signing eight Building Canada framework agreements – with British Columbia, New Brunswick, Nova Scotia, Newfoundland and Labrador and the three territories – with negotiations on the remaining five framework agreements well advanced;
• Signing of the Provincial Base Funding Agreement with Nova Scotia;
• Identifying priority investments in five provinces and territories to be considered for funding under Building Canada;
• $778 million of the GTF allocation ($790 million) was transferred to the provinces/territories, to be in turn allocated to their municipalities;
• The first GTF extension agreement was signed with British Columbia in March 2008;
• 1,967 new GTF projects were reported for 2006-2007², with a cumulative total of 2,233 projects funded to date (i.e., for 2005-2006 and 2006-2007), benefiting over 2,700 municipalities.

Sunsetting Programs

The Canada Strategic Infrastructure Fund, Border Infrastructure Fund, Infrastructure Canada Program and Municipal Rural Infrastructure Fund

These four programs are delivered or coordinated in partnership with other federal departments and agencies. For the Canada Strategic Infrastructure Fund (CSIF), Border Infrastructure Fund (BIF) and Municipal Rural Infrastructure Fund (MRIF), projects are managed collaboratively under the terms of specific Memoranda of Understanding. For the Infrastructure Canada Program (ICP), funding was transferred at the beginning of the program to our federal delivery partners, whose ministers are accountable for this program. As the coordinator and funding agent for CSIF and BIF, Infrastructure Canada is responsible for project review, selection and approval, negotiation of the contribution agreement and, in cooperation with federal delivery partners, ongoing monitoring and oversight. For CSIF- and BIF-related transport projects, Transport Canada takes the lead responsibility for the above listed activities and Infrastructure Canada participates in a supportive role. For the MRIF program, lead responsibility for project review, selection and ongoing monitoring and oversight rests with our federal delivery partners.

During 2007-2008, Infrastructure Canada provided close to $2 billion to support critical infrastructure priorities across Canada – an increase of 33.5% over 2006-2007. The major accomplishments of these four programs during 2007-2008 are as follows:

• CSIF: The $5-billion CSIF, originally established in Budget 2001, is one of the large-scale strategic programs. During 2007-2008, nine projects were announced with a total federal allocation of $210.1 million. As of March 31, 2008, a total of 71 projects have been announced, with a value of almost $4.5 billion. Refer to Sections II and IV for additional details.
• BIF: Announced in Budget 2001, the BIF was established as a $600-million fund, targeting infrastructure primarily at the six largest surface border crossings between Canada and the United States, as well as several other crossings. Since inception, there have been 12 BIF agreements, with a total federal commitment to date of $550.1 million. Refer to Sections II and IV for additional details.
• MRIF: Budget 2003 established this community-based fund, with an allocation of $1 billion for smaller-scale municipal infrastructure projects designed to improve the quality of life and economic opportunities in smaller centres, including a component addressing the infrastructure needs of First Nations. During 2007-2008, 821 projects were approved, valued at $212.4 million. As of March 31, 2008, a total of 1,778 projects have been approved, with a total federal investment of $871.3 million. Refer to Sections II and IV for additional details.
• ICP: This community-based fund was set up in 2000 and, as of March 31, 2006, all the original ICP funding had been committed to 3,871 projects across Canada, totalling more than $1.9 billion. The Program was extended to March 31, 2009, and to March 31, 2007 for the First Nations component, to provide more time to complete approved projects. A subsequent extension until 2011 was approved in 2007 (excluding the First Nations component).

Figure 2 illustrates the funding breakdown by project categories for these four programs (CSIF, BIF, ICP and MRIF).

Figure 2: Summary of Total Funding for Approved or Announced Projects (CSIF, BIF, ICP and MRIF) by Project Categories, as of March 31, 2008 ($M)

The Public Transit Fund (PTF)

Through the Public Transit Fund (PTF), the Government of Canada provided $400 million to support investments in public transit infrastructure in cities and communities. Modeled on the federal Gas Tax Fund, funding under the PTF was allocated to provinces and territories on a per capita basis between 2005-2006 and 2006-2007, to be spent over five years. The PTF offers the potential to reduce greenhouse gas emissions and smog in urban areas by improving services and offering Canadians greater flexibility in their transportations options.

The jurisdictions report on their PTF spending on an annual basis, at the same time as when they do their GTF reporting.

The major accomplishments of the PTF program are as follows:

• In 2006-2007, provincial and territorial PTF signatories spent $190 million, nearly half of the total allocated PTF amount.
• Nunavut, Yukon and PEI spent their entire PTF allocation on projects.

First Nations Communities

First Nations Infrastructure Fund (FNIF)

Announced in October 2007, the First Nations Infrastructure Fund (FNIF) pools resources from the Gas Tax Fund, the Municipal Rural Infrastructure Fund (MRIF) and the Indian and Northern Affairs Canada Capital Facilities Maintenance Program (CFMP) to create a $131 million program designed to help address the infrastructure needs for on-reserve First Nations communities within the provinces. FNIF is administered by Indian and Northern Affairs Canada.

The objectives of FNIF are to: improve the health and safety of First Nations communities; contribute to a cleaner and healthier environment; enhance collaboration between the Government of Canada and First Nations communities; and, leverage other sources of funds for First Nations infrastructure projects.

Four categories of projects are eligible under the program, each with several sub-categories: planning and skills development; solid waste management; roads and bridges; and, energy systems.

The program is competitive and application-based. Bands or tribal councils will be typical applicants and the program's administration will include national and regional committees that will review and recommend projects. For more information, please visit: http://www.ainc-inac.gc.ca/ps/hsg/cih/ci/prg-index_e.html.

Priority 2: Developing Policy, Knowledge and Partnerships

Policy Development

Infrastructure Canada works to support public infrastructure needs through the development of strategic policies that are based on sound knowledge and strong partnerships and address existing and emerging challenges and opportunities. In 2007-2008, Infrastructure Canada continued to deliver high quality and timely policy support and advice to the Minister and to develop strategic policies based on sound knowledge and strong partnerships. Some results achieved include:

• Leading the development of the Building Canada plan that was announced in Budget 2007.
• Designing infrastructure programs and initiatives that enable provinces and territories as well as cities and communities and the private and non-profit sectors to contribute to Canada's competitiveness, environmental and quality of life objectives.
• Securing Cabinet approval of the Building Canada plan and overall policy and program framework to allow signing of framework agreements with provinces and territories.
• Signing several Building Canada framework agreements, as noted earlier.
• Conducting interim due diligence studies and providing project selection advice to the Minister.
• Providing parliamentary and cabinet support to the Minister to ensure that Infrastructure Canada perspectives are incorporated in relevant Parliamentary, Cabinet, interdepartmental and portfolio briefing and policy documents.

Knowledge and Partnership Development

On behalf of the Government of Canada, Infrastructure Canada seeks to build capacity and to develop and share knowledge about public infrastructure needs and policy options through research, communications and other partnership initiatives.

Infrastructure Canada contributed to the objective of generating and disseminating knowledge of infrastructure challenges in Canada by conducting in-house research, by providing targeted financial support to initiatives by other Canadian and international organizations, and by participating in major multi-stakeholder initiatives, such as the Centre on Infrastructure under the CanCompete initiative of the Conference Board of Canada. Reports produced by departmental research analysts and released for discussion or information purposes included Best Practices in Brownfield Management and Redevelopment, and Urban Transportation in Canada: Key Issues, Challenges and Policy Response at the Provincial/Municipal Levels.

Infrastructure Canada is supporting a major collaborative project between the National Research Council Canada (NRC) and the National Round Table on Sustainable Infrastructure (NRTSI) aimed at improving knowledge of Canada's infrastructure. The NRC and Engineers Canada (representing NRTSI) will work collaboratively to establish scientific and engineering methods and develop nation-wide assessment tools for measuring and reporting on the state, performance and management of Canada's core public infrastructure.

Infrastructure Canada also continued to develop and strengthen partnerships with other levels of government, key stakeholders and international organizations to foster information exchange and sound policies and decision-making on public infrastructure. The department participated in the Federation of Canadian Municipalities (FCM) Sustainable Communities Conference and Trade Show and in several presentations on Integrated Community Sustainability Plans. Collaboration on international initiatives included working with the World Bank on developing lobal city indicators, working with the Province of British Columbia and Metro Vancouver in preparation for the first meeting in Canada of the Commonwealth Local Government Forum (CLGF), and funding support and extensive input to an ongoing OECD Metropolitan review of Toronto, in cooperation with the Province of Ontario and City of Toronto.

1.4.2 Infrastructure Challenges

In 2007, the average age of Canada's public infrastructure decreased to 16.3 years, a reduction from its peak of 17.5 years in 2000. The average age of public infrastructure has been falling almost steadily in most provinces for the past few years. This rejuvenating trend was driven mainly by large investments in highways and roads in several provinces.

Modern, world-class public infrastructure is a key factor in achieving the Government's goals of a stronger economy, a cleaner environment and better communities.

Infrastructure and the Economy

During 2007-2008, Canada's economy continued to be strong, with growth rates that surpassed those of all other G-7 nations, however, if Canada is to continue to live up to its potential in a global economy characterized by emerging economic superpowers, international "just-in-time" supply chains and fierce competition, modern, efficient and reliable infrastructure is essential to the country's prosperity today and for the long-term.

Modern, efficient infrastructure can encourage foreign investment and support economic growth. Research shows that inadequate public infrastructure tends to drive away foreign investment more so than quality infrastructure attracts private investment. This, in turn, suggests that public infrastructure is taken "as a given" – something that must be present.

Public infrastructure is also related to productivity. Congestion, for example, takes a major economic toll – it slows movement of goods and impacts productivity. Transport Canada estimates the total annual cost of congestion in terms of lost time and fuel consumption to be between $2.3 billion and $3.7 billion (in 2002 dollars) for Canada's nine major urban areas.

Modern, efficient infrastructure is necessary to get Canadian goods and service to global markets, which is critical for Canada, the most trade-dependent nation among the G-7. Exported goods and services accounted for 38% of Canada's gross domestic product (GDP) in 2005.

More than $1.8 billion in trade crosses the Canada-US border alone each day. In the last decade, trade with the United States has grown by an average of almost 6% a year. Canada's growing trade with emerging economies, particularly in Asia, is also straining the transportation system. From 1999 to 2004, Canada's merchandise exports to China grew, on average, by 20% a year. This sharp and sustained rise in trade and traffic puts relentless pressure on major corridors and border crossings, creating bottlenecks and impeding the flow of goods and people. Having the infrastructure in place that allows the transportation system to move people and goods – quickly and reliably – is crucial to Canada's competitiveness.

Canada's three largest cities (Toronto, Montreal and Vancouver) generate 35% of the country's GDP, a major factor in the broader Canadian economy. Modern infrastructure also creates employment opportunities and attracts skilled knowledge workers, particularly in Canada's urban centres, boosting the cities' growth and competitiveness. Modern, efficient infrastructure providing water, energy, and local transportation, as well as facilities for culture and sports, is critical to attracting people, jobs and investment in communities across Canada.

Infrastructure and the Environment

Maintaining a healthy and sustainable environment is directly related to the well-being and prosperity of Canadians. Infrastructure investments can be a powerful tool for achieving environmental goals. Better infrastructure planning and construction can reduce the impact of human activity, and help protect and improve the environment.

According to Environment Canada, air pollution is estimated to cause some 5,900 premature deaths each year in eight major cities in Canada, with personal transportation being among the main causes of air pollution. Shifting a larger portion of this traffic to public transit can improve air quality by providing an alternative to driving that is energy efficient and lower in emissions. In addition, Environment Canada's 2006 Greenhouse Gas (GHG) Inventory reports that the transportation sector is responsible for over 26% of GHG emissions in Canada. Enhanced public transit will help Canadian efforts to address climate change issues. A transit rider creates 65% lower greenhouse gas emissions than an auto user for the same trip, and commuters who take transit just twice a week can reduce their emissions by 25%.

Energy generation is another major contributor to air pollution in many areas of the country. In general, Canada has one of the most diversified electricity generation bases in the world, with sources including natural gas, oil, coal, nuclear power, and hydro-electricity and other renewable energy. However, there is an increasing need to make Canada's energy supplies and technologies cleaner and more efficient.

Water pollution is another major environmental challenge. Wastewater effluents are one of the largest sources of pollution to Canadian waters. Although 84% of inland municipal populations in Canada that are served by sewers receive secondary or tertiary wastewater treatment, a minority of coastal communities served by sewers has only secondary treatment, with most having only primary or no treatment at all. In addition, the cost of treating health problems related to water pollution is estimated at about $300 million per year. Again, effective modern infrastructure is needed to ensure sufficient processing and purification of wastewater, both for the protection of human health and to ensure the long-term viability of Canada's aquatic environments.

Infrastructure and Communities

Canada's national strengths are a function of the strengths of its communities, whether large or small, urban or rural. Liveable and prosperous communities of all sizes define Canadians' standard of living, quality of life and overall well-being. These communities must continually adapt to increasingly rapid change, and provide the infrastructure to maintain and improve residents' quality of life.

In the integrated global economy, Canada's large cities must compete with other global cities for private-sector capital investment and a skilled workforce. Today's skilled knowledge workers have high job mobility, picking and choosing the community where they will apply their skills. Cities and communities that provide a high quality of life are therefore able to attract, retain and create the required human capital to remain economically competitive. Talented professionals and investors are attracted to healthy, prosperous, vibrant and safe communities supported by public infrastructure such as public transit, sports facilities, green spaces, and arts and cultural institutions. Although many of Canada's largest cities consistently rank highly on global quality of life surveys, they face constant competition to maintain this standing.

Smaller communities also have unique challenges. They must build and maintain the full range of municipal infrastructure regardless of their population size. A lack of reliable and affordable transportation is seen as an obstacle to community development, reducing citizens' mobility and creating barriers and costs for community and rural businesses. In remote communities, the lack of broadband communications service is another significant deterrent to growth and residents' quality of life.

An important determinant of a community's liveability is the safety and reliability of its drinking water – an infrastructure issue of growing concern in many centres across Canada, particularly smaller and rural communities.

In addition to other issues facing cities and communities, decades of expansion and industrial development have contributed to a prevalence of "brownfield" sites across Canada. The National Round Table on the Environment and the Economy estimates that redevelopment of these sites has the potential to generate up to $7 billion a year in public benefits.