Economic Effect
Transit City was expected to create approximately 200,000 new jobs in Ontario from $8.3 billion invested. This includes operation, construction, and economic stimulus effect of spending. Unemployment reached 9% in 2010, the GTA's highest level since 1995.
The Ontario government's promised funding for Transit City creates short-term economic growth of $12.4 billion per year, adding in the near-term 2.1% to Ontario's GDP, according to the American Public Transportation Association.
According to the Federation of Canadian Municipalities research, Transit City was to produce a first-year GDP gain of $17.3 billion, were all the money to be spent in the first year. After five years the project levels off to add $8.0 billion per year to GDP, with each $1 billion spent on transit adding 0.06% to Canada's GDP annually. This compares closely to US Congressional testimony, which shows infrastructure investment to stimulate annual GDP at a multiplier of 1.69 within one year, or $14 billion per year for Transit City. Both studies count direct impact of spending only.
In addition to this direct consequence, long-term indirect effects on business costs, productivity, and consumer spending from reduced congestion and travel costs create an additional $14.1 billion of value annually to Ontario's economy. Other indirect effects not measured are improved air quality and public health and reduced carbon emissions from extending rapid transit to 1.1 million more people.
Ontario taxes capture 12% of Ontario's GDP, meaning that Transit City's stimulus effect directly adds to Provincial tax revenue. Transit City's direct economic impact of $12.4 billion per year nets the Ontario treasury $1.4 billion in annual tax revenue. Indirect effects on congestion and transportation costs produce an additional $1.7 billion per year in tax revenue. Government of Canada Bonds currently offer 4% interest for a 10 year term. Transit City's $8.3 billion expansion funding, if amortized over 10 years at prevailing bond rates, cost the Province $1.2 billion per year. With Provincial tax revenues of $3.1 billion per year, Transit City easily makes up its financing cost.
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