Who should pay for the Infrastructure Gap?

A couple of weeks ago, Tabitha Southey, a columnist for the Globe and Mail (and a Guelphite), mused about the debt ceiling crisis in the U.S. and how only one half of the story was being told. She noted that the assets created are also passed on to future generations for their benefit – not just the liabilities. This is true.

For instance, the new Clair Road Emergency Services Centre was partially funded through debt. The services delivered from this asset will serve not just existing taxpayers but new residents and businesses well into the future.

Now before some of my readers go apoplectic, there is clearly a limit to the amount of debt that can be sustained without compromising your financial position. The U.S. has learned this fact the hard way through the downgrading of its credit rating. The City’s Debt Management Policy sets limits on the amount of debt we can use to protect the City’s financial position (i.e. credit rating).

The Policy also prohibits the use of debt to fund the maintenance and replacement of our aging infrastructure. The thinking here is that it is our past use of these assets that has led to the need for its maintenance and/or replacement so we should not be passing that cost on to future taxpayers.

There is one problem though – the Infrastructure Gap. We are inappropriately passing on this liability to the future because not enough money is being set aside to ensure we can maintain or replace our infrastructure when we need to.   There is simply not enough money in the municipal system.

One of the biggest challenges for all municipalities, and Guelph is no exception, is how to free up more space within our capital budgets to at least begin to close the infrastructure gap rather than see it grow bigger. This is one of the challenges put to our staff in developing a 10 year capital budget for this fall.

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About Karen Farbridge

An unwavering change maker seeking a just, democratic and sustainable world.

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One Comment on “Who should pay for the Infrastructure Gap?”

  1. John Prescott Says:

    The infrastructure gap is a very serious problem for all Canadian cities, and requires multiple solutions including recognition at the political level of the critical importance of cities to the economy including their relative efficiency in service delivery compared to rural areas. A proportion of the HST should be rebated to the places where it is paid. As the global population moves to the cities the taxation system needs to adapt to the change.

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