Prime Minister Nero?
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. (more…)