Alberta has eliminated its provincial debt, but it built up a substantial debt in municipal infrastructure in the meantime, says a right wing think-tank.
In the report, Foundations for Prosperity, the Canada West Foundation said the lack of money spent on infrastructure is starting to hurt the provincial economy.
“The conclusion is inescapable: Alberta’s municipal infrastructure debt and its associated costs have grown to the point where the problem must be tackled,” said the report.
“Although Alberta’s provincial debt has been eliminated, municipal infrastructure debt remains. Municipal infrastructure spending has met neither the ongoing need for maintenance and replacement nor the unrelenting pressure from vigorous economic and demographic growth,” said the report.
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Casey Vander Ploeg, a policy analyst with the Canada West Foundation and one of the authors of the report, said during the period of retrenchment in the 1990s, the federal, provincial and municipal governments across the country cut more than $23 billion in infrastructure projects.
“Whenever a government finds itself in a period of fiscal restraint, the first thing to go is capital. The first thing they will cut is spending on things like infrastructure. There’s a reason for that. Bridges and roads don’t get up and march at the legislature,” said Vander Ploeg.
That lack of spending soon catches up, said Vander Ploeg, who pointed to higher replacement costs for infrastructure projects than regular maintenance costs would have been.
“If your infrastructure is not up to snuff, and we have indications of that across the province … your ability to attract investment is going to be limited.”
In rural areas, roads are a key area for infrastructure spending. Rural municipalities are responsible for 135,000 kilometres or 85 percent of all municipal roads and 9,452, or 95 percent, of municipal bridges in the province.
“Highway access is one of the highest priorities for people wanting to invest in rural areas,” he said.
During election campaigns most politicians focus on health and education, but Vander Ploeg said that’s a shortsighted view. Without government investment in infrastructure, there won’t be any private investment in the province.
The report also looked at how to change the funding mechanism to municipalities, which rely on government grants and property tax revenue that doesn’t keep pace with growth.
It recommends municipalities have an improved form of revenue sharing with the provincial government. In Manitoba, a certain percentage of the personal income tax or corporate tax is given to the municipalities. When the province is doing well, so are the municipalities, he said.
