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Transit fix needed for Toronto economic growth: TD

Fin - Balance Sheet - CA
The CN Tower is seen along the Toronto skyline from Centre Island.

The Toronto region needs to fix its traffic gridlock problem that is not only a drain on productivity, but also the health of thousands people sitting in their vehicles for hours a day.

That’s one of a handful of challenges highlighted in a new Toronto-Dominion Bank report about the post-recession economy of Canada’s largest urban region, which includes the Greater Toronto Area and the City of Hamilton.

Other challenges include aging infrastructure, economic competitiveness, youth unemployment, and the impact of climate change on the environment.

While the region has bounced back from the 2008-09 global recession, the Toronto region has a number of “significant" longer-term challenges to sustain future growth, the report says.

“Notwithstanding financial problems globally, the Toronto region has recorded solid gains in living standards since the Great Recession. Still, building on this relative success over the next five years in what is likely to be a slow growth, fiscally constrained environment will not be easy,” says the report from TD economists Derek Burleton and Sonya Gulati.

“The best chance of success is likely to revolve around finding areas of common challenge across the region and where residents perceive a significant payback in terms of economic benefits and improved quality of life.”

The report also recommends what actions the region and its leaders can take, such as setting priorities, make decisions through the lens of productivity and making polices and plans as an overall region, not just by individual municipalities.

TD prepared the report for a group known as the Greater Toronto CivicAction Alliance ahead of an upcoming forum to be held in Toronto on April 17.

The seven structural issues that “could derail the Toronto's region economic momentum coming out of the global recession.” These include:

Traffic gridlock: Thousands of people sitting in their cars all day is making them sick and costing the municipalities and their businesses money. The report cites a Toronto Region Board of Trade report that says traffic gridlock is costing the region $6 billion in lost productivity each year. That number is forecast to rise to $15 billion by 2031 if the status quo remains. “After years of talk, developing a world-class transportation system of the 21st century could be one major initiative that finally sees its day in the sun,” the TD report states.

Infrastructure debt: All of those roads, bridges, water and sewer systems cost big money to maintain and much of the bill goes to municipalities. The TD report says jurisdictions don’t have the “fiscal and administrative flexibility” to handle it going forward.

Aging workforce: More people retiring and fewer young people and immigrants are filling the gap. TD says this will put a damper on the region’s income-generating capacity, while at the same time putting pressure on health care expenditures.

Youth without work: While many people are getting educated in the Toronto region, too many are left unemployed once school is out. TD says Ontario’s post-secondary schools aren’t well integrated with employer needs and money spent on training is low.

Competitiveness challenged: Despite moving to reduce the tax burden of Toronto area businesses – such as the implementation of Ontario’s HST and some reduced tax rates – the region is feeling the pinch from a strengthening Canadian dollar and Canada’s growing international trade ties. TD describes business investment in the region as experiencing a “relatively subdued rebound” since the recession.

Marginalized residents need more help: While the economy has seen a decent recovery since the recession, “many residents in the Toronto region have been left behind,” TD says. The report says the income security system is “too complex” and that affordable housing supply in the region is too low.

More action on the environment: TD says the environment is not enough of a priority in the Toronto region. While there has been some progress over the past decade, “the urgency to take action has waned,” taking a back seat to the economy. TD notes that southern Ontario is seeing rising temperatures and “erratic precipitation” as a result of “climatic changes,” which needs to be addressed.