||Canada: Federal Government Wants More Private Sector Cash in New Infrastructure Plan
||Friday, January 25, 2013
Public Institutions, Knowledge Management in Government
||Jan 28, 2013
OTTAWA — The federal government is hoping to use its upcoming budget to introduce a new long-term infrastructure plan for municipalities that draws more private-sector dollars to match billions of dollars in federal investments in city roads, public transit, water systems and other infrastructure.
The office of Transport Minister Denis Lebel told Postmedia News that the government wants to build on a track record of policies, delivering jobs and economic growth, as it replaces an existing $33-billion seven-year plan expiring in 2014.
Lebel’s spokesman, Mike Winterburn, said the new plan would also “generate better value for taxpayers,” by encouraging partnerships with the private sector that also help address long-term sustainability.
“The end result will respect taxpayer’s ability to pay, as governments at all levels face fiscal restraint,” he said.
The Federation of Municipalities has asked the government to make its next plan a 20-year deal, to replace the existing seven-year plan and allow them to adequately plan for long-term needs. But so far, the government hasn’t confirmed details about its timelines, only pledging a “long-term” initiative.
The federation, which represents about 90 per cent of the country’s population, said it supports public-private partnerships in some cases, but warned that they can sometimes require higher costs up front, and don’t always apply to small towns.
Claude Dauphin, the federation’s vice-president and mayor of the Montreal borough of Lachine, said cities have always needed financial help from other governments to maintain infrastructure since the municipalities must rely mainly on property taxes that give them less than 10 per cent of tax revenues in Canada.
“We own 60 per cent of the infrastructure in Canada, and at the same time, (maintaining infrastructure) is a matter of quality of life. It’s a matter of public health and public safety,” said Dauphin in an interview. “So we need to invest in our infrastructure and we need the other governments to help us. If they want to replace the federal money by private-sector money, at some point we’re going to have a problem because we won’t be able to follow and it won’t work.”
The existing federal infrastructure plan – known as the Building Canada Plan – included a $1.25-billion public-private partnership fund that has contributed to 14 different projects in Quebec, Ontario, Saskatchewan, Alberta, British Columbia and Nunavut.
The cities have praised the federal government for maintaining a gas tax revenue sharing plan that now gives them about $2 billion per year, distributed to all municipalities for their infrastructure needs based on the size of their populations, along with some other funding programs that are expected to continue.
But the cities have also expressed concerns about other funding options such as the Building Canada Fund for major infrastructure spending.
This fund divided about $7.8 billion among 157 projects, but left most of the country’s 4,000 municipalities without any access to the money.
Winterburn pointed out that with all of the funds combined, cities have received billions of dollars in federal funding for 7,500 projects in “all corners of the country,” in recent years.
Karen Leibovici, an Edmonton city councillor who is president of the federation, said application-based programs such as the Building Canada Fund, can have a role in the new plan, but should not be the only option.
“It is a bit of a lottery system where you have losers and you have winners,” said Leibovici. “What our proposal talks about is (a system where) every municipality knows on a long-term basis what their funding is going to be so that they can in fact put in place an asset management plan that can … produce results with regards to the infrastructure that they have.”
The federal government has rejected calls from municipalities for a national public-transit strategy, but Lebel has said mass transit investments would remain a part of future infrastructure programs, without imposing a “made-in-Ottawa strategy.”
Lebel’s office also said that its existing infrastructure programs have delivered about $5 billion for public transit projects across the country since 2006.
Leibovici said that the government should reconsider dedicating a portion of its new plan toward public transit as part of an economic strategy.
“You only need to sit in traffic in a major city to know that gridlock is not good for the economy,” she said.
Municipalities have estimated that they need about $123 billion to bring their existing infrastructure up to acceptable levels, and another $115 billion to meet growing demand.
But Leibovici said she was encouraged by discussions in recent years with the government, including recent consultations led by Lebel and junior minister Stephen Fletcher, and she is hopeful the government will strike the right balance.
“It really is a once in a generation opportunity to fix what didn’t work so well in the past,” she said.