Thank you very much, Mr. Chair.
As you can imagine, this is a really important study for us. We are keenly interested in this discussion, so I really appreciate the invitation to be here today. I also send regards from our president, Brad Woodside. He is on stage right now as a governor in a graduation ceremony. He'll be giving his own son his graduation diploma, so that kind of trumps the committee today, unfortunately.
I'm here representing Mayor Woodside and the FCM. I'm also joined by Daniel Rubinstein, manager of policy and research at FCM and the senior policy staff on infrastructure and transportation.
The Federation of Canadian Municipalities is the national voice of municipal government. Our municipal members represent 90% of Canada's population and all parts of our country. Our members include Canada's largest cities, small urban and rural communities, and 20 provincial and territorial municipal associations. As a leader in the municipal movement, the FCM works with all parliamentarians in order to strengthen municipalities and Canada. Canadians know that cities and communities are the drivers of employment and the economy and that the quality of our public infrastructure is directly related to Canada's productivity and long-term prosperity. A stronger economy is key to a higher standard of living for all Canadians.
In our big cities, public transit is a absolute necessity, and that is why the FCM was pleased to hear about the public transit fund announced in budget 2015. This investment is a big step forward on one of the main challenges that Canadians have to face on a daily basis. If such a high level of funding were allocated on a permanent basis, it could transform public transit across the country.
There are important details which remain to be discussed, such as ensuring that local governments retain the flexibility to determine the appropriate degree of private sector involvement. There is no one-size-fits-all for P3 projects, and in the end, it is the municipality that best understands the local context. Each municipality will need to carefully assess the impacts of local borrowing limits and debt-servicing costs on a project-by-project basis.
In addition, as a permanent federal investment envelope, it is critical that the federal government invest as a true one-third partner in these projects, as alternative financing through mechanisms like P3 does not reduce the need for government funding for the capital costs of public goods like major transit projects. While the public transit fund offers certainty and predictability for major municipal transit projects, Canadians still face growing challenges with roads, bridges, and water systems, the core infrastructure that they depend on each day.
Canada is at a crossroads. The core infrastructure that Canadians rely upon is at risk. That’s what the first edition of the Canadian infrastructure report card told us in 2012. The report card measured the physical condition of municipal roads, drinking water, waste-water and stormwater infrastructure and found that one-third of these assets are at risk, requiring significant investment in the years ahead.
On top of these current challenges, new federal waste-water regulations pose a troubling challenge for our communities. The new building Canada fund has renewed funding in this critical area. However, even if every dollar were to be invested into updating municipal waste-water systems, it would not be enough by itself.
Municipalities across the country supported the new waste-water regulations when they were introduced several years ago. Local governments must comply to upgrade existing water and sewer infrastructure by 2040. Highest risk systems will be required to meet the new obligations by 2020.
FCM continues to call for dedicated funding to assist with meeting the new federal waste-water obligations given the scope of the challenge, especially for our smaller communities. We estimate the full costs of meeting the new federal regulations to be $18 billion, with $3.4 billion needed to meet the 2020 deadline.
Here are some examples: Madam Young, in your riding, metro Vancouver will need to find $700 million to upgrade the Lions Gate waste-water plant by 2020. Mr. Watson, Chatham-Kent, your neighbouring community, will require $16 million for upgrades in addition to the projects already in their capital plan. In Montreal, the estimated cost of compliance with these federal regulations sits at around $1 billion alone. In total, Quebec communities are under pressure to upgrade 174 systems, 30 of which will need to start now to hit the 2020 deadline.
Canadians expect all governments to come together to find solutions to these and other challenges. Investing in roads, bridges, transit, and water systems is one of the best ways to create local jobs and generates $1.20 in annual GDP growth for each dollar invested. In addition, investment in core infrastructure meaningfully improves the quality of life for all Canadians and helps business attract the best talent in a global market.
In order for the Canadian economy to thrive, we must ensure that the flow of goods and people in our cities and communities is not held back by crumbling roads or aging transit networks. We all know by now the cost of congestion: countless hours lost by Canadians commuting to and from work and $11 billion per year lost in productivity just in the Toronto area alone. Clearly a plan for our cities and communities is a plan for the economy.
The permanent indexed gas tax fund provides a long-term predictable investment that cities and communities can plan on and bank over time. Municipalities have repeatedly and unanimously endorsed the gas tax as a model for federal-municipal partnerships going forward.
The new building Canada fund also provides an opportunity for the federal government to partner with cities and communities, as well as with provinces and territories, to build and refurbish important municipal infrastructure across the country. Local governments have welcomed these announcements as significant steps towards a return to meeting and then exceeding historic averages for government investment in infrastructure.
There still remain a number of outstanding questions about how municipalities can access these programs. While these issues remain unresolved, jobs are not being created and core infrastructure that fuels our country's national competitiveness is not being built. Cities and communities require long-term predictable investments to move forward. We still have a lot of work to do on this front.
The OECD has reported that total infrastructure investments by all orders of government currently stand at approximately 3.9% of GDP. To put this number in perspective, Canada spent well over 4% of GDP on infrastructure during the late 1950s and through the mid-1970s, a period of urbanization and of population and economic growth. However, the level of investment then dropped to close to 2% by the late 1990s, and we are still paying for this underinvestment. The needs of Canadians and businesses are much more complex now than in decades past, and meeting these needs requires long-term investments dedicated to core economic infrastructure at the local level.
Current federal investments are a step in the right direction for the infrastructure challenges we will face today, but what about the emerging challenges that Canadians will face tomorrow?
I've spoken about the new federal requirements for local governments with respect to clean water, but our local infrastructure is also under stress from more severe weather and environmental pressures. We have all witnessed the dramatic rise in weather-related emergencies across Canada, from the flooding of the Bow River to the ice storm in the GTA, to forest fires and countless other disasters that have led to people and families being displaced, property being damaged, and local economies being disrupted.
Floods in Calgary and Toronto contributed to $3.2 billion in insurance claims by Canadian property owners in 2013. Canada's smaller rural and northern communities face additional geographical and capacity challenges responding to these events. The new building Canada fund will not be enough on its own to tackle these emerging pressures on our economy and on the cities and communities that drive it.
Canada's municipalities have consistently demonstrated that with a willing partner, we get the job done. We saw it during the great recession and it is consistently demonstrated in projects of economic significance around the country. What cities and communities need is further commitment to ensure long-term predictable and sustainable investment to tackle the challenges of today and those of tomorrow.
In closing, recent federal investments have signalled the beginning of a broader partnership with the federal government. It shows what we can achieve when municipalities and the federal government work together to ensure a strong future for Canada. We need to build upon these successes on other shared priorities, including the building of the core infrastructure that is essential to job growth and Canada's long-term economic competitiveness.
Thank you, Mr. Chair, for listening. I look forward to addressing any questions you may have at the appropriate time.