Canada’s Debate

I’ve talked about the infrastructure deficit a couple of times in the past; and have even mentioned it on AD Radio on a couple of ocassions when I’ve called in. Well, the subject is in the news once again, as is Harper (and primarily) Flahertys’ appallingly weak response.

Here are the basic facts: Canada’s municipal and rural infrastructure is in staggeringly poor repair, most of it (in adjusted capital spending) being built between 1900 and 1970. A large amount of that infrastructure is so old/dicrepid that it is impossible to project it’s long-term lifespan, and a large majority of it will pass the point that it is repairable in the next decade. The cost to repair/replace this infrastructure is well over $100 Billion dollars. Almost all of it is municipal.

I highlight that last fact because it is at the root of both the problem, and the above-mentioned weak response. Municipal/regional governments depend largely on property taxes for their revenues, and property taxes usually increase along with the rate of inflation, if that. Most of Canada’s urban infrastructure was built during periods of economic expansion and intense urban growth. Toronto’s infrastructure was built in the early part of the 20th century during the two major influxes of European settlers, and during the 1960’s when monied newcomers from Asia started to arrive. (The story is similar in Vancouver, Calgary, etc.) During the periods of expansion the cost of labour and material was relatively stable, and maintenance was inexpensive as the systems being built were being used at rates well below capacity. End result, cities could afford to build infrastructure as they expanded. Fast forward to the 21st century: labour and material costs have far out-stripped inflation, infrastructure systems are being used at peak capacity (or higher), and perhaps most significantly, municipalities are required to use the money raised from property taxes to pay for obligations that didn’t exist during previous build-cycles.

Is it becoming a bit more clear why I highlighted that second-paragraph sentence above in bold? The economics of urban areas have changed fundamentally by the vary nature of Canada’s changing economy. Now lets reconsider the last sentence of the paragraph above. I probably don’t need to explain the concept of “downloading” again so I will spare you the rant. It happened in Ontario (where over 40% of Canada’s urban infrastructure exists), and it happened elsewhere. Some would suggest that Flaherty’s curt response to suggestions that he should “help out” is a result of his not caring… I don’t really believe that. The Conservatives downloaded costs and responsibilities not only to balance the books, but to “downsize-via-crisis.” This is a tried and true technique for shrinking government: by cutting taxes (always popular), the Conservatives can constrain a government’s ability to manage and fund social programs, making cutbacks appear necessary. In Ontario the Tories cut income taxes to create a budget “crisis,” and responded by massive cuts to social programs and eventually downloading. If you consider the Tories subsequent responses to municipal woes in the Province (the language of responsible spending is predominant) it is clear that the government was hoping not just to make someone else pay, but to make someone who cannot afford to pay responsible, so that the programs would eventually be dismantled. Harper and Flaherty are both extremely conservative (don’t let their cries of “Moderate” confuse you) and would like nothing more than to see Canada’s welfare state dismantled entirely.

The ultimate goal of the Blue Tory brand of conservative is the privatization of all non-constitutional government services (health care, welfare, etc.) By creating and “supporting” budgetary shortfalls they are able to force the door open for private participation in what are traditionally government-operated areas of jurisdiction. The infrastructure deficit is just the latest example of Harper and his cronies tying the hands of government in an attempt to force a sea-change in Canada’s public-sector landscape. While the cost may be prohibitive make no mistake: The Tory’s are treating this as an opportunity to advance their agenda, not a costly time-bomb they are hoping to avoid.