SECTION 1:  EXECUTIVE SUMMARY

  "CANADA'S QUALITY OF LIFE AND ECONOMIC COMPETITIVENESS DEPEND IN PART ON HAVING RELIABLE, EFFICIENT INFRASTRUCTURE THAT IS PROVIDED IN LARGE PART BY THE MUNICIPAL, PROVINCIAL, TERRITORIAL AND FEDERAL GOVERNMENTS."

Restoring Fiscal Balance in Canada-Focusing on Priorities, Federal Budget 2006

Canadian municipalities build, own and maintain most of the infrastructure that supports our economy and quality of life. Yet for the past 20 years, municipalities have been caught in a fiscal squeeze caused by growing responsibilities and reduced revenues. As a result, they were forced to defer needed investment, and municipal infrastructure continued to deteriorate, with the cost of fixing it climbing five-fold from an estimated $12 billion in 1985 to $60 billion in 2003. This cost is the municipal infrastructure deficit, and today it has reached $123 billion.

The upward trend of the municipal infrastructure deficit over the past two decades points to a looming crisis for our cities and communities and ultimately for the country as a whole. The deficit continues to grow and compound as maintenance is delayed, assets reach the end of their service life, and repair and replacement costs skyrocket. When compared with earlier estimates, the $123-billion figure clearly shows the municipal infrastructure deficit is growing faster than previously thought.

Across Canada, municipal infrastructure has reached the breaking point. Most was built between the 1950s and 1970s, and much of it is due for replacement. We can see the consequences in every community: potholes and crumbling bridges, water-treatment and transit systems that cannot keep up with demand, traffic gridlock, poor air quality and a lack of affordable housing. The infrastructure deficit affects all communities, from major cities to rural, remote and northern communities, where municipal governments lack essential infrastructure and do not have the tax base to develop it.

Action is needed to eliminate this deficit and prepare for effective infrastructure management in the future. Since the first step in any project is to determine the scope of the problem, FCM commissioned Dr. Saeed Mirza of McGill University to survey municipal governments to determine their infrastructure needs as a first step toward determining the size, scope and growth rate of the municipal infrastructure deficit.

The $123-billion estimate includes "sub-deficits" for key categories of municipal infrastructure: water and waste water systems ($31 billion), transportation ($21.7 billion), transit ($22.8 billion), waste management ($7.7 billion) and community, recreational, cultural and social infrastructure ($40.2 billion). There is also an estimate of new infrastructure needs, defined as projects that increase infrastructure capacity through expansion and/or new construction. Similar to earlier studies, this report provides a "snapshot" of what municipal governments identify as their infrastructure funding needs. It does not provide an exhaustive or complete account of the physical condition of municipal infrastructure.

If Canada is to prosper, municipal infrastructure investments must support the economic potential of our cities and communities. For this to happen, financing must reflect the long-term nature of infrastructure investments, which will require a long-term investment plan with agreed-upon priorities. This plan must bring long-term certainty to infrastructure funding, which will promote new efficiencies, technologies and best practices in infrastructure delivery.

Any serious plan to address the municipal infrastructure deficit must begin with an acknowledgement of the scope of the problem and the urgency to address it. This study represents the first step towards a real plan.