November 26, 2007

Municipal infrastructure will need $123 billion to ward off collapse, says FCM

The physical foundations of Canada's cities and communities are "near collapse," with nearly 80% of Canada's infrastructure past its service life, says the Federation of Canadian Municipalities (FCM). A study of the current state of disrepair estimates the cost of eliminating the municipal infrastructure deficit at $123 billion.

The study report, titled Danger Ahead: The Coming Collapse of Canada's Municipal Infrastructure, defines this deficit as "an estimate of the total additional investment needed to repair and prevent deterioration in existing, municipally-owned infrastructure assets."

By asset category, the estimate cost of repair and upgrading includes: water and wastewater systems ($31 billion); solid waste management ($7.7 billion); transit ($22.8 billion); transportation ($21.7 billion); and community, recreational, cultural and social facilities ($40.2 billion).

The $31-billion deficit for existing water and wastewater systems has increased considerably from the $21 billion estimate made in a similar study done in 1996, and does not include the $56.6 billion that will be required to construct new systems. In addition to the $7.7 billion needed to address the waste management infrastructure deficit, the study says another $4.3 billion will be required to meet new needs.

"Canada's economy and quality of life and the health and safety of Canadians depend on the infrastructure our municipalities build and own, yet we don't have the resources to maintain it," said FCM president Gord Steeves. "If we don't act soon as a nation to tackle this deficit, we will see more catastrophic failures in our roads, bridges, water supply and other vital infrastructure. Continued delay is unthinkable."

The study further estimated that municipalities need $115 billion for new infrastructure, which will compete with existing assets for investment and place even more pressure on already strained municipal budgets.

Dr Saeed Mirza of McGill University's department of civil engineering and applied mechanics, leader of the research team that conducted the study, said the latest estimate, compared with earlier ones, "clearly shows the municipal infrastructure deficit is growing faster than previously thought.

"Most municipal infrastructure was built between the 1950s and 1970s, and much of it is due for replacement. As assets reach the end of their service life, repair and replacement costs skyrocket. Across Canada, municipal infrastructure has reached the breaking point," he added.

The study found that one of the main reasons for the deterioration in Canada's municipal infrastructure has been a lengthy, continuing trend to deferred maintenance, especially during fiscally difficult times. Investing about 2% of a given facility's cost in its upkeep and maintenance can slow its deterioration considerably and lengthen its service life substantially. With continued deferral of maintenance, or none at all, however, the researchers say the municipal infrastructure deficit could balloon to nearly $2 trillion by 2065.

Ensuring adequate and well-maintained infrastructure is vital for environmental as well as public health and safety and quality of life reasons. Investments in public transit, for example,help reduce greenhouse gas emissions and air pollution, while modern water treatment systems are needed to provide safe, reliable drinking water and reduce the incidence of boil-water advisories, says the study report.

Steeves said FCM is calling on the federal government and all parties in the House of Commons to acknowledge the problem and the need for a real national plan to fix it once and for all. "One thing is certain," he said, "the cost of fixing this problem will only go up. Any serious plan to eliminate this deficit must begin with an acknowledgement of the scope of the problem and the urgent need to address it."

The study makes a single recommendation, calling for a national plan to eliminate the municipal infrastructure deficit and prepare the groundwork for effective management of Canada's infrastructure in the future. The first step in developing such a plan, says the FCM, must be a comprehensive national study, involving all levels of government, to determine the size, scope and geographic characteristics of the municipal infrastructure deficit.

FCM has been calling for federal government action in this area for more than 15 years. It has succeeded in persuading the federal government to contribute to municipal infrastructure funding and was instrumental in the creation of programs such as the Infrastructure Canada program, the Canada Strategic Infrastructure Fund and the Municipal-Rural Infrastructure Fund.

FCM has also played an important role in securing tax breaks from the federal government to support infrastructure upkeep. This included a full refund of the GST paid by municipalities (a benefit worth more than $700 million a year to municipal governments) and a transfer of a portion of federal gas tax funds to municipal governments. This transfer was implemented in the 2005 federal budget and extended in the 2007 budget, providing a total of $8 billion in new predictable funding for sustainable infrastructure. The 2007 federal budget further committed $8.8 billion over seven years for the new Building Canada Fund, which replaces the Municipal Rural Infrastructure Fund and the Canada Strategic Infrastructure Fund.

These and other measures have helped provincial and territorial governments begin reinvesting in municipal infrastructure upgrading, after years of cutbacks and reductions. However, the Federation says it is up to the federal government to assume the lead role because the municipal infrastructure deficit is a national problem. It compromises Canada's competitiveness, lowers the community's quality of life, and hampers Canada's cities and communities in the global competition for educated and skilled people.

The full report may be viewed on the FCM Web site, www.fcm.ca.

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