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Big infrastructure news for small municipalities

Ontario Premier Kathleen Wynne is taking dead aim at the province’s crumbling infrastructure. Last month, she asked for $12 billion in annual funding from the federal government. A mere two weeks later, she announced Ontario’s $100 million annual infrastructure fund for small municipalities. The reaction from municipalities, journalists, and the public has been a real indication of the fragmented state of Canadian politics.

The fact that municipalities are dependent upon infrequent, and unpredictable, handouts from the provincial and federal governments for infrastructure makes it very difficult for them to maintain roads, bridges, water systems, and sewer systems. The “infrastructure deficit”, defined as that which needs to be repaired or built, is estimated at $100 billion across the province–with much of it over the age of 50. Starting in the 1970s with the decrease in government spending, provincial and federal governments have spent astonishingly little on infrastructure, particularly repairing existing highways and bridges. Many, including the Federation for Canadian Municipalities, have argued that politicians have been ignoring infrastructure repairs for far too long, as most of it was built during the country’s expansive 1950s and 1960s. With climate change causing more flooding and other severe weather, it’s particularly critical that our cities’ skeletons are strengthened.

Most of Canada’s municipal infrastructure is built through partnerships between all three levels of government, because the country’s governance structure allows the federal government to generate much more revenue through taxation and other fees than the provinces or municipalities. The federal government’s contributions to infrastructure, such as highway widening or wastewater systems, is substantial but sporadic. The federal government contributes just half a percent of the GDP annually to infrastructure. Wynne’s appeal to the federal government to raise their infrastructure contribution to municipalities to 2 per cent of the GDP would result in $12 billion annually for Ontario–a stable, reliable funding source for the province.

Federal Finance Minister Joe Oliver trashed Wynne’s proposal as “divorced from reality”; no doubt he sees the transfer of $30 billion annually to municipalities as insane. But as Lee Prokaska wrote in the Hamilton Spectator, “Recently it has been increasingly clear that the federal Conservative government prefers to show Ontario the back of its hand, rather than extend a helping hand.” Ontario could have done what Manitoba did last year: raise its provincial sales tax by one per cent and devote the increase to infrastructure. But provincial politicians (and many municipal ones) have spent decades convincing Ontario residents that taxes are evil. Now they need to backtrack and re-educate the public that taxes are necessary to keep our cities running.

On the other end of the spectrum, small town mayors like Heather Jackson of St. Thomas and Al McDonald of North Bay praised the new Ontario Community Infrastructure Fund for its stability and its funding formula. Half the money will be distributed through a fair and transparent formula and the other half will be given out through an application process. This will help ensure small municipalities, whose projects are often deemed less critical than those of the larger cities, get their fair share of the infrastructure pot. But if you have espoused the mantra of the balanced budget, if in fact this has become your rigid ideological stance, you cannot believe that cities’ infrastructure needs are significant.

Public spending on infrastructure is necessary and cannot happen without tax revenues. The fact that many Canadians don’t seem to understand this basic fact means that politicians (whether mayors like Rob Ford or prime ministers like Stephen Harper) continually to convince the public that taxes are evil and that somehow money for repairs and new projects can materialize out of thin air.


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