Term Paper: Unfunded Infrastructure of Canadian Municipalities and the Risk it Poses

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Unfunded Infrastructure of Canadian Municipalities and the Risk it Poses

Canadian infrastructure has fallen into a terrible state of disrepair due to lack of funding for such projects in municipalities in Canada. The resulting problems are great and diverse ranging from insurance liabilities for the municipalities in Canada due to health and safety risk posed by lack of funding to lack of recreational space and place for citizens resulting in a loss in social capital and declining health of citizens in Canada. This problem has not gone unnoticed and efforts have been and are being made to address this problem in Canada's municipalities.

The state of Canadian infrastructure has been due to a lack of funding by the government and has resulted in a terrible state of disrepair of Canadian infrastructure.

PURPOSE of STUDY

The purpose of this study is to ascertain how and why Canadian infrastructure has fallen into such a state of disrepair and to discover what is and what might be done to address this problem.

SIGNIFICANCE of STUDY

The significance of this study is the knowledge that will be added to that already existing in this area of study.

METHODOLOGY

The methodology is this study is qualitative in nature and will be conducted through an analysis of the historical reasons these problems exist and the economic effects that lack of government funding is having on local, provincial and federal governments in Canada.

LITERATURE REVIEW

In an August 14, 2006 News Release published by the Association of Municipalities of Ontario, it is stated that the President of the Association of Municipalities of Ontario (AMO), Roger Anderson, "...applauded Premier Dalton McGuinty's commitment to a joint Provincial-Municipal review of how municipal services are funded and delivered in Ontario." (AMO, 2006) the news release of the AMO goes on to relate that the an answer has been delivered by Premier McGuitny to the "AMO's call for a joint review of how municipal services are financed and delivered in Ontario..." stated to be in need of "a plan to ensure that our communities can benefit from fiducially sustainable municipal government within a manageable period of time." (AMO, 2006) There is stated to be a shared goal of the review including the improvement of both delivery and funding of municipal programs and services and for strengthening the Province's communities." (AMO, 2006)) the focus is stated to be upon: (1) affordability for both levels of government; (2) fairness to taxpayers; (3) timely infrastructure investments; (4) provincial and municipal services effectively delivered across Ontario; and (5) long-term economic development and prosperity for Ontario and its communities. (AMO, 2006)

The work entitled: "Assessing Canada's Infrastructure Needs: A Review of Key Studies" published in 2004 states: "The existence of reliable data on the state of Canadian infrastructure is an important requirement for evidence-based infrastructure policy. Without reliable and comprehensive data, the capacity of policy-makers at all levels to plan, prioritize and evaluate investments in public infrastructure is hindered, as is their ability to develop new policy approaches." (Canada Research and Analysis: Infrastructure, 2004) Reported is a study conducted by the Federation of Canadian Municipalities (FCM) and the Department of Civil Engineering and Applied Mechanics and McGill University" which focused on defining "as the cost of rehabilitating infrastructure to an 'acceptable' level of repair." (Canada Research and Analysis: Infrastructure, 2004) the study reported is a survey of municipalities in Canada in which 589 surveys were sent to municipalities. Twenty-nine percent of the municipalities responded which is representative of approximately 55% of the population in Canada. The questions the study sought to answer were those of: (1) Quantification of asset deterioration over the last 10 years; (2) average age of existing infrastructure; (3) total cost to bring existing infrastructure to an 'acceptable level'; and (4) what are the short- and long-term needs of municipalities." (Vander Ploeg, 2003) Stated, as 'key' findings in the study are those as follow:

1) at the national level, transit, roads and curbs have deteriorated over the past 10 years, while parks and recreation facilities have improved;

2) Roads, sidewalks and bridges are in greatest need of repair;

3) Sewage systems, water distribution systems, and water supply instillations are among the oldest infrastructure facilities in Canada;

4) Where there is user pay funding to support infrastructure development and maintenance, facilities seem to be in better condition than the infrastructure supported through general revenue funding; and 4) a greater emphasis should be placed on maintenance and reconstruction of infrastructure rather than new construction of infrastructure. (Canada Research and Analysis: Infrastructure, 2004)

The work of Mizra and Haider (2003) entitled: "The State of Infrastructure in Canada: Implications for Infrastructure Planning and Policy" reports a study conducted for Canadian Infrastructure and specifically, is a review of the 1996 FCM-McGill study. Infrastructure is stated by Mirza and Haider (2003) to be lacking in clarity in its decision but is stated to include: "...roads, bridges, sewers, water supply, schools, airports, telecommunications and transit and transportation systems." (Mizra and Haider, 2003) Stated as key findings by the authors, deterioration is the determining factor in the infrastructure deficit. Three decades of deferred maintenance work have created a situation where the deterioration is not halted, it (and the associated costs) will escalate exponentially." (Mizra and Haider, 2003)

Stated secondly are estimations that "the cost of Canada's infrastructure deficit as well as the overall state of repair of Canada's infrastructure is roughly comparable to that of the U.S. The size of the deficit is roughly one tenth, for a Canadian population that is roughly one-tenth the size of the U.S.'s."

The work entitled: "A Choice Between Investing in Canada's Cities and Disinvesting in Canada's Future" states that Canadian municipalities are in a fiscal crisis stated to be the result of the downloading of increased responsibilities from the senior levels to local governments without also transferring adequate funding or access to the instruments for municipalities to raise the needed funds themselves to pay for these programs." (TD Bank Financial Group, 2002) Key findings in this report are stated in conclusions to be due to a failure to invest in urban infrastructure will "impede future economic growth and development for the country as a whole." (TD Bank Financial Group, 2002)

The work presented by L'union des Municipalities du Quebec and the Conference Board of Canada (2003) describes the total amount required from all three levels of Canadian government for restoration of the infrastructure stock of Quebec to what is considered to be an 'adequate level'. Infrastructure in this report is described as "...sewers, water delivery systems, aqueducts and public roads." (L'union des Municipalities du Quebec and the Conference Board of Canada, 2003) the report states that between the years of 1955 and 1977 the rate of investments in infrastructure "increased at a rate of "...6.6% per years, which was roughly comparable to Quebec's rate of demographic change. If it is assumed that there was a 'need' for infrastructure investments to continue to keep pace with the various rates of demographic change that affect infrastructure demand (e.g. population growth, increased urbanization, standards of living, automobile use, etc.). The infrastructure investments should have continued to increase at a rate of 2.6%, rather than the 0.1% per year that investments actually increased by, from 1978-2002. Using this hypothesis, the gap would measure $17.9 billion in constant dollars." (L'union des Municipalities du Quebec and the Conference Board of Canada, 2003) Findings of the report state: "This high-end estimate is probably cut back simply because of the unprecedented scale of infrastructure investments, especially in Montreal, during the Quiet Revolution and the leadups to first Centennial and Expo in 1967 and then the Olympics in 1976. These levels of investment were fiscally unsustainable under increased pressures of rising gasoline and other commodity prices, powerful labor unions and stagflation in the economy. Mega projects like the Metro system and Ville Marie expressway were huge up-front and one time investments that do not necessarily need to be repeated today, only serviced and maintained. However, the fact that the conservative estimate is only about 15% lower than the high-end figure is likely a testament to the overall lack of proper maintenance work in the province since 1978." (L'union des Municipalities du Quebec and the Conference Board of Canada, 2003) the work of Casey Vander Ploeg (2003) entitled: "A Capital Question: Infrastructure in Western Canada's Big Six" reports having addressed several key questions which included the question of the government sector infrastructure total deficit and "the size of the deficit in Western Canada's big cities and how the various estimates were determined." (Vander Ploeg, 2003) According to Vander Ploeg, this was accomplished through "an extensive literature review" and through exploration of three databases, which covered the total government capital spending in Canada as well as the local sector along with the six large cities in Western Canada. In the report of Vander Ploeg infrastructure was defined as: (1) transportation; (2) protection; (3) community; (4) general government; and (5) utilities and environment." (Vander Ploeg, 2003) the… [END OF PREVIEW]

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