Your argument has validity as well, but I don't think it should be taken to the extreme it currently is. Smaller cities and towns having horrible transit is a major factor in internal migration to larger centres, and ultimately facilitates the decay of smaller cities and selects for them to be inhabited by increasing numbers of F150 driver types. It sharpens the rural urban divide and makes it even harder to leverage provincial and federal money for transit investment, because people who don't have or don't take transit don't see the value in it, aren't personally invested and are especially likely to resent "their" money being spent somewhere else. It's not like there's a set amount of funding transit can have, it's just a matter of how much politicians feel they can win support by bribing people with it.
The more important transit is as a social issue, ultimately the more money will be available. This means that a large section of the population needs to be won over to transit even if they don't ride it every day. Intercity transit is far, far more important for rural people because for rural people basically all travel is intercity travel on some level, as genuine urban transit is really only possible if you have an urban area of a certain size already. If people have a car free way of getting to cities, they're also far less likely to drive around in them, which helps ease congestion and drive up ridership for urban systems.
I think another very Canadian dimension to the issue is the relentless Calvinism around what transit should be for. The ideal is often grim people taking the bus to work at 7am, not people visiting grandparents in their small hometown, tourists going hiking in a provincial park. Culturally people still see not owning a car as a personal moral failure, and that car free people should be confined to whatever city they live in and not allowed to leave.
