A Critical Conversation: “Building Municipal Infrastructure” Thursday, February 25th 2010 www.cvsrd.org Carleton University, Ottawa, Ontario
Welcome!
Introduction CURE conducts multi-disciplinary research on: Community governance Municipal government Citizen engagement Infrastructure Multi-level governance “There is a need to foster a stronger, more multi -disciplinary community of researchers interested in infrastructure and communities issues and willing and able to generate policy- relevant research” INFC Performance Report 2005-06, p.12 3
The Big Picture Situating Our Research 4
The Big Picture: P lace matters (again!) Multi – level governance New deal-GTF/urban and infrastructure renewal (ISF) Integrated Community Sustainability Plans (ICSPs) Democratic renewal Responsive, enabling government 5
Influencing Local Outcomes * International Agencies & Agreements Federal, Provincial, Municipal Government Sustainable Cities & Communities *Source: Tindal & Tindal 2008, p.166
Multi-Level Governance Federal/ provincial transfers: Unpredictable Strategic investments or redistributive politics? Who decides priorities? Who‟s accountable? 7
Pressures for Urban Renewal Globalization, immigration, and urbanization Downloaded responsibility for public services Crumbling Declining investment Infrastructure in public infrastructure Average Age of Asset Types (Age in Years) % of GDP Source: Department of Finance Canada Source: Statistics Canada. Investment & Capital Stock Division 8
Local Government's Fiscal Crisis Current tri-level arrangements Federal for managing the cities are Government with resources increasingly seen as anachronistic and Provinces dysfunctional, a product of Municipalities with many „hourglass federalism ‟ problems and few resources Government's Share of Every Tax Dollar (in cents) In 2007, the fiscal infrastructure deficit was 8 Federal estimated at $123 billion, Provincial 50 and is believe that is growing 42 Municipal by over $2 billion annually 9
Municipalities Fiscally Challenged Federal Provincial Municipal (%) (%) (%) Share of Total Taxes 50 42 8 Raised Share of assets held 10 40 50 Expenditure per capita +0.9 +0.6 -0.9 1988-2005 Revenue per capita -0.2 +0.8 +0.6 1988-2005 *Source: Tindal & Tindal 2008 10
...and Investment 11
Sustainable Construction... 12
Bruntland...22 years ago ...local governments have not been given the political power, decision making capacity, and access to revenues needed to carry out their functions. This leads to frustration, to continuing criticism of local governments for insufficient and ineffective services, and to a downward spiral of weakness feeding on frustration … To become key agents of development, city governments need enhanced political, institutional, and financial capacity, notably access to more of the wealth generated in the city. Only in this way can cities adapt and deploy some of the vast array of tools available to address urban problems. 13
Agenda 21…. „local matters‟ Because so many of the problems and solutions being addressed by Agenda 21 have their roots in local activities, the participation and cooperation of local authorities will be a determining factor in fulfilling its objectives. Local authorities construct, operate and maintain economic, social and environmental infrastructure, oversee planning processes, establish local environmental policies and regulations, and assist in implementing national and subnational environmental policies. As the level of governance closest to the people, they play a vital role in educating, mobilizing and responding to the public to promote sustainable development …Each local authority should enter into a dialogue with its citizens, local organizations, and private enterprises and adopt a local Agenda 21. 14
Options for Municipal Reform Constitutional amendment Creating city charters Governance reform Public funding of councilors Increased fiscal space for local taxes Model federal grants on GTF not ISF Change incentives that produce sprawl Meaningful „upfront‟ public engagement Creation of „urban agenda‟ at the national level 15
The Gas Tax Fund (GTF) A Conditional Non-matching Close-ended Transfer Erika Adams 16
Intergovernmental Fiscal Transfers Transfers of monetary assets to another level of government for which the government making the transfer does not: receive any goods or services directly in return; expect to be repaid in the future; or expect a direct financial return. Conditional Open-Ended Matching Close-Ended Transfers Non-Matching Unconditional 17
Transfers in Canada Historically a dominant feature of the highly decentralized Canadian fiscal framework. In 2006-2007 transfers amounted to $125 billion dollars $1.8 billion was allocated to Infrastructure Canada $590 million represented the Gas Tax Fund. 18
The Policy Problem Mid 1990s Local Government‟s Fiscal Crisis Pressures for Urban Renewal 19
The Policy Community The Policy Problem Emergence of Elimination of large federal deficits surpluses Creation of a very strong and vocal policy community Which started to exert considerable pressure on the federal government for new recognition, respect, and resources 20
Promising government actions Budget 2000 – $2 billion Canada Infrastructure Fund. Opportunity for All, the 2000 Liberal party platform - recognized the challenges facing cities. Budget 2001 - $2 billion Strategic Infrastructure Fund. Caucus Task Force on Urban Issues, chaired by Judy Sgro. 2002, Martin, as Finance Minister, talks about the New Deal. BUT Implementation delayed by political uncertainty 21
Urban Policy back on the Agenda In February 2004, the Speech from the Throne introduced the New Deal for Cities New Urban Policy and Communities Framework In July, Minister New Ministry Godfrey was appointed Minister of Infrastructure Policy Problem State for Infrastructure and Communities. 22
Requirements of the Solution: Municipalities • Avoid fights • Address the over the • Ensuring that they fiscal gap issue of received the funds and jurisdiction • Responsive were able to pool, bank, to the New and borrow against the • Discourage Deal‟s funding them from political clawing back • Meet the needs of any imperatives their current size municipality by level of • Further its allowing them to choose support policy goals the projects Provinces • Have a strong Federal G. accountability framework 23
Federal‟s Government Response: The Gas Tax Transfer • Designed to incentivize municipalities to invest in environmentally sustainable infrastructure investments • Conditionality clause: list of eligible projects and Conditional expenditures • Understanding the fiscal position of the municipalities the government chose not to require a matching Non- contribution. Matching • When first announced the GTF was a $5 billion program delivered over 5 years. Close-ended 24
A Hybrid Transfer The GTF disburses funds based on a formula, and it has characteristics of: Contributions Grants Complex Accountability Funding given up-front Framework, i.e. an annual expenditure report, an outcomes report, and an audit report Federal government not involved in the selection of projects 25
A Transfer with Ambitions Objectives Elements of the The Gas Tax Fund New Deal Transfer Goals: An overarching Improvement of the quality, efficiency, effectiveness and vision of where sustainability of environmental municipal infrastructure Canadian cities and communities of all sizes should be in Transfer Expected Outcomes : 30 years Cleaner air, cleaner water and the reduction of green house gas emissions Money Viable, politically appealing, option to address the need for stable, predictable, long-term funding for municipalities Using an urban The focus on hard infrastructure reflects the needs expressed lens by municipal leaders Build new Created purposeful partnerships and emphasized flexibility relationships with based on the belief that municipalities know what is better for provinces, them and will use the money accordingly municipalities & territories 26
An Allocation-driven, Predictable, Long-term Transfer In 2005, the government started sharing with municipalities (based on their population) 1.5 ct. per litre, or $600 million in revenues. For 2009-2010, this amount increased to 5 cents per litre, or $2 billion annually In 2007, the Harper Conservatives, extended the funding from 2010 to 2014 at $2 billion per year. Then, the 2008 Budget announced that the GTF would be extended at $2 billion per year beyond 2014 becoming a permanent measure 27
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