Some of the greatest challenges that local governments face in Canada revolve around the concept of the “Infrastructure Deficit“. In Canada, the Federation of Canadian Municipalities, (FCM) has a position statement on the infrastructure deficit:
All governments – federal, provincial, territorial and municipal – must work together and with the private sector to make immediate infrastructure repairs to protect public health and safety. They must act now to establish a fully funded, long-term plan to build roads, water systems, community facilities and transportation systems Canada needs to support businesses and families, enrich our quality of life and maintain competitiveness in international markets.
Fully funded, long-term plans need to be developed in coordination with provincial and federal levels of government to ensure sustainable asset management.
In Australia, it seems that regional and rural local governments are being recognized (by some) as being of real importance to the federal economy:
Sustained cooperation, coordination and collaboration between the Federal Government and local governments will be crucial to creating new jobs in regional and rural Australia, and boosting economic growth.
It is truly remarkable that local government’s contribution towards employment in regional and rural Australia, and the sector’s capacity to build stronger and more resilient communities through its significant infrastructure portfolio, has largely gone unnoticed in the budget.
Interestingly, in this article the role of mining in the Australian economy is discussed, from the perspective of economic value, (~10%) against employment (~2%), which seems similar to Canada’s oil and gas industry, (employment figures range from 226,000 people ((http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/labr71c-eng.htm)), ~1% to 500,000 people ((http://www.capp.ca/library/statistics/basic/Pages/default.aspx)), ~2%) against 7.9% of GDP ((http://en.wikipedia.org/wiki/Economy_of_Canada#Energy)). In comparison, Stats Canada figures show that in 2011 there were almost 680,000 people employed in local government activities ((http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/govt62a-eng.htm)) in Canada.
In Canada, as in Australia – local governments are on the front line of service delivery and infrastructure for the over 60% of facilities that are used daily by citizens, yet municipalities collect only 8% of Canadian tax dollars ((http://www.fcm.ca/home/issues/infrastructure/about-the-issue.htm)). A recent article from The Tyee asks some pertinent questions and delves into the complexity of local government funding and responsibilities…
While municipal spending in Canada has indeed risen over the past decade or so, our Centre for Civic Governance study on local government finance, currently in progress, points to something quite different, and much more complex.
The evidence we’re uncovering suggests that municipalities have been pushed to take on a greater share of government responsibilities over the past 20 years, while federal and provincial programs and support has waned…
…The evidence so far points to something other than “out of control” spending by “reckless” local governments. Instead, it looks a lot like local governments have been asked to take on an increasing share of responsibilities, but with reduced assistance from the very levels of government that have been offloading these responsibilities. Local governments are forced to rely on two limited and often unpopular mechanisms for raising the revenue needed to fund these services: property taxes and fees/sales of services.
In Canada, the Federation of Canadian Municipalities regularly advocates on behalf of local governments nationally. the FCM President recently made this statement regarding the Federal Build Canada Fund:
Municipalities own a significant majority of public infrastructure and, for a fund that will span the next decade, we must be sure that that it is used accordingly. This is the only way to ensure that local governments can address infrastructure challenges in their communities. We are also concerned by rule changes that could force municipalities to carry a larger share of infrastructure costs in the future, the eligibility rules for local roads, the screening process for projects structured as public/private partnerships (P3s).
Local governments have a role to play too, many are only just waking up to the fact that ownership is a liability that needs to be considered at the procurement stage and throughout the lifespan of the asset, and are lacking the systems and policies to fully account for the deficit…
“Our accounting systems don’t even account for the full cost of building and maintaining infrastructure,” she says. “The capital budget and the operation and maintenance budget are entirely separate. The mindset in infrastructure projects is to design, build — and forget.”
This is a discussion that is far from over, solutions are complex and require cooperation between all levels of government and will by necessity involve a great deal of capacity building for government staff and engineering consultants to provide recommendations and reports that meet best practice expectations for asset management and infrastructure financing.