Who will foot the bill for bringing municipal infrastructure up to snuff?

ANALYSIS: According to the Financial Accountability Office, more than half the infrastructure owned by municipalities in Ontario is in good repair. That just leaves everything else
By John Michael McGrath - Published on Aug 18, 2021
Municipalities own more infrastructure in Ontario than the feds and province combined. (Nathan Denette/CP)

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Infrastructure is a word that has lost nearly all meaning, given its over-use by politicians pledging to shower money on urgent infrastructure needs. (A hockey arena? That’s, uh, social infrastructure. Sure, why not!) But when you zoom out and look at the stuff that we actually build and operate, the category becomes much clearer. That task was made easier this week thanks to a Financial Accountability Office report, the second of three dealing with the state of the province’s infrastructure. The first focused on provincially owned infrastructure; this week’s surveys municipally owned infrastructure.

It's a big topic: as the report notes, municipalities own more infrastructure in Ontario than the feds and province combined. It all amounts to nearly half a trillion dollars ($484 billion, more precisely) and includes everything from landfills to fire stations. But a huge portion of what municipalities do is actually quite familiar: the vast majority of the infrastructure we’re talking about is either road-related (including the roads themselves, but also bridges and culverts) or water-related (drinking water, sewers, stormwater infrastructure). The stuff that cars run on, as a package, adds up to more than $170 billion; the stuff that tells water where to go adds up to almost $230 billion. So the car stuff and the water stuff add up to about $400 billion of the $484 billion total. By comparison, transit — which readers might think is a pretty big-ticket item in our inventory — adds up to only $9.3 billion, or 2 per cent of the total.

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In short, as far as municipal infrastructure goes, there’s water infrastructure and road infrastructure. Everything else is a distant third (and as you get outside the province’s biggest cities, transit spending drops off substantially).

The bad news is that nearly half that infrastructure is not, in the technical language, “in a state of good repair.” The stuff we build needs to be cared for over its lifespan, and while it’s cheaper to maintain stuff regularly than to replace it when it breaks ahead of schedule, it’s even cheaper in any one budget year to put off maintenance spending — and municipalities face budget pressures that the province and feds don’t. The FAO was able to collect data on the conditions of 90 per cent of municipal infrastructure; of that, it estimates that $197.8 billion worth of roads, bridges, pipes, and buildings are not in a state of good repair.

So how much would it take to bring all that stuff up to snuff? The FAO estimates that $52 billion is needed for repair or renewal. The need is distributed all across the province; the GTA scores relatively well, but both eastern Ontario and Bruce and Grey Counties have higher shares of their infrastructure that need work. It’s not as simple as “the big cities of the province need massive cash infusions.” The need is there in the north as much as in the south.

Of course, where that money comes from is another question, one the FAO report doesn’t provide an answer for. This is a long-standing topic of debate at the Association of Municipalities of Ontario annual conferences (which TVO is helping to produce this year). AMO has historically asked higher levels of government for help bearing the infrastructure burden. Under Premier Kathleen Wynne, it asked for a share of HST revenue, an idea that the Liberals rejected with extreme prejudice and that is unlikely to get any more of a hearing under Doug Ford. This year, with a federal election on, such groups as the Federation of Canadian Municipalities are asking for the federal government to double the Canada Community-Building Fund (the new name for the share of federal gas-tax revenues that go to municipalities). Who knows: elections matter, and it could happen.

But even doubling the CCBF might not make a big dent in the municipal-infrastructure backlog; there’s just too much work to do. At some point, there are only two solutions: handing more money to municipalities or taking over some of their infrastructure responsibilities. (This wouldn’t be unprecedented; much of the provincial road network that’s now run by cities and towns was provincially maintained before the Mike Harris government.) Until someone decides which answer they prefer, we’ll keep muddling through as we have for a while now.

The third and final ministers’ forum at this year’s AMO conference will focus on the environment, infrastructure, and resource development post-COVID-19 and will be moderated by TVO.org’s John Michael McGrath.

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