The Prime Minister's recent pledge on the gasoline tax or "equivalent" suggests that more direct assistance is in the pipeline for municipalities, although the specific form of how the money will be provided remains uncertain. As we discuss in Part IV of the study, we are not in support of a gasoline tax transfer as a vehicle to fund infrastructure, and thus, were pleased to see that he has left the door open to other alternatives. Regardless, any additional assistance needs to be spent as efficiently as possible. In order to achieve this, new funding should satisfy two major criteria:
• Minimize interference in local operational issues - it is important that the federal government not follow a one-size-fits all approach, nor allow its priorities to trump local priorities in allocating funding.
• Don t substitute taxpayer funds in cases where user-pay works. Federal funding should not be used to in effect subsidize projects that are good candidates for full-cost pricing.
Happily, the federal department that administers infrastructure funds - Infrastructure Canada - appears to be doing a better job adhering to these requirements recently. As such, we believe that it would be more efficient for the federal government to take action to strengthen the current process rather than set up a new vehicle, such as one to administer the sharing of the gasoline excise tax. The federal government should consider the following changes to the way its manages infrastructure programs:
• Set up an advisory board - although the federal government would still call the ultimate shots for the sake of accountability, an independent board should be established to provide advice to the government on what type of infrastructure should be financed and how. We envision a board similar to that of the National Roundtable of the Environment and Economy (NRTEE) that would play a lead role in setting standards and principles on which infrastructure should be cost-recovered, which require general tax-financed funding and which are good candidates for private-sector involvement. In order to ensure local priorities are heard the board should have a strong local and provincial government representation. The private sector should also have a seat at the table, so that the governments can better capitalize on opportunities for P3s.
• Education should be made eligible - over the past few years, infrastructure funds have largely focused on municipal transportation and environmental projects, which we support. However, one area that we believe should be pushed up in the pecking order is the all-important area of education. Put simply, inadequate capacity and huge deferred maintenance will threaten the ability to educate the next generation of Canadians, thus presenting a major risk to Canada's ability to compete down the road.
• Create an infrastructure bank with private-sector involvement - Federal infrastructure assistance could extend to a newly-established vehicle that would be aimed at helping municipalities to finance projects similar to those commonly used in the United States. This revolving lending facility could be created by a federal grant, and used to leverage contributions from the provincial government and the private sector. Advice on lending decisions could be made by the same public-private advisory board as that above to ensure the money is well spent.