Mr. Speaker, our motion today is as follows:
That, consistent with the spirit of the Liberal New Deal for Cities and Communities, this House believes it is in the best interests of Canadians that the government should take steps to make permanent the sharing of the Federal Excise Tax on gasoline with all Canadian municipalities for the purposes of enhancing local community infrastructure.
Canada's cities are the engines that drive our economy. The continued growth and economic stability of Canadian cities are essential to provide opportunities for all Canadians. With 50% of both Canada's population and its GDP output coming from our largest 10 cities, their needs must be taken care of. To ensure the future sustainability of our economy, that is imperative.
It is also true that the development of Canadian cities will play a major role in determining how well we succeed in the global economy. As pointed out by the former Liberal prime minister, the member for LaSalle—Émard, “In a world in which talent, capital and ideas are globally mobile, it's Toronto and Montreal vs. Shanghai and Bangalore; Ottawa vs. Helsinki; Vancouver vs. San Francisco”.
At the other end of the spectrum, it cannot be overlooked that cities are where most Canadians live, work and play. They are our homes and our neighbourhoods. Our standard of living is directly related to the recreational, cultural and educational opportunities that are available in our cities.
It is a standard of living which relies on a strong, viable and sustainable infrastructure that allows us to take advantage of these opportunities. By and large, that responsibility is left to the municipal level of government. It is simple: municipal governments must have proper support to carry out that mandate.
I am very proud to be a member of a party that for over a decade engaged Canada's municipal leaders in an attempt to improve the quality of life in Canada's cities. Right from the very first budget brought in by the Chrétien government in 1994, Liberal governments made progressive investments in infrastructure across the country. The infrastructure Canada program, the Canada strategic infrastructure fund, the municipal rural infrastructure fund and other Liberal programs invested $12 billion in Canada's municipalities.
Even while the member for LaSalle—Émard was working to tackle the deficit monster that Canadians inherited from the previous Conservative government under former prime minister Mulroney, he and the rest of the Liberal cabinet ensured that Canadian cities did not go without and that key infrastructure investments were made throughout the 1990s.
However, investing in infrastructure projects was only the first step in a long term policy and funding framework that Canadian municipalities badly needed. Municipalities need this even more so today. The fact is that Canadian cities are attempting to address 21st century policy needs under a model designed in the 19th century.
Unlike the vast majority of municipalities throughout the United States and western Europe, the majority of revenue for cities and communities in Canada comes from property taxes. Despite the fact that cities are expected to provide social services, immigration counselling, housing, public transit, roads, policing and a whole host of other measures, there has not been any change in the funding model for cities in Canada for over 150 years.
We cannot expect Canadian municipalities to fund welfare programs, immigration services and numerous other aspects of Canada's social safety net on the back of property taxes. Property taxes are ill-suited to funding these kinds of services.
If a widow owns a home in downtown Fort McMurray, Alberta, it is entirely possible that the value of her home has gone up fivefold or tenfold, but she is still living on a fixed income. Should we really be demanding that she pay 10 times the property taxes she paid a decade ago despite the fact that she is living on the same income? I certainly think not.
The biggest single reason for the increased scope of responsibilities of the cities is the steps taken by governments in the 1990s to tackle the ballooning deficit problem. Responsibilities for a wide array of policy fields were downloaded to lower levels of government without providing them adequate resources with which to manage the burden.
Cities, with no one to download responsibilities to, have been left with the duty to deal with all of the issues that have been heaped upon them. Legally, cities are not allowed to run operating deficits, although some can fund capital projects through deficit financing. The City of Edmonton, for example, has had a balanced operating budget for some time, but in 2005 its long term debt increased from $417 million to $470 million due to capital expenditures. Interest payments alone are more than $20 million annually.
As a result, although it appears from an operating perspective that municipalities have been able to manage things without getting into financial trouble, municipal debt levels are increasing right across Canada.
City after city and community after community across the country have to choose between long term investments in infrastructure versus meeting the day to day demand to balance the operating budgets. Most cities cannot even keep up with the day to day demands of their new responsibilities. They are desperately looking for new funds.
In an attempt to address this fundamental imbalance, the Liberal government worked extensively with its municipal and provincial partners to begin the process of building the long term fiscal capacity of Canada's municipalities and communities.
In budget 2004, the Chrétien government announced that the federal government would fully refund municipalities all of the GST that they were required to pay out. Alone, this simple step provides municipalities with more than $700 million per year in revenue.
In 2005 the Liberal government went one step further, announcing its new deal for cities, which would begin sharing the federal excise tax on gasoline with municipal governments. In the 2008-09 fiscal year the program comes fully of age and provides municipalities, I am proud to say, $2 billion in funding annually.
However, the program will eventually come to an end. It is legislated to stop providing money to municipalities in 2014. The motion that we are debating today would call upon the federal government to make permanent the gas tax transfer to municipalities.
Why is this so important? The answer is very simple: proper municipal planning. In order for cities to be able to adequately plan their investments in infrastructure and ensure they can replace key components in a timely and orderly fashion, they need to be assured of their income streams.
This is especially key for municipalities, because most of them are not allowed to take on deficit financing for large scale capital projects, so unless they can be fully assured of long term income streams, they simply cannot manage their local infrastructure. Making the gas tax transfer a permanent feature of federal government budgets would go part of the way toward providing Canadian municipalities with the long term funding they need to address their community and infrastructure needs.
Some members of the House may be wondering why municipal infrastructure is so important. They may be asking why we should care. In fact, I am guessing that the Minister of Finance is asking why he should be filling potholes.
On November 20 of this year, the Federation of Canadian Municipalities released an extremely important report, which showed that as a whole Canadian municipalities face a $123 billion infrastructure deficit. The FCM press release states, “The physical foundations of Canada's cities and communities are 'near collapse'”.
It went on to say:
Canada's economy and quality of life and the health and safety of Canadians depend on the infrastructure our municipalities build and own, yet we don't have the resources to maintain it. If we don't act soon as a nation to tackle this deficit, we see more catastrophic failures in our roads, bridges, water supply and other vital infrastructure. Continued delay is unthinkable....
The $123-billion figure, when compared with earlier estimates, clearly shows the municipal infrastructure deficit is growing faster than previously thought. Most municipal infrastructure was built between the 1950s and 1970s, and much of it is due for replacement. As assets reach the end of their service life, repair and replacement costs skyrocket. Across Canada, municipal infrastructure has reached the breaking point.
I do not think that any member of the House should be surprised by any of the statements from the FCM. Just to take recreational infrastructure as an example, each and every one of us has either a memorial rink or a centennial pool in our ridings. Let us think about those facilities. Many of them are in serious disrepair and are in need of a facelift, if not an outright replacement.
Liberal infrastructure programs started helping to address those needs, as they did in Sault Ste. Marie, where the Sault Memorial Gardens were replaced by a new arena, or in Grand Bay, New Brunswick, where partnership with the province and the municipality constructed new recreational facilities.
Let me give members another example. Montreal is one of the largest cities in our country and is home to millions of people. It is also a city where there are very high property values. This might suggest that the city would be able to take on significant projects, yet even in Montreal, the FCM found, there are serious problems with the city's water and waste water systems. According to the report, 33% of its sewage pipe stock reached the end of its life in 2002, yet there is no plan to provide comprehensive support to Montreal's water system.
Should the government sit on the sidelines while the water system of one of Canada's largest cities continues to deteriorate? Montreal is an example of a city that has a pretty good water and waste water system right now. However, there are many communities across the country where raw sewage is dumped into our lakes and rivers.
Team Saint John lobbied long and hard to have all levels of government agree on harbour cleanup as a priority. We are now beginning the even greater task of renewing and replacing water pipes and systems at a cost in excess of $150 million, and that is just one of dozens of infrastructure projects in Saint John, New Brunswick, my community. The sister communities of Rothesay and Quispamsis are typical of hundreds of communities across the country that need new roads, new water treatment facilities and new recreational facilities to address their growing populations.
There is no doubt that urgent action is needed now. All we need to do is look to the position of the Conservative Party toward cities before it actually had the responsibility of governing.
In June 2003, the Prime Minister said that he was opposed to the new deal for cities. It is true. He opposed transferring the gas tax to municipalities. He said, “That the federal government should have its own new deal with municipalities is not a view I would subscribe to”. That is not all he said.
In 2004, when he was running for the leadership of the Conservative Party, the Prime Minister said, A Stephen Harper government will not seek to create “boutique” programs--