Manitoba Heavy Construction Association

A SUPPLEMENT TO THE WINNIPEG FREE PRESS SATURDAY, APRIL 6, 2019 5 S ustained and strategic investment in public infrastructure is essential to our long-term economic growth and is critical to the quality of life enjoyed by Manitobans. So, why do we see reluctance among some governments to maintain a high level of investment in infrastructure? is lack of attention is not seen just in our political offices: Unless a bridge collapses or a train derails, the media don't pay much attention to infrastructure, either. Let's face it: Infrastructure bores political reporters. Economic infrastructure is not a term easily understood and is oen sidetracked by greatly expanding the definition of infrastructure. Whatever you call it, what we are talking about is the backbone of our market economy and the foundation for social policy investments. It is relatively easy for the average citizen to make a connection between good infrastructure and things like fixed potholes and the building of bridges that shorten the commute to work – things that improve our personal quality of life. However, the connection between good infrastructure and Canada's long-term economic prosperity, on the other hand, is just not something most people think about. Lawmakers also seem to have difficulty in distinguishing between investments that generate tangible economic returns to society and spending that fuels present consumption. Modernizing the way we evaluate infrastructure would be a step towards a capital budget that separates investments in future growth from consumption spending. e distinction is crucial, even if it eludes many people. As any business knows, when credit is cheap it makes sense to borrow to expand production and use some of the increased revenue it generates to repay your loans. (Conversely, borrowing to consume more than you earn is a fool's errand that will land you in bankruptcy.) With real interest rates relatively low, it would make sense to borrow now to enlarge the nation's future productive capacities. A new approach to public infrastructure works, however, cannot rely exclusively on public financing, whether it's by taxes or borrowing. Closing the nation's enormous infrastructure investment gap — estimated at about $150 billion a year — also will require creative ways to tap private capital. It's already happening on a modest scale. Public-private partnerships (P3s) are beginning to crop up around the country. P3s do more than leverage private dollars; they inject greater market discipline into both the selection and management of new projects. Investing in public infrastructure was seen as a good way to stimulate the economy during the last recession. Now that the worst is over — we hope — governments have to decide if it makes sense to continue investing in infrastructure or if we should put our scarce tax dollars toward other priorities. Complicating matters, this decision takes place against the backdrop of the ongoing fiscal challenges and the high level of debt accumulated over the last number of years, which suggest that belt-tightening should be the order of the day rather than more public spending. But here's the issue: Despite the stimulus splurge aer the recession, we have actually been shortchanging investment in our economic public infrastructure for years. If we continue on this track, productivity gains will not be adequate to maintain our quality of life. ere is a strong connection between investing in public infrastructure and long-term gains in economic productivity. Canada's productivity — how efficiently we produce goods and services — is critical to our current standard of living and quality of life, as well as to our future economic and social prospects. While there have been reasons given for our weak productivity gains in the economy, a part of the solution is investment in public infrastructure and, in particular, infrastructure that supports economic development such as trade, applied research and other productivity improving investments. is, however, comes with a caveat. e investments must be strategic. It's not just a matter of more infrastructure. To get infrastructure right, we need to be investing in the right infrastructure in the right places and this means focusing on infrastructure that serves economic ends such as transportation systems and core services such as water and sanitation. We cannot take our infrastructure, which facilitates a competitive and trade-friendly environment, for granted. Manitoba needs to be investing in the right infrastructure in the right places. ❱❱❱ Ron Koslowsky is divisional vice-president of Canadian Manufacturers and Exporters INFRASTRUCTURE: NOT JUST MORE INVESTMENT, BUT IN THE RIGHT PLACES B Y R O N K O S L O W S K Y TO GET INFRASTRUCTURE RIGHT, WE NEED TO BE INVESTING IN THE RIGHT INFRASTRUCTURE IN THE RIGHT PLACES AND THIS MEANS FOCUSING ON INFRASTRUCTURE THAT SERVES ECONOMIC ENDS, SUCH AS TRANSPORTATION SYSTEMS AND CORE SERVICES SUCH AS WATER AND SANITATION. Coun. Scott Gillingham (St. James) is Chair of the Finance Committee WINNIPEG'S INFRASTRUCTURE NEEDS STRATEGIC, LONG-TERM FUNDING FROM MANITOBA I t has been 15 months since Winnipeg City Council adopted its 2018 capital budget and yet a dispute over $40 million in outstanding provincial roads funding for that year drags on. e funding shortfall stems from a decision made by the provincial government to not honour the final year of a five-year, $250-million roads commitment to the city. Not only is the ongoing back and forth between the city and province sapping time and resources on both Main Street and Broadway, it appears the public is growing increasingly indifferent to the fight. Notwithstanding the waning public interest, I remain steadfast in my position that the province still owes the City of Winnipeg $40 million. At the time of this writing, the provincial government has not provided the city with a reconciliation that supports its position that the $250-million commitment has been fulfilled completely. As a city councillor elected to serve the residents of Winnipeg, I am reluctant to acquiesce to the province on this matter without evidence to substantiate their claim. At this point however, Winnipeg taxpayers are being forced to cover the province's outstanding bill. Council faced a difficult choice in how to address the $40-million, provincial roads funding shortfall during the preparation of the City of Winnipeg's 2019 Budget. Council could have chosen to increase property taxes by 7% or to fill the gap with long-term debt. Instead, City Council sought a balanced approach that will cover the $40 million by spreading the costs over the 2019 and 2020 budget years. Unfortunately, this results in a substantial reduction to the local street renewal program. And that means all 2019 expenditures in the local streets program will go only to industrial road reconstructions and the thin bituminous overlay (TBO) projects, plus the engineering for the residential streets the department had been preparing for reconstruction this year. However, the situation does not end at this point. e recently tabled federal budget contains a commitment to double the gas tax funding available to municipalities in 2019. is funding would flow directly from Ottawa to the City of Winnipeg and could mean that just over $40 million may be available this year for roads and other infrastructure projects. Due to budget timing and political unrest in Ottawa, it would be premature to presume these federal dollars and to amend the city's 2019 budget at this time. However, subject to the passing of the federal budget and a review of funding details, council and city administration will work diligently to administer any funds made available. I want these federal funds used to restore the 2019 local street renewal program. In the meantime, the city will continue to press the province to provide an irrefutable reconciliation to substantiate its claim that it has honoured the $250-million funding commitment. And if unwilling to provide that information, it should pay the $40 million outstanding to the city. e province recently unveiled its 2019 Budget. As part of any budget package, the government tables supplementary documents, which contain the statements and charts that expand upon the thinking of the government and help explain the choices it made when producing the budget being presented. e opening sentence under the heading on 'Funding of Municipalities' labels grants to municipalities as a "material expense" for the Province of Manitoba. e descriptor, while factual, is very telling in its placement and should not be glossed over. It appears to signal the way the present provincial government views the City of Winnipeg and all other Manitoba municipalities. To a government sprinting to balance its budget, eliminate the deficit and reduce the PST (all laudable and important B Y S C O T T G I L L I N G H A M COUNCIL AND CITY ADMINISTRATION WILL WORK DILIGENTLY TO ADMINISTER ANY (GAS TAX) FUNDS MADE AVAILABLE. I WANT THESE FEDERAL FUNDS USED TO RESTORE THE 2019 LOCAL STREET RENEWAL PROGRAM. - COUN. GILLINGHAM goals), it would seem that financial support of municipalities is primarily a hurdle to be cleared or an expense line to be manipulated. But when the day arrives that the province's trio of fiscal goals is finally achieved, what comes next? Citizens will wake up the following morning in municipalities that are still struggling under growing infrastructure deficits, with limited options to raise revenues and no long-term plan that provides provincial funding certainty. It is time for a pivot in the relationship between the provincial government and its municipalities. It is time for a strategic, long-term, predictable, growth-oriented funding model to be developed. is would benefit the province, municipalities, industry stakeholders and taxpayers by providing greater fiscal certainty and the opportunity for increased collaboration. And such a model could help the province avoid further disputes with its municipalities, like the one going on with the City of Winnipeg over $40 million. ❱❱❱

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