THE UNFUNDED INFRASTRUCTURE OF CANADIAN MUNICIPALITIES AND THE RISK IT POSES

INTRODUCTION

Canadian infrastructure has fallen into a terrible state of disrepair due to lack of funding for such projects in municipalities in Canada. The resulting problems are great and diverse ranging from insurance liabilities for the municipalities in Canada due to health and safety risk posed by lack of funding to lack of recreational space and place for citizens resulting in a loss in social capital and declining health of citizens in Canada. This problem has not gone unnoticed and efforts have been and are being made to address this problem in Canada's municipalities.

STATEMENT OF PROBLEM

The state of Canadian infrastructure has been due to a lack of funding by the government and has resulted in a terrible state of disrepair of Canadian infrastructure.

PURPOSE OF STUDY

The purpose of this study is to ascertain how and why Canadian infrastructure has fallen into such a state of disrepair and to discover what is and what might be done to address this problem.

SIGNIFICANCE OF STUDY

The significance of this study is the knowledge that will be added to that already existing in this area of study.

METHODOLOGY

The methodology is this study is qualitative in nature and will be conducted through an analysis of the historical reasons these problems exist and the economic effects that lack of government funding is having on local, provincial and federal governments in Canada.

LITERATURE REVIEW

In an August 14, 2006 News Release published by the Association of Municipalities of Ontario, it is stated that the President of the Association of Municipalities of Ontario (AMO), Roger Anderson, “…applauded Premier Dalton McGuinty's commitment to a joint Provincial-Municipal review of how municipal services are funded and delivered in Ontario.” (AMO, 2006) The news release of the AMO goes on to relate that the an answer has been delivered by Premier McGuitny to the “AMO's call for a joint review of how municipal services are financed and delivered in Ontario…” stated to be in need of “a plan to ensure that our communities can benefit from fiducially sustainable municipal government within a manageable period of time.” (AMO, 2006) There is stated to be a shared goal of the review including the improvement of both delivery and funding of municipal programs and services and for strengthening the Province's communities.” (AMO, 2006)) The focus is stated to be upon: (1) affordability for both levels of government; (2) fairness to taxpayers; (3) timely infrastructure investments; (4) provincial and municipal services effectively delivered across Ontario; and (5) long-term economic development and prosperity for Ontario and its communities. (AMO, 2006)

The work entitled: “Assessing Canada's Infrastructure Needs: A Review of Key Studies” published in 2004 states: “The existence of reliable data on the state of Canadian infrastructure is an important requirement for evidence-based infrastructure policy. Without reliable and comprehensive data, the capacity of policy-makers at all levels to plan, prioritize and evaluate investments in public infrastructure is hindered, as is their ability to develop new policy approaches.” (Canada Research and Analysis: Infrastructure, 2004) Reported is a study conducted by the Federation of Canadian Municipalities (FCM) and the Department of Civil Engineering and Applied Mechanics and McGill University” which focused on defining “as the cost of rehabilitating infrastructure to an ‘acceptable' level of repair.” (Canada Research and Analysis: Infrastructure, 2004) The study reported is a survey of municipalities in Canada in which 589 surveys were sent to municipalities. Twenty-nine percent of the municipalities responded which is representative of approximately 55% of the population in Canada. The questions the study sought to answer were those of: (1) Quantification of asset deterioration over the last 10 years; (2) average age of existing infrastructure; (3) total cost to bring existing infrastructure to an ‘acceptable level'; and (4) what are the short and long term needs of municipalities.” (Vander Ploeg, 2003) Stated, as ‘key' findings in the study are those as follow:

(1) At the national level, transit, roads and curbs have deteriorated over the past 10 years, while parks and recreation facilities have improved;

(2) Roads, sidewalks and bridges are in greatest need of repair;

(3) Sewage systems, water distribution systems, and water supply instillations are among the

oldest infrastructure facilities in Canada ;

(4) Where there is user pay funding to support infrastructure development and maintenance,

facilities seem to be in better condition than the infrastructure supported through general revenue funding; and

(4) A greater emphasis should be placed on maintenance and reconstruction of infrastructure rather than new construction of infrastructure. (Canada Research and Analysis: Infrastructure, 2004)

The work of Mizra and Haider (2003) entitled: “The State of Infrastructure in Canada: Implications for Infrastructure Planning and Policy” reports a study conducted for Canadian Infrastructure and specifically, is a review of the 1996 FCM-McGill study. Infrastructure is stated by Mirza and Haider (2003) to be lacking in clarity in its decision but is stated to include: “…roads, bridges, sewers, water supply, schools, airports, telecommunications and transit and transportation systems.” (Mizra and Haider, 2003) Stated as key findings by the authors, deterioration is the determining factor in the infrastructure deficit. Three decades of deferred maintenance work have created a situation where the deterioration is not halted, it (and the associated costs) will escalate exponentially.” (Mizra and Haider, 2003)

Stated secondly are estimations that “the cost of Canada's infrastructure deficit as well as the overall state of repair of Canada's infrastructure is roughly comparable to that of the U.S. The size of the deficit is roughly one tenth, for a Canadian population that is roughly one-tenth the size of the US's.”

The work entitled: “A Choice Between Investing in Canada's Cities and Disinvesting in Canada's Future” states that Canadian municipalities are in a fiscal crisis stated to be the result of the downloading of increased responsibilities from the senior levels to local governments without also transferring adequate funding or access to the instruments for municipalities to raise the needed funds themselves to pay for these programs.” (TD Bank Financial Group, 2002) Key findings in this report are stated in conclusions to be due to a failure to invest in urban infrastructure will “impede future economic growth and development for the country as a whole.” (TD Bank Financial Group, 2002)

The work presented by L'union des Municipalities du Quebec and the Conference Board of Canada (2003) describes the total amount required from all three levels of Canadian government for restoration of the infrastructure stock of Quebec to what is considered to be an ‘adequate level'. Infrastructure in this report is described as “…sewers, water delivery systems, aqueducts and public roads.” (L'union des Municipalities du Quebec and the Conference Board of Canada, 2003) The report states that between the years of 1955 and 1977 the rate of investments in infrastructure “increased at a rate of “…6.6% per years, which was roughly comparable to Quebec's rate of demographic change. If it is assumed that there was a 'need' for infrastructure investments to continue to keep pace with the various rates of demographic change that affect infrastructure demand (e.g. population growth, increased urbanization, standards of living, automobile use, etc). The infrastructure investments should have continued to increase at a rate of 2.6%, rather than the 0.1% per year that investments actually increased by, from 1978-2002. Using this hypothesis, the gap would measure $17.9 billion in constant dollars.” (L'union des Municipalities du Quebec and the Conference Board of Canada, 2003) Findings of the report state: “This high-end estimate is probably cut back simply because of the unprecedented scale of infrastructure investments, especially in Montréal, during the Quiet Revolution and the leadups to first Centennial and Expo in 1967 and then the Olympics in 1976. These levels of investment were fiscally unsustainable under increased pressures of rising gasoline and other commodity prices, powerful labor unions and stagflation in the economy. Mega projects like the Metro system and Ville Marie expressway were huge up-front and one time investments that do not necessarily need to be repeated today, only serviced and maintained. However, the fact that the conservative estimate is only about 15% lower than the high-end figure is likely a testament to the overall lack of proper maintenance work in the province since 1978.” (L'union des Municipalities du Quebec and the Conference Board of Canada, 2003) The work of Casey Vander Ploeg (2003) entitled: “A Capital Question: Infrastructure in Western Canada's Big Six” reports having addressed several key questions which included the question of the government sector infrastructure total deficit and “the size of the deficit in Western Canada's big cities and how the various estimates were determined.” (Vander Ploeg, 2003) According to Vander Ploeg, this was accomplished through “an extensive literature review” and through exploration of three databases, which covered the total government capital spending in Canada as well as the local sector along with the six large cities in Western Canada. In the report of Vander Ploeg infrastructure was defined as: (1) transportation; (2) protection; (3) community; (4) general government; and (5) utilities and environment.” (Vander Ploeg, 2003) The following lists that which is included in each of these categories of infrastructure:

  • Transportation: roadways, bridges, sidewalks, and transit;
  • Protection: fire, police, EMS facilities and equipment;
  • Community: cultural and community services and amenities;
  • General government: civic buildings, information technology, municipal fleet;
  • Utilities and Environment: water supply and distribution, storm drainage and flood control, and solid waste. (Vander Ploeg, 2003)

Key findings stated in the report of Vander Ploeg include the following:

  • Unlike the overall indications of municipal infrastructure needs, which identify water and wastewater infrastructure as having the greatest investment needs, western cities biggest needs exist in the transportation sector. In each of the cities except Vancouver, roads, bridges, interchanges, sidewalks and public transit make up at least half of the annual infrastructure deficit;
  • This may be related to the relative youth of western Canadian cities with respect to their eastern counterparts, and suggests that maintenance and repair of existing systems should remain a priority in order to prolong the useful lifespan of water delivery systems and sewers;
  • Also, environmental services in most western cities are self-financed through user fees, which makes it much easier to finance infrastructure improvements to municipal utilities as opposed to general infrastructure which relies on the tax base for funding. Western cities are also subjected to stringent provincial regulations and standards for water and waste water infrastructure, which mitigates against foregoing maintenance of these systems. (Vander Ploeg, 2003)

It is reported in the work entitled: “The National Highway System: Condition and Investment Needs Update 1997” a study conducted by the Council of Ministers Responsible for Transportation and Highway Safety is for the purpose of measuring the total deficiencies in the National Highway System against benchmark criteria. It is stated that the study utilizes “four specific minimum design or operational standards, which should be met by all routes on the National Highway System and that these standards provide a basis for describing deficiencies in the condition of the NHS, and also serve as guiding objectives for jurisdictions in choosing appropriate remedial measures to correct the identified deficiencies. In 1988 it was agreed that the minimum standard which should be met by all routes on the National Highway System should be a two lane paved road with partially paved shoulders, with a design speed of 100 km/h. It should be noted that the $ 17.4 billion estimate includes only the costs of correcting existing deficiencies as new deficiencies are expected to arise each year.” (Council of Ministers Responsible for Transportation and Highway Safety, 1998; paraphrased) Infrastructure is described in this report as “roads and shoulders, bridges, and viaducts that make up the National Highway System.” (Council of Ministers Responsible for Transportation and Highway Safety, 1998) Key findings of the report are stated to be those as follows:

(1) Report estimates that implementing the $17.4 billion investment that it recommends “would generate an estimated $30 billion in economic benefits over 25 years through savings in travel time, increased safety, and reduced vehicle operating costs.”

(2) Although it is also noted that upgrades will necessitate increased maintenance costs, lead to higher greenhouse gas emissions, and in the long term may simply lead to higher use/consumption of highway infrastructure

and do little to reduce congestion over time. (Council of Ministers Responsible for Transportation and Highway Safety, 1998)

The work entitled: “Thinking Outside the Gap” states that municipal infrastructure is a critical component to achieving economic prosperity, creating vibrant neighborhoods and culturally rich communities, and committing to conscientious and responsible environmental stewardship.” (City of Edmondton Infrastructure Strategy Report, 2004) This report relates that the municipality's infrastructure and the infrastructural state of a city “defines a city's capacity to deliver services to its citizens and provide a desirable quality of life.” (City of Edmondton Infrastructure Strategy Report, 2004) Managing infrastructure is a challenging endeavor and the challenge is only increasing according to the report, which states that it examines “methods of generating new revenue for long-term infrastructure investments and reinvestment strategies.” (City of Edmondton Infrastructure Strategy Report, 2004) This report comes from the City of Edmondton in Canada, which states that it has anticipated revenue opportunities as follows in terms of anticipated revenue and possible resource opportunities:

Anticipated Revenue Opportunities:

  • Municipal Rural Infrastructure Fund (MRIF - federal / provincial): Through this program, Edmonton could receive up to a total of $12 million from the other two orders of government to apply to infrastructure projects;
  • GST rebate (federal): Over the next 10 years, up to $80 million may be available through this rebate to fund infrastructure projects;
  • Gasoline tax rebate (federal): The City of Edmonton could receive about $300 million through this rebate over the next ten years;

Possible Resource Opportunities from the Province:

  • Education tax: Capping the education tax may provide an additional $370 million over the next decade to fund infrastructure;
  • Legislative changes to allow cities to impose taxes: With greater authority to generate tax revenues the City could increase revenues for essential infrastructure projects;
  • Matching responsibilities with resources: The provincial government could significantly reduce the fiscal burden on cities by taking back responsibility for services such as emergency medical services and affordable housing;
  • Revenue sharing with municipal governments: This policy could provide a stable, sustainable source of funding to municipalities; and
  • Provincial infrastructure funding: This proposed provincial funding of up to $1 billion would be significant in addressing Edmonton's infrastructure issues. (City of Edmondton Infrastructure Strategy Report, 2004)

Opportunities Requiring Action by the City:

  • Smart Debt: Incorporate sustainable borrowing tools through:
  • Tax-supported debt for next 3 years (2005, 2006, 2007) — generates an additional $150 million;
  • Arterial road levy: Approximately $60 million in savings over the next decade could be realized if developers fund the full four-lane arterials to service new developments;
  • User pay — development/improvement fees:
  • Property owners are less hesitant to pay user fees when the actual improvements are visible and reflect the true cost of providing the service; and
  • User pay — self-financing utilities: A self-financing utility can sustain the actual costs to deliver services. (City of Edmondton Infrastructure Strategy Report, 2004)

Managing the gap is stated to involve the “…identification and implementation of strategies, processes and tools” needed in planning investments and making decisions all of which are “long-term plans [which] will “play a role in managing the factors affecting infrastructure demand.” (City of Edmondton Infrastructure Strategy Report, 2004004) Included are:

  • Maximization of existing infrastructure;
  • Comprehensive asset management system: inclusive of risk assessment and life cycle analysis to optimize decision-making and investment planning;
  • Sustainable levels of service: relating to determining the levels of service that meet financial, social and environmental standards;
  • Shared services: in relation to making an examination of cost effective and cost sharing strategies among communities for optimization of investment in infrastructures and to generate synergies; and
  • Other opportunities
  • link property tax increases with specific investment;
  • Public-private partnerships (P3); and
  • Alternate service delivery. (City of Edmondton Infrastructure Strategy Report, 2004)

The Edmonton infrastructure strategy report states that infrastructure is defined as “all the physical assets developed and used by the City to support the community's social and economic activities.” (Infrastructure Strategy Report, 2004) The infrastructure listed in this report is stated to be as follows:

  • Drainage: includes sanitary, storm and combined sewers (including manholes, catchbasins) and wastewater treatment.
  • Road Right-of-Way: including roads (arterials, collectors, local; and curb and gutter), sidewalks, bridges, and auxiliary structures (such as gates, streetscapes and others)
  • Parkland: includes horticulture, trails, hardsurfaces, playgrounds, sportsfields, park infrastructure and parks;
  • Transit facilities and equipment: including Light Rail Transit (LRT)system facilities and equipment (including cars), transit centers, bus equipment and systems, trolley system;
  • Fleet: Includes transit buses, city vehicles, and shop equipment;
  • Buildings: including civic offices, public works and operation facilities (e.g. yards) emergency response buildings, police buildings and libraries.
  • Traffic Control and Street lighting: Including traffic signals, signs, markings, street lighting, and parking meters;
  • Recreation facilities: includes all major recreational facilities (e.g. arenas, leisure centers, Fort Edmonton) and amenities;
  • Affordable housing: includes non-profit housing, community housing and seniors lodges/cabins;
  • Waste Management Facilities: includes operation and administration facilities, transfer stations and public facilities, processing facilities and operating landfills and appurtenances;
  • Technology Equipment: includes servers, network, all communication equipment; and
  • Others: includes emergency response and policy equipment and library contents and materials. (City of Edmondton Infrastructure Strategy Report, 2004)

The infrastructure gap is defined as “the difference between the City's capital needs and funding available to address the City's infrastructure rehabilitation and growth requirements.” (Infrastructure Strategy Report, 2004) The City of Edmonton's infrastructure is stated to have grown “from $1.8 billion in 1990 to the current estimate (in 2004) of $4.1 billion.” (Infrastructure Strategy Report, 2004) The growth of the gap is attributed to two primary factors: (1) aging infrastructure; and (2) demand for new infrastructure. (City of Edmondton Infrastructure Strategy Report, 2004) The City of Edmondton reports several measures that have been found effective in minimizing the gaps in the infrastructure including the following:

(1) Corporate infrastructure asset management approach: a comprehensive infrastructure inventory, which captures the value and state of the City's infrastructure and its long-term investment needs;

(2) Effective tools such as life cycle analysis and risk assessment: identify priority areas and optimize investment decisions;

(3) Innovative revenue partnerships involving developers and home builders to support new developments: the Sanitary Sewer Strategy Fund for the construction of major sanitary sewers and arterial assessment fees for future construction of arterial roads;

(4) Land drainage utility: a self-financing userpay system that is independent of general revenues collected through the property taxation system for land drainage operation and projects;

(5) Amendment to the City's Debt Management Fiscal Policy in 2002: tax-supported borrowing of up to $50 million per year over five years, reviewed annually, to fund large-scale, high priority capital projects.

(6) The Infrastructure Technical Advisory Committee (ITAC): is an advisory committee made up of key stakeholder groups with expertise in municipal infrastructure, and was designed to shape and help effectively implement the City of Edmonton's Infrastructure Strategy. (City of Edmondton Infrastructure Strategy Report, 2004)

The following chart lists the estimated revenue and resource opportunities and the opportunities requiring action by the city stated in the report.

Figure 2

Anticipated Revenue and Resource Opportunities and Opportunities Requiring Action by the City

Source: City of Edmondton Infrastructure Strategy Report (2004)

In relation to education tax it is stated that called for was a provincial investment in Calgary and Edmonton. Each had made a formal requesting calling for the honoring of the Province 2001 “commitment to cap the total provincial education requisition at $1.2 billion in the 2005-06 provincial budgets and reduce the education requisition on property taxes an additional $120 million annually until it is eliminated as a provincial tax source.” (City of Edmondton Infrastructure Strategy Report, 2004) The guiding principle of the Alberta Urban Municipalities Association (AUMA) is: “Municipal governments must have the fiscal capacity to fulfill their mandate through primary access to the property tax base and other stable long-term and progressive sources of revenue.” (City of Edmondton Infrastructure Strategy Report, 2004)

The assessment and collection of property taxes at the current rates as well as the capping of the portion that has been”allocated to education” to provide municipalities with the funds that are need additionally for projects relating to infrastructure. Elimination of education tax that is collected in Edmonton and those funds being allocated for municipal revenue would generate additional funding for capital projects. It is stated however, “operating impacts of capital investments would need to be considered and a balance attained between capital investments and associated operating costs…” in order to provide a “stable long-term source of funding that could address ongoing and future budgeting requirements.” (City of Edmondton Infrastructure Strategy Report, 2004) Sharing of tax more equitably among the sectors of government in cities would better serve cities in shaping the future. It is related that cities in America have “a broader set of revenue tools that includes sales tax, hotel tax, employment tax and others…” which therefore, empowers them to “take some of the economic burden off property owners and better absorb changes in the economy.” (City of Edmondton Infrastructure Strategy Report, 2004)

As noted already there are opportunities which require action by the city. The first of these is stated to be ‘smart debt' and this is stated to be on of the main sources of financing used in cities in the United States which “provides greater flexibility for keeping pace with growing infrastructure demands.” (City of Edmondton Infrastructure Strategy Report, 2004) Arterial road levies are assessed for the purpose of financing “arterial roadway located within a predetermined catchment area.” (City of Edmondton Infrastructure Strategy Report, 2004) The requirements are that each development located within the catchment pays the said assessment which is based “on a per hectare rate.” (City of Edmondton Infrastructure Strategy Report, 2004) Presently, the standard practice is the city pays for two lanes and the developers pay for two lanes. In the case where the arterial road levy is city-implemented then developers are required to financial a four lane arterial road in the new developments and estimations holds that the generation would be approximately $60 to $65 million saved over the next ten years. (City of Edmondton Infrastructure Strategy Report, 2004; paraphrased)

User pay improvement fees include the levying of development/improvement fees “whenever possible because when property owners actually see improvements they are less hesitant to pay a levy.” (City of Edmondton Infrastructure Strategy Report, 2004) A warning is stated in this report that “development or improvement fees and levies should be determined on a real-cost basis, which reflects the true expense of providing new development or neighborhood reinvestment. Additional development or improvement costs need to be considered very carefully as the fees would eventually be passed on to the homebuyer and may result in a higher cost fro houses.” (City of Edmondton Infrastructure Strategy Report, 2004) New funding methods at the municipal level including utilities that are self-financing which “can sustain the actual costs to deliver services, including the life cycle costs of operation, maintenance, and rehabilitation and replacement of infrastructure.” (City of Edmondton Infrastructure Strategy Report, 2004)

The work entitled: “The Role of Government in the Financing of Deferred Maintenance Costs in Canada's Post-Secondary Institutions” published in 2001 by the Standing Senate Committee on National Finance states that the 1990s were characterized by “budgetary restraint for all levels of government.” (Standing Senate Committee on National Finance, 2001) Federal government's reduction in transfers to provinces in Canada resulted in the reduction of transfers to universities by the provinces. The reduction in transfers to universities resulted in deferment of maintenance expenditures. The results of all of this is that “deferred maintenance has accumulated to such an extent that is poses significant health and safety risks to both staff and students on some campuses.” (Standing Senate Committee on National Finance, 2001) Additionally, these facts make it harder for the post-secondary institutions to compete in the attraction of “top students and professors.” (Standing Senate Committee on National Finance, 2001) Estimates for climinated of this deferred maintenance costs which have accumulated are stated to be in excess of $3.6 billion.

The Canadian systems is formed by 90 institutions. Universities collected approximately $14.9 billion in total revenue in the 1999/2000 school year, which is stated to be an increase of 15.7% over the previous school year. The following chart shows the growth in funding by government of the universities following the years of cutbacks which occurred in the 1980s and 1990s.

Figure 3

University Revenue Sources 1999-2000

Government grant and contracts

Government grants and contracts

Student fees(1)

Bequests, donations and non-government grants and contracts

Sales of services and products

Investment revenue(2))

Miscellaneous(3)

Total

% of total revenue

$'000

Canada

55.0

19.3

9.5

9.1

3.7

3.6

14,922,436

Newfoundland

62.2

20.0

3.7

4.5

1.9

7.6

251,316

Prince Edward Island

55.1

22.3

3.3

17.0

1.6

0.7

56,101

Nova Scotia

43.4

25.5

7.8

16.5

4.7

2.1

642,267

New Brunswick

52.6

22.5

5.6

12.9

4.6

1.7

327,166

Quebec

65.3

11.9

10.4

6.5

3.3

2.6

3,335,835

Ontario

49.4

24.1

10.9

7.3

3.4

4.8

5,829,047

Manitoba

58.5

18.2

9.3

9.9

3.0

1.1

544,950

Saskatchewan

57.3

15.9

7.1

15.2

3.1

1.4

574,301

Alberta

55.1

17.5

9.0

12.5

5.2

0.7

1,512,050

British Columbia

55.2

17.3

6.5

11.5

4.2

5.2

1,849,403

Source: Standing Senate Committee on National Finance, 2001

  • student fees include fees for both credit and non-credit courses as well as miscellaneous student fees (such as transcripts and late registrations)
  • investment revenue includes revenue from dividends, bonds, mortgages, short-term notes and bank interest;
  • Miscellaneous revenue includes facilities rental and library fines.

Figure 4

University Revenue and Expenditures (1)

1994/95

1998/99

1999/2000

1994/95 to 1999/2000

1998/99 to 1999/2000

$ '000

% change

Total revenue

12,431,645

12,903,033

14,922,436

20.0

15.7

Government grants and contracts

Federal

1,129,246

1,072,940

1,328,781

17.7

23.8

Provincial

6,630,825

5,957,091

6,762,990

2.0

13.5

Municipal and other

49,904

91,767

108,612

117.6

18.4

Total

7,809,975

7,121,798

8,200,383

5.0

15.1

Student fees(2)

1,989,198

2,619,058

2,874,942

44.5

9.8

Bequests, donations, and non-government grants and contracts

998,047

1,256,502

1,412,203

41.5

12.4

Sales of services and products

1,064,969

1,079,663

1,355,861

27.3

25.6

Investment revenue(3)

326,607

446,589

548,890

68.1

22.9

Miscellaneous(4)

242,849

379,422

530,157

118.3

39.7

Total expenditures

12,456,296

12,675,450

14,157,680

13.7

11.7

Salaries and benefits

8,083,760

7,873,474

8,269,171

2.3

5.0

Scholarships and bursaries

244,488

378,471

468,811

91.8

23.9

Buildings(5)

523,038

407,039

430,184

-17.8

5.7

Operations(6)

1,721,852

2,032,530

2,182,432

26.7

7.4

Other(7)

1,883,159

1,983,936

2,807,082

49.1

41.5

(1)

Constant 1999/2000 dollars.

(2)

Student fees include credit and non-credit courses, as well as miscellaneous student fees (such as transcripts and late registrations).

(3)

Investment revenue includes revenue from dividends, bonds, mortgages, short-term notes and bank interest.

(4)

Includes commissions, royalties, fees for services rendered, library (and similar) fines and rentals.

(5)

Includes buildings, land and land improvements.

(6)

Includes travel, library acquisitions, printing and duplication, material and supplies, communications, space rental, insurance, property taxes, institutional membership fees, meals, advertising and promotion and doubtful accounts.

(7)

Includes furniture and equipment purchase, rental and maintenance, utilities, renovations and alteration, externally contracted services, professional fees, cost of goods sold, debt repayment (interest and principal portion), internal and external cost recoveries and lump sum payments.

Source: Standing Senate Committee on National Finance, 2001

It is stated in this report that review and analysis of the problem associated with “deteriorating university structures requires the adoption of a number of terms that will facilitate discussions. The following are stated to be used in measuring and comparing “the degree of deterioration in buildings and facilities”:

  • Accumulated Deferred Maintenance (ADM): the backlog of unfunded major maintenance and renewal projects that have been deferred to future budgets. It results either from an accumulation of neglected routine maintenance items which evolve into more serious concerns or from failure to carry out major repair or restoration projects on facilities which have reached the end of their life cycle or have become obsolete;
  • Current Replacement Value (CRV): the estimated cost, in current dollars, to replace buildings, utility systems, physical plant and site improvements; and
  • Facility Condition Index (FCI): a well-known unit of measure of the state of disrepair of buildings, sites, and even institutions as a whole. The FCI is the ratio of accumulated deferred maintenance over current replacement value. It is usually expressed as a percentage of the current replacement value in a given year that is in need of repair. (Standing Senate Committee on National Finance, 2001)

Stated is this means the following:

Accumulated Deferred Maintenance

Facility Condition Index = _____________________________

Current Replacement Value

Or stated in simpler terms: FCI =ADM/CRV (Standing Senate Committee on National Finance, 2001) The factors that have been identified as explaining the high degree of deferred maintenance in the universities include those as follows: (1) aging physical plant: average university building in Canada is 32 years old while average life cycle of systems is approximately 23 years; (2) Decreasing funding levels: government cut-backs in the 1990s and high inflation and energy costs in the 1980s cramped resources availability for capital upgrading and renewal. The inadequacy of physical plant operating and maintenance budgets contributes to the problem of ADM; (3) Lack of profile: facility maintenance and renewal tends to attract little interest in comparison to new building projects; (4) Demands for New Space: Growth in university programs, research, and enrolment has continued relatively unabated for fifty years. Universities have had to place priority on expanding their physical plant; (5) Facility Renewal and Adaptation: The need to comply with new codes and regulations, together with the pace of change in learning and workplace technology, has further depleted the available capital resources; and (6) Life cycle funding: While budgeting processes are at best based on three-year plans, life cycle renewal of physical plant components requires longer-term planning and fund allocation. (Standing Senate Committee on National Finance, 2001)

Serious consequences arise from deteriorating facilities of the universities. Capital market solutions have been explored and in 2001 $160 million was raised by the University of Toronto “through a public bond offering.” (Standing Senate Committee on National Finance, 2001) This transaction is stated to have involved “the issuance of 30-year unsecured debentures to raise $160 million.” (Standing Senate Committee on National Finance, 2001) Expectations are that this will be repaid by 2031 in full and that this has an interest rate of 6.78% that is payable semi-annually. IN 2000 the Medical Equipment Trust Fund under “the Canada Health Care, Early Childhood Development and Other Social Services Funding Act to assist hospitals in acquiring medical equipment. The Government of Canada established a $1 billion fund that provinces and territories can use to acquire and install necessary diagnostic and treatment equipment. The provinces and territories determine the priorities within their own systems, and the funds are allocated across provinces and territories on an equal per capita basis. As part of the accountability provisions of the agreement, provincial and territorial governments will report to Canadians on how they have invested these funds.” (Standing Senate Committee on National Finance, 2001) This problem can be prevented from reoccurring by the federal government and provinces working in collaboration to establish an accord in funding of setting aside $1 billion for post-secondary education. Under the proposal being reported special funding programs for facility maintenance would be within the power of universities to set up. Stated as well is that “under subsection 38 (a.1) of the Income Tax Act a significant tax incentive is temporarily granted to donors who make a donation with publicly traded shares, mutual funds and bonds. Until December 31, 2001, where a donor makes a gift to a registered public charity of publicly traded marketable securities that have increased in value since the time they were acquired, only 25% of the deemed capital gain is taxable—that is half of the normal inclusion rate of 50% implemented on October 18, 2000. The current measure, which was introduced on a five-year trial basis, is scheduled to expire the end of the current year. It appears to have enjoyed considerable success.” (Standing Senate Committee on National Finance, 2001)

In a 2002 report entitled: “Managing Financial Resources: Budgeting and Monitoring Public and Quasi-Public Expenditures” it is stated that best practice “internationally recognizes the importance of budgeting and monitoring each key phase in the life cycle of an infrastructure investment…” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) International best practice as related to public expenditure budgeting and monitoring is characterized by the following: (1) relevant government authorities and public infrastructure service providers have a systematic and timely investment planning and management process based on consistent, outcome based objectives and performance based management; (2) the asset management process is understood by and has the support of key government leaders, policy-makers and agencies, users, financiers, taxpayers, the business community, and interest groups in the jurisdiction; (3) multi-year asset management plans and budgets are updated annually to incorporate new information, policies, and requirements. Plans "roll" each year by adding one year and dropping a year; (4) effective budgeting and monitoring systems are in place. Provincial and Central/State governments generally budget and monitor at the program level. Except for the largest projects, project level monitoring is delegated to a lower tier - e.g. the city/municipal or county level; (5) the responsibilities, accountabilities and degree of involvement of each level of government in budgeting and monitoring are specified, widely known and accepted by all parties; (6) a thorough appraisal/evaluation is conducted on each completed program or project to determine if technical and financial expectations are met and how policies, practices and procedures can be changed to improve the efficiency and effectiveness of current and future efforts; and (7) the performance of infrastructure service providers is closely monitored and commented on by government leaders, environmental, consumer and other public interest groups, and the media. (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

Budgeting is stated to have a requirement of resulting from the following: (1) a top down approach, which consists of: defining aggregate resources available; establishing sector spending limits - a hard constraint; and making the spending limits known to line government ministries and infrastructure service providers; (2) a bottom up approach through which infrastructure service providers identify and prioritize strategies and actions within their spending limit; and (3) iteration and reconciliation between the government and the service provider to achieve a consistent, predictable, and reliable overall spending program, which balances need with available funds. (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

Phase I is described as ‘Generalized Roles of Budgeting and Monitoring in the Infrastructure Investment Life Cycle' and includes purposes of budgeting and monitoring. Budgeting purposes are stated to include: (1) determination of overall spending priorities; (2) allocation of available funds among different: (a) program sectors; (b) infrastructure; (c) social programs; (c) public safety and security; and (d) infrastructure sectors. The process is one in which “governments balance their overall investment needs with available funds from all sources. Allocations to different program sectors and to subprograms within a sector are done at systems level in the context of overall government goals and priorities.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) The purpose of monitoring is stated to be for ensuring that “program and project proposals comply with overall government goals, policies and priorities.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) The process of monitoring is “generally done at a program level. Except for large projects, project level monitoring is generally delegated to a lower tier of government.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) Stated as deliverable is “a multi-year and/or annual budget which specifies funding allocations to each government program and subprogram. In most cases, funding allocations are specified as a program level, with specific project requirements and cost estimates to be determined later. In some cases, generally for large projects, funding allocations are specified at this stage.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

Phase II is stated to be the ‘Establishing, Approving and Monitoring of Program/Project Expenditures' with the following purposes and processes assigned to budgeting and monitoring. Budgeting purpose: To approve a specific allocation of money to a specific program or project. Monitoring Purpose: To ensure that spending complies with the overall plan and to ensure that efficient and effective use of resources takes place. The Budgeting Process is stated as follows: “Proponents submit program/ project proposals for approval. Proposals provide: a thorough evaluation of the costs and benefits; justification for the selected approach based on a detailed comparison of options; and capital and O&M funding requirements over the program/ project life cycle.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) The Monitoring Process is stated as follows: “Proposals are compared with overall plans to ensure a good fit. Value management assessments are conducted to ensure that the proposed approach is both efficient and effective; also to ensure that the proposal provides significant returns/benefits when compared with other proposals. The level of effort and approach to value management varies with the scope and budget of the proposal being considered.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) Deliverables in Phase II include the “approval to proceed with implementation and approval of a specific and detailed funding allocation, including sources of funding, for both capital and O&M expenditures.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) The work entitled: “Restoring Fiscal Balance in Canada: Focusing on Priorities” published in 2006 by the Department of Finance in Canada states that the federal government “recorded its first surplus in 1997-1998 and provinces achieved a combined positive budgetary balance in 1999-2000 after decades of deficits.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

Phase III is described as ‘Implementation of Public Infrastructure' and stated as budgeting and monitoring purposes are the following: (1) Budgeting purpose: Adjustment of funding allocations for specific programs or projects based on specific requirements, which arise during implementation. To review and, as appropriate, adjust overall funding allocations at Phases I & 2 based on actual implementation experience and requirements; and (2) Monitoring Purpose: Ensuring efficient and effective use of resources. The Budgeting Process is stated to include the comparison of actual requirements of funding with allocations of the budget. Where additional funds are justified for a specific project, then allocations for another project must be dropped, reduced or deferred to stay within the overall budget allocation for the sector. Justification for additional funding must be based on a thorough cost effectiveness assessment of the change in scope. Where less funds are required than expected, then additional projects can be considered through the Phase II approval process, while remaining within the overall funding allocation authorized at Phases I & 2. The Monitoring Process include implementation of “effective project management system to ensure that requirements for scope, schedule and budget are met. Regularly report on project status and suggest options to deal with project issues. Conduct value management assessments at each key implementation phase. Also conduct expenditure audits. The level of effort and approach to value management and audits varies with the scope and budget of the program or project being considered. Deliverables of Phase II are stated to be: “Completion of specific projects/programs within approved schedule and funding allocation. Overall (total of all programs and projects) delivery is accomplished within approved funding allocations, without over expenditure.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

Phase IV is the ‘Post Program/Project Appraisal with a stated ‘Budgeting Purpose' of adjusting allocation at Phases 1 and 2 based on actual implementation experience. The ‘Monitoring Purpose' is to ensure effective use of resources and to improve, through experience, efficiency and effectiveness by implementing changes to policies, practices and procedures. ( ; paraphrased) The ‘Budget process' in this phase is “estimated program/ project funding requirements, which are established at either of Phases I, II or III, are updated based on actual implementation experience. Where actual funding requirements are higher than expected, then the scope or number of approved projects will have to be reduced to stay within overall budget. Where actual requirements are less than expected, then additional projects can be considered for approval within the allocated budget.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) Stated as the ‘monitoring process' is “upon completion of a program or project, a thorough appraisal is conducted to determine: if the completed project meets expectations; and how policies, practices, and procedures can be changed to improve efficiency and effectiveness.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) Stated as deliverable in this phase is “efficient and effective use of resources and practices that are continually improved through learning and experience.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

It is additionally stated that a sustainable funding approach requires a balance between for primary elements as follows:

  • the current value of infrastructure assets;
  • The replacement cost of current assets;
  • The present values (PV) of upcoming investments needs to maintain assets in good working condition; and
  • The present value of both accumulated funds and the projected amount and timing for future investments to pay for infrastructure maintenance, rehabilitation and renewal. (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

In the section of this report entitled: ‘Budgeting and Monitoring by Multiple Levels of Government: A Canadian Example' it is stated that budgeting and monitoring of infrastructure is “more complex in situations where more than one level of government is contributing to the financing, or providing debt guarantees.” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) It is related that an agreement was signed in October 200 by the Canadian Federal, Provincial and Local Governments to invest in excess of CDN$800 million in the public infrastructure of British Columbia with each level of government to invest approximately one-third of the funds total. It has been agreed upon by all levels of government that the objectives of the program are: (1) to enhance the quality of the environment; (2) to support long-term economic growth; (3) to improve community infrastructure; and (4) to build 21st century infrastructure through encouraging the use of best technologies, new approaches and best practices. (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) It is additionally related that funds allocation are agreed to be as follows:

  • Green local government infrastructure - 75%
  • Other public infrastructure - 25%
  • Projects in rural communities - 16% (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002)

Source: PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002

The work of Mark Yakabuski entitled: “Unfunded Infrastructure Liabilities = $30 Billion Plus?” states that as of June 1, 2008 “Canadian debt per worker in $44,159 but tax collected per workers is $36,199” which equals a shortfall of $7960. This means that per each working Canadian the government must borrow $7960 “and pay interest in the compounded shortfall. Add unfunded infrastructure liability $30 billion adds another $909 per year, per Canadian” added to $7960. Yakabuski relates that the major infrastructure projects such as “water and sewage treatment plan require design, environmental studies, technology, labor expense and heavy equipment construction expense, the hard costs. Hard costs do not vary much based on capacity of water to be treated whether that be 1 million gallons per day production vs. 2.5 million versus 500,000 gallons.” (2008) Yakabuski relates as well that each disabled child is “costed and budgeted for by every government.” (2008) He asks “what is the cost of a child born with a disability caused by drinking water consumed by pregnant Mom? (Yakabuski, 2008) Furthermore, Yakabuski asked what the cost is for the care-giver who quits working to care for this child and what is the cost over a lifetime of the child. According to Yakabuski, “Disability programs in the Province of Ontario are $3-5,000 below poverty…[and] does not include spikes in inflation such as 2008 gas price increase and subsequent grocery, home heating, merchant shipping costs passed on to consumer.” (Yakabuski, 2008) Yakabuski lists the following liabilities which resulted in lawsuits for municipalities in Canada due to drinking water:

  • March 6, 2008 - Town of Parry Sound Ontario fined $6,250 for illegal drinking water stated to have “knowingly produced and delivered drinking water without disinfecting that water. ‘knowingly' failed to advice Minister Office of Health.
  • February 27, 2008 - City of Pembroke - Ontario fined $16,250 failed to disinfect water due to equipment failure and failed to advise of the same.
  • January 31, 2008 Township of St. Ignace - Ontario fined $4375 for illegal water operator in charge of water treatment.
  • Fines $105,000 City of Timmins - Ontario

2 counts fail to sample water

2 counts failure to comply with law enforcement officer order to comply

Illegal water treatment equipment

Failure to install disinfection equipment (Yakabuski, 2008)

The largest noted fine was that of $950,000 assessed upon a chemical company for illegal discharge into the St. Clair River Ontario.

The work entitled: “Investing in Healthy People & Communities Through Recreation & Parks Infrastructure” relates that while citizens in Canada are being urged by both “Health Canada and the Province of Alberta” to be active “the public recreation and parks infrastructure needed to support active living and build community capacity is distinctly compromised.” (ARPA, 2006) Stated as the impacts of inadequate capital funding and aging facilities are the following: (1) deteriorating facilities - worn out physical plants; (2) sub-optimal functioning and operation of recreation facilities; (3) health and safety concerns for facility users and staff; (4) reduced use and satisfaction due to a growing disconnect between facility design and current recreation participation trends, at a time when all governments recognize the health benefits of active living; (5) insufficient capacity, particularly in growth communities; (6) older, less energy efficient facilities compound the effects of utility rate increases; (7) inability to capitalize on environmental and other innovations that would save energy and money; (8) facility upgrade and programming dollars diverted to cover operating and maintenance costs, which escalate as facilities age and deteriorate; (9) significant user fee increases reduce accessibility to key public services; (10) reduced ability to provide enhanced quality of life and attract and accommodate growth. (ARPA, 2006)

ARPA states that municipalities have “assumed a far larger share of the funding burden for public infrastructure in the past two decades, filling gaps left by reduced provincial and federal investment.” (2004) Stated to be three essential components in the creation of healthy and active individuals and communities are: (1) Activities and outreach; (2) human resources; and (3) physical infrastructure. (ARPA, 2006) The following chart illustrates the manner in which healthy and active individuals and communities interact with one another.

Source: ARPA (2004)

ARPA states that a direct link exist between “physical activity levels and appropriate places and spaces to recreate.” (2006) In fact, the most recent Alberta Survey of Physical Activity is stated to emphasize that link and states: “respondents who agreed or strongly agreed that they had ‘easy access to places where I can get physical activity' were 1.94 times more likely to be sufficiently active than those who disagreed or strongly disagreed.” (ARPA, 2006) Also stated is the fact that studies have reported finding “a correlation between availability and affordability of recreational facilities, parks, sports fields and playgrounds and increased physical activity.” (ARPA, 2006) Social capital is enhanced by quality recreation infrastructure because of “the essential sense of participation, belonging and mutual trust that grows by playing, working and walking together. High levels of social capital have further been linked to “increased physical activity, lower mortality rates, reduced crime and increased perceptions of positive health.” (ARPA, 2006) This report describes recreation and parks infrastructure as including the following diverse infrastructure required in recreation and parks:

Indoors

  • Ice arenas;
  • Swimming pools;
  • Curling clubs;
  • Community centers/halls;
  • Leisure multicomplexes
  • Senior centers

Outdoors

  • Sports fields;
  • Parks;
  • Trails;
  • Open spaces.

Stated additionally is that in an assessment of the 132 pools in Alberta as well as arenas and curling rinks by structural engineers and architects the following facts are discovered:

  • Of the 466 pools, arenas and curling rinks across Alberta, 75% are 25 years old or older and many are entering the last half of their functional life expectancy.
  • With an average age of 37 years, the buildings are deteriorating more rapidly than necessary due to inadequate capital maintenance and upgrade.
  • Numerous and significant code violations, safety hazards, slab deterioration, mechanical problems, building envelope deficiencies are raising health and safety issues for users.
  • Designed when energy was cheaper and requiring more maintenance as they age, these facilities are increasingly expensive to operate as energy and construction costs rise, diverting dollars needed for capital maintenance and redevelopment.
  • The capital upgrades required by Alberta's existing pools, arenas and curling rinks could cost in the range of $327 million.
  • Only one assessed recreation facility rated above 50% on the Facility Condition Index (repair cost as a percentage of replacement cost). Fifty per cent is the point at which replacement becomes more appropriate than repair. The average FCI stands at just over 15%. While aging, these facilities still retain value, and thus deserve appropriate upkeep.
  • Replacing these assets would cost as much as $2.8 billion. That figure does not include such crucial community assets as parks, trails, cultural and arts venues, community halls and libraries. Including that infrastructure has the potential to more than double the total capital funding requirement. Nor does it include the new facilities warranted by population growth and changing recreation participation trends. These aspects also require further investigation, which will undoubtedly uncover still more investment required to regenerate and develop Alberta recreation infrastructure. ARPA, 2006

The following tables shows the anticipated capital cost of addressed the needs that are most urgent by facilities in Alberta.

Source: ARPA (2006)

FINDINGS OF THE STUDY

Findings in this study include those cited by the Canada Research and Analysis: Infrastructure (2004) report which states that at the national level great deterioration has occurred to transit, roads and curbs over the past decade. Furthermore, it is reported that in the greatest need of repair are roads, sidewalks, and bridges. Some of the oldest infrastructure in Canada are the country's sewage systems, water distribution systems, and water supply. Facilities are in better condition where user-pay exists which funds infrastructure development and maintenance. Findings in this study further include knowledge that required is an emphasis to be placed on maintenance and reconstruction of Canadian infrastructure as compared to new constructions of infrastructure. Noted as the reason these problems have occurred by TD Financial Group (2002) is due to a failure to invest in urban infrastructure, which has impeded economic growth and development in the country of Canada. The work of Vander Ploeg has informed this study that at least fifty percent of the annual infrastructure deficit is comprised by roads, bridges, interchanges, sidewalks and public transit in all but Vancouver. Environmental services in most western cities of Canada are “are self-financed through user fees, which makes it much easier to finance infrastructure improvements to municipal utilities as opposed to general infrastructure which relies on the tax base for funding. Western cities are also subjected to stringent provincial regulations and standards for water and waste water infrastructure, which mitigates against foregoing maintenance of these systems. (Vander Ploeg, 2003) The City of Edmondton in Canada reports anticipated revenue opportunities in the areas of: (1) anticipated revenue and (2) possible resource opportunities. Anticipated Revenue opportunities include: (1) Municipal Rural Infrastructure Fund; (2) GST Rebate; and (3) Gasoline Tax Rebate. Possible resource opportunities identified by Edmondton include: (1) education tax; (2) Legislatives changes allowing imposition of taxes by cities; (3) matching responsibilities with resources; (4) revenue sharing with municipal governments; and (5) provincial infrastructure funding. (City of Edmondton Infrastructure Strategy Report, 2004) Opportunities which require actions by the City of Edmondton are noted to be: (1) Smart Debt; (2) tax-supported debt; (3) arterial road levy; (4) user pay; (5) property owners less hesitant to pay fees when actual improvements are easy to see and are reflective of the actual costs of the service; and (6) User pay self-financing utilities. (City of Edmondton Infrastructure Strategy Report, 2006) Managing the gap in needs of infrastructure funding and actual receipts requires “the identification and implementation of strategies, processes and tools” needed in planning investments and making decisions all of which are “long-term plans [which] will “play a role in managing the factors affecting infrastructure demand.” (City of Edmondton Infrastructure Strategy Report, 2004) This includes: (1) Maximization of existing infrastructure; (2) Comprehensive asset management system: inclusive of risk assessment and life cycle analysis to optimize decision-making and investment planning; (3) Sustainable levels of service: relating to determining the levels of service that meet financial, social and environmental standards; (4) Shared services: in relation to making an examination of cost effective and cost sharing strategies among communities for optimization of investment in infrastructures and to generate synergies; and (5) Other opportunities: (a) link property tax increases with specific investment; (b)Public-private partnerships (P3); and (c) Alternate service delivery. (City of Edmondton Infrastructure Strategy Report, 2004) This work has reported the 2002 report “Managing Financial Resources: Budgeting and Monitoring Public and Quasi-Public Expenditures” and has noted the statement of this report that best practice “internationally recognizes the importance of budgeting and monitoring each key phase in the life cycle of an infrastructure investment…” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) This work has additionally noted the statement that the characteristics of best practice related to public expenditure budgeting and monitoring is characterized by: (1) relevant government authorities and public infrastructure service providers have a systematic and timely investment planning and management process based on consistent, outcome based objectives and performance based management; (2) the asset management process is understood by and has the support of key government leaders, policy-makers and agencies, users, financiers, taxpayers, the business community, and interest groups in the jurisdiction; (3) multi-year asset management plans and budgets are updated annually to incorporate new information, policies, and requirements. Plans "roll" each year by adding one year and dropping a year; (4) effective budgeting and monitoring systems are in place. Provincial and Central/State governments generally budget and monitor at the program level. Except for the largest projects, project level monitoring is delegated to a lower tier - e.g. the city/municipal or county level; (5) the responsibilities, accountabilities and degree of involvement of each level of government in budgeting and monitoring are specified, widely known and accepted by all parties; (6) a thorough appraisal/evaluation is conducted on each completed program or project to determine if technical and financial expectations are met and how policies, practices and procedures can be changed to improve the efficiency and effectiveness of current and future efforts; and (7) the performance of infrastructure service providers is closely monitored and commented on by government leaders, environmental, consumer and other public interest groups, and the media. (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) It is related to required in budgeting are those of a top down approach comprised of “…defining aggregate resources available; establishing sector spending limits - a hard constraint; and making the spending limits known to line government ministries and infrastructure service providers. Further required is: “…a bottom up approach through which infrastructure service providers identify and prioritize strategies and actions within their spending limit; and iteration and reconciliation between the government and the service provider to achieve a consistent, predictable, and reliable overall spending program, which balances need with available funds” (PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002) This work has reviewed the various phases required in this type of public expenditure policy.

CONCLUSIONS OF THE STUDY

This study concludes that Canada has failed to fund its municipalities in a manner in which they were enabled to correctly fund and support infrastructure development and maintenance and that this problem is well-acknowledged in Canada. Reassessment has been ongoing in Canada and plans are now well underway for addressing this problem. Canada appears to have come to the realization that other means and methods of public infrastructure funding such as those noted to be successful in the United States, will be required if Canada is to repair existing infrastructure and properly maintain that infrastructure in the years to come.

BIBLIOGRAPHY

AMO Welcomes Joint Review of Municipal Fiscal and Service Delivery in Ontario (2006) Association of Municipalities of Ontario. 14 Aug 2006.

Mirza, Saeed M. & Haider, Murtaza (2003) The State of Infrastructure in Canada: Implications for Infrastructure Planning and Policy”, A study prepared for Infrastructure Canada, 2003

TD Bank Financial Group (2003) A Choice Between Investing in Canada's Cities and Disinvesting in Canada's Future April 2002.

L'union des Municipalités du Québec and the Conference Board of Canada (2003) La situation fiscale des municipalities du Québec”, May 2003.

The National Highway System: Condition and Investment Needs Update 1997 (1998)

Council of Ministers Responsible for Transportation and Highway Safety.

Thinking Outside the Gap (2004) Opportunities to Address Edmonton's Infrastructure Needs - Infrastructure Strategy Report 2004.

The Role of the Government in the Financing of Deferred Maintenance Costs in Canada's Post-Secondary Institutions (2001) Standing Senate Committee on National Finance. October 2001. Online available at: http://www.parl.gc.ca/37/1/parlbus/commbus/senate/Com-e/FINA-E/rep-e/rep09oct01-e.htm

Managing Financial Resources: Budgeting and Monitoring Public and Quasi-Public Expenditures (2002) PRC: Strengthening Public Infrastructure Investment Policy, Chreod Ltd., 2002 June.

Yakabuski, Mark (2008) Unfunded Infrastructure Liabilities = $30 Billion Plus? 12 May 2008. Online available at: http://www.flushtax.ca/introduction.html

Investing in Healthy People & Communities Through Recreation and Parks Infrastructure. (2006) ARPA. July 2006.