Backgrounder: Cities Look to Ottawa for Infrastructure Funding
November 25, 2012
TORONTO – Canada is facing an unprecedented infrastructure crisis – an assessment countless studies, expert testimonies and media reports confirm. Traffic gridlock, failing water systems and potholed roads make it clear: a concerted effort by all three levels of government is needed to tackle the growing infrastructure crisis in earnest.
Canada’s Infrastructure Deficit
Communities across Canada are facing the reality that much of the post-war infrastructure is reaching the end of its lifespan. Population growth and increasing urbanization is outpacing investment and persistent funding shortfalls prevent municipalities from performing crucial maintenance tasks. Canada’s infrastructure deficit, calculated as the total pent-up investments to maintain and replace decaying municipal infrastructure, has ballooned to $171 billion.
The $171-billion estimate can be broken down by category: water and waste water systems 25%, transportation 17%, transit 19%, waste management 6%, and community, recreational, cultural and social infrastructure 33%.
Current Infrastructure Challenges
The symptoms of Canada’s infrastructure crisis are manifold: increasing traffic gridlock places Canada’s cities in the top tier for global commute times. Total GDP losses stemming from gridlock is estimated to be north of $10 billion annually (that’s more than the GDP of the three territories and PEI combined).
Roads: 21% of municipal roads are estimated to be in poor or very poor condition. Potholes, sinkholes and falling concrete chunks pose increasing safety hazards for drivers and pedestrians.
Public Transit: year after year, transit ridership across Canada breaks new records. But this is not matched by investments in maintaining and expanding transit networks. Canada is the only G8 country that does not have a national policy framework for transit. Olivia Chow as the NDP Transport Critic is calling for a National Transit Strategy to remedy the situation and put dedicated transit funding in place. This call is supported by the Federation of Canadian Municipalities and the Canadian Urban Transit Association.
Water: more than 200 communities across Canada are struggling with drinking water problems, often linked to outdated pipe systems and treatment plants. To bring local water treatment systems in line with federal wastewater regulations, an estimated one in four treatment plants will need to be replaced.
Rural Communities: affected by cuts to VIA Rail and Greyhound, lacking in funding for road and bridges upkeep, many rural communities find themselves increasingly cut off from services and jobs in urban areas. Decrepit or insufficient water and wastewater infrastructure is another problem.
Aboriginal Communities: after decades of neglect and federal underinvestment, many aboriginal communities face a multi-faceted crisis that includes inadequate housing, transportation links, unpaved roads, unsafe drinking water and dilapidated or non-existent public buildings like schools and community centres.
Roots of Canada’s Infrastructure Woes
Over the past 50 years, the proportion of infrastructure ownership has evolved from a roughly even distribution between federal, provincial/territorial and local governments to a completely lopsided situation. In 1961, federal, provincial/territorial and municipal governments each controlled respectively 24%, 45% and 31% per cent of the national infrastructure in terms of value. Today, the federal share has dropped to approximately 12%, the provincial share to 30%. Local governments are now in charge of roughly 58% of Canada’s infrastructure.
At the same time, local government expenditures on infrastructure have steadily risen, while federal infrastructure spending has decreased, leaving total government infrastructure spending well below the levels of the 1960s and 1970s. Back then, total investments in infrastructure amounted to more than 4% of annual GDP, only to drop to 2% in the early 2000s.
Municipalities only collect 8 cents out of every tax dollar generated in Canada while provinces and the Federal Government share the remaining 92 cents almost equally. It is no surprise that our communities struggle to find the money for direly needed infrastructure investments.
Current federal infrastructure funding is too little and too beholden to partisan interests and backroom deals due to the existing application process. The ad hoc funding model favoured by Harper is better suited to photo ops rather than building dynamic and strong communities.
Call for Long-Term Federal Infrastructure Funding
The Federal Government needs to step up to the plate and dedicate significant resources to tackle Canada’s infrastructure challenges.
We need to put a long-term infrastructure plan in place that takes politics out of the funding process by being accountable, transparent and non-partisan. Instead of one-off funding through an application process that is beholden to partisan interests, clear-cut funding formulas like per-capita allocations will ensure reliable, predictable funding for provinces/territories and municipalities.
The Federal Government must commit to an infrastructure funding plan for a 20 year-term to provide communities with the planning horizon they need for large capital investments. Periodical reviews are need to ensure targets are being met and investment volumes adjusted.
The time for the Federal Government to act is now. With the Building Canada Fund set to expire in 2014, Canada’s municipalities need immediate funding support to avoid missing a vital construction season. With 11,000 jobs being created for every $1 billion in infrastructure investments, job growth and economic productivity hinge upon federal infrastructure funding. It is a crucial opportunity that Canada cannot afford to waste.