Mr. Chair, ladies and gentlemen members of the committee, thank you very much for this invitation.
I'm accompanied by Mr. Patrick Robert-Meunier, who works in my office, as well as by Mr. Gilles Carpentier, who is the chair of the Société de transport de l'Outaouais, vice-chair of the executive and municipal councillor; and by Mr. Denis Tassé, chair of the capital assets and budget committee of the City of Gatineau. He has been a municipal councillor for many years and has been closely involved in the infrastructure dossier during his political career. Do not hesitate to put questions to them during the question period. They know the file as well as I do.
The state of municipal infrastructure is one of the main threats to the financial health of all of the cities of Quebec and Canada. The cost to be paid for years of negligence is huge. The repairs are going to cost more and more, and the retrofit work to be done is increasing constantly. The weight of this budget item is increasingly strangling other essential municipal missions such as libraries, social development, leisure activities, sports or economic development. The objective of today's presentation is to give you a picture of the situation in Gatineau, and especially of Gatineau's reaction to this fundamental issue.
Some five years ago now, the City of Gatineau completed a rigorous and well-documented project to identify and precisely quantify its infrastructure needs. We prepared master plans for each of the relevant areas, that is to say waterworks, sewage, asphalt, the water purification plant and buildings, which exercise allowed us to assess our infrastructure deficit at $1.1 billion. This means that in Gatineau alone, we need to invest $1.1 billion to bring our infrastructure up to an acceptable level.
We are going to table a certain number of documents with the committee, that is to say our long-term financial plan, which was prepared at that time and sets out our needs specifically and rigorously. To deal with this situation, Gatineau made some massive investments. We allocated 100% of all new sources of city revenue since 2005 to infrastructure. Every year since 2012, we have levied a special 1% infrastructure tax. This tax is added to the usual taxation so that we maintain our services. This was a courageous decision on the part of the council. In 2017, the envelope created by that decision will represent a recurring fund of $20 million a year that will be allocated once again only to infrastructure.
We also implemented a strict policy to increase the debt, essentially to take advantage of federal and provincial infrastructure programs. The greatest part of the increase in our debt since the municipal fusion which took place 12 years ago is due to that decision. Our public works department is the only department whose budgets are automatically indexed on a yearly basis because its workload increases considerably every year. We put in place a committee to review expenditures and services and we want to realize recurrent budgetary savings. However, that only involves our other mandates because we want to protect our investments in infrastructure.
In order to stop what we call a hemorrhage, we have created a life-cycle reserve where we take 2% of the cost of each new infrastructure. We put this in a fund so that we can maintain them when they begin to age. We don't want to repeat what was done in the past, that is to say build infrastructure without having any means to maintain them.
We also imposed development charges on all new developments. This is a type of fee that is well-known in the rest of Canada but that is not used much in Quebec. Gatineau is on the cutting edge of that debate in Quebec. The principle of these charges is that growth pays for growth. When a new neighbourhood is built, we impose charges that allow us to expand our plants and do the work related to that new development.
With regard to infrastructure, the necessary catch-up work in Gatineau alone was quantified five years ago at $1.1 billion. We did an update in 2014 and today, despite our massive investments, the cost of the retrofit has increased to $1.3 billion. We are good students. We shoulder our responsibilities and we make sacrifices. I would add that we have shown political courage. Despite all of that, the gap is growing. For instance—and this is a figure I constantly have in mind—the number of kilometres of streets in an unacceptable condition has gone from 195 kilometres in 2005 to 356 kilometres in 2011. I'm talking here about our entire road network.
All of the catch-up work to be done on our infrastructure basically monopolizes all of our fiscal capacity. This has negative consequences. Almost all of the increase in our debt is also allocated to infrastructure.
All of the tax increases on new investments are channelled into our infrastructure. Over the past years our taxation level has often been below the rate of inflation. Our recent tax hikes were limited to the rate of inflation, plus the infrastructure tax. For a growing city like ours this means that the increase in our service offer has to be accomplished through a compression of the services we already offer or through efficiency gains.
These rigorous principles have major repercussions on municipal mandates aside those that are infrastructure-related. For instance, for 12 years now we have made no investments in our library network. Although the population of Gatineau is growing steadily, and knowledge and culture lead to innovation, and we know quite well that our economic and social future depends on our children's grey matter, we have had to neglect our libraries in order to meet immediate infrastructure needs.
To illustrate the gap between that budget item and the others, over the next four years we are going to invest $67 million in projects for parks, bicycles paths, the downtown area and our libraries. During the same period, we will invest $480 million in our infrastructure.
The choices that the state of our infrastructure imposes on us are jeopardizing our capacity to prepare for the future. We feel that that is not an overstatement. Although investing in infrastructure allows us to reduce maintenance expenses, those same infrastructures do not create long-term wealth, do not stimulate innovation and do not contribute to quality of life, as do for instance our libraries or our downtown core.
There are several possible solutions. The fundamental problem is that the urban design of our city is in a way a fiscal error. We have low density, and that low density means that for each street we do not have sufficient tax revenue to pay for the property services and individual services that come with urban development. We have adopted a new development project. We are trying to tighten up construction in our city. We are also grappling with that reality. Our development charges are also a response to that because those fees force densification.
There is also a problem with funds and revenue. In Quebec, cities manage 58% of public infrastructure—that is the other figure I never forget— but they only have access to 8% of the taxes paid by Quebeckers as a whole. The math is implacable. Even with the best will in world, as we have in Gatineau, and even if we invested all of the budgets allocated to other municipal mandates, it is impossible to meet the needs.
Moreover, when federal and provincial governments invest in infrastructure, they obtain a significant return on their investment, which is not the case for municipalities. According to the general perception, governments contribute one third each. However, a study carried out by Deloitte in 2012 on the state of municipal infrastructure in Quebec revealed that taking into account the tax income the other governments enjoy, the net contribution by municipalities to the maintenance of infrastructure and construction is on the order of 76%. This has nothing to do with our capacity to pay.
The financial problem is even greater because the only thing we control is our own budget. There is a great temptation to invest more to solve the problem, which can in some ways be a mistake. We cannot expect today's Gatineau residents to carry the full weight of a problem that was created over several decades. There is also a limit to property taxes and that is our main revenue in Gatineau. It represents 87% or our revenue. It is a tax that is less fair than income tax and that we cannot avoid, as opposed to consumption taxes that we may avoid by consuming less.
The dedicated tax, our life cycle reserve and our policy to increase the debt already weigh heavily on our fiscal capacity. It would be ill-advised to add to the tax burden of Gatineau residents. However, the problem has to be solved, and in my opinion the solution has to come from a better sharing of the resources at the disposal of municipal, provincial and federal governments
I do in fact want to take advantage of this opportunity to highlight the important progress made by cities thanks to the help of the federal government. By putting in place infrastructure funding programs and making them more predictable and permanent, the federal government has greatly facilitated things for us.
I will conclude by saying that we have to build our cities differently, and that is what we are trying to do. We also have to invest massively in public transport because this contributes to reducing the pressure on our infrastructure. M. Carpentier could give you some details regarding our needs in that area.
Finally, we do indeed need greater financial resources. You have already heard that type of comment. This ratio of 58% of the responsibilities and 8% of the income has to be changed. It is a ratio that puts cities in an impossible situation. If the proportions stay the same, the substance of the problem will not change.
Thank you.