-----

Resources



Market News

 November 20, 2007
Canada's infrastructure deficit - $123 billion

 Vancouver, Canada (GLOBE-Net) - The Federation of Canadian Municipalities (FCM) has released a report which states that 80% of Canada’s municipal infrastructure is past its service life and the infrastructure deficit - estimated at $12 billion in 1985 - has risen to $123 billion.

The FCM report, entitled Danger Ahead: The Coming Collapse of Canada’s Municipal Infrastructure, states the physical foundation of Canada’s cities are "near collapse" and unless urgent action is initiated immediately, the economic, social, and environmental costs of this deficit will grow at an even faster rate.

As stated in the report, the municipal infrastructure deficit refers to the following:

  • The unfunded investments required to maintain and upgrade existing, municipally owned infrastructure assets; and
  • The funding needed over and above current and projected levels to bring existing facilities to a minimum acceptable level for operation over their service life, through maintenance, rehabilitation, repairs and replacement.

More simply, the municipal infrastructure deficit is an estimate of the total additional investment needed to repair and prevent deterioration in existing, municipally owned infrastructure assets. These assets include:

  1. Transportation (roads, bridges, curbs, sidewalks);
  2. Water infrastructure (distribution, supply and treatment);
  3. Wastewater systems (sanitary and storm sewers and related treatment facilities);
  4. Transit systems (facilities, equipment and rolling stock); and
  5. Other public infrastructure (including cultural, social, community and recreational facilities; and waste-management facilities).

According to Dr. Saeed Mizra of McGill University’s Department of Civil Engineering and Applied Mechanics, who led the research team for the report, the decay of the municipal infrastructure is growing more rapidly when compared to earlier studies. He cautions that a failure to act will incur a steeper price tag and a catastrophic failure roads, bridges and water systems.

The $123-billion estimate in the study includes "sub-deficits" for key categories of municipal infrastructure, most of which were built between 1950 and 1970:

  • Water and waste water systems - $31 billion
  • Transportation - $21.7 billion
  • Transit - $22.8 billion
  • Solid waste management - $7.7 billion
  • Community, recreational, cultural - $40.2 billion

Gord Steeves, the President of the FCM has called on the federal government to acknowledge the issue and to develop a national plan to correct the problem before the nation’s infrastructure declines even further.

For the last 15 years, the Federation of Canadian Municipalities has secured funding for infrastructure repair from the federal government in incremental amounts. Between 2005 and 2014 the federal government plans to invest $20 billion dollars. Provincial governments have been responding as well, such as Ontario’s $30 billion ReNew Ontario campaign and Quebec’s 5 year, $3 billion plan to repair its aging infrastructure.

However the FCM considers these investments very ad-hoc and short term. The group states that infrastructure financing is a long-term financial undertaking and requires investments with 30, 50 or 70-year time horizons. Short term planning will cost more in the long-term as the problems of deterioration will continue to escalate.

The FCM argues this situation constitutes a national crisis that will compromise Canada’s competitiveness in the world market and the quality of life of all Canadians. This necessitates a serious investment by the federal government to repair or replace aging infrastructure and to retrofit older buildings with more modern, efficient and sustainable energy options.

The full report, Danger Ahead: The Coming Collapse of Canada’s Municipal Infrastructure, is available here.

For More Information: Federation of Canadian Municipalities