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Ottawa's fiscal whims won't help new mayor

Pre-election budget likely to hurt city

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Stephen Harper's policies won't help rebuild crumbling infrastructure.

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Stephen Harper's policies won't help rebuild crumbling infrastructure.

Hundreds of thousands of Winnipeggers are, as we speak, readying themselves to choose the city's next mayor in October's civic election.

We're wondering which of the candidates will restore trust and integrity in city hall. Or find a way to rebuild our crumbling infrastructure. Or sustain key services without crippling property taxpayers with unbearable increases.

To reach our decision, we will look at their policies and pledges. We'll assess the sincerity of their campaigns, the quality of their character and the depth of their intelligence.

However, regardless of who wins this fall's election, the fate of this city and its next mayor will likely be determined by events that take place many thousands of kilometres away. Specifically, in Ottawa on Parliament Hill.

During the next year, the federal Conservative government will introduce a budget and face an election of its own. It is widely expected the Tories will move to lower taxes and introduce some new spending to pave the way to another majority government.

If the new mayor is to have any hope of doing better than his/her predecessor, it will have to involve a change in federal policy

For the new mayor of Winnipeg, those decisions will determine how much federal support for infrastructure flows from federal coffers to the provinces and down to the municipalities. If federal funding stays at current rates -- about $5 billion per year -- then anyone with the misfortune of having won a mayoral election will find their lives very unpleasant indeed.

We already have a strong inkling that help will not be forthcoming.

Last week in Charlottetown, Canada's premiers gathered for the annual Council of the Federation meeting. Many things were discussed, but only one major theme emerged: The provinces are deep in deficit and debt and federal restraint on transfer payments and other funding arrangements looks as if it will make a bad situation worse.

Specifically, the premiers are deeply concerned about their ability to pay for health care and infrastructure.

The Conservative government in Ottawa has imposed funding formulas on both needs that involve billions of dollars of federal tax dollars. Unfortunately, the provinces -- most of which are deep in deficit -- have complained those billions of dollars fall billions of dollars short of what is needed to meet growing demand in both health and infrastructure. And in almost every regard, they are right.

Ottawa created a formula for health-care funding that's based on GDP growth and inflation. Unfortunately, given an aging population, neither of those two measurements has any relation to the increasing demand on the health system.

A similar disconnect afflicts the infrastructure file.

The Tories will celebrate their 10-year, $50-billion Building Canada infrastructure program as an act of gross generosity. In fact, $5 billion annually over a decade will, lamentably, leave Canada with worse overall infrastructure than when it was launched.

How can this be? As in many developed countries, Canada's aging infrastructure inventory was largely built from the late 1950s to the early 1970s. As a result, bridges, arenas, roads and sewage systems are all failing, all at the same time.

Even worse, since that building boom, our overall investment in infrastructure has been declining as a percentage of GDP, in large part because Ottawa has dramatically reduced its share of total infrastructure spending.

At the Council of the Federation, all the premiers -- from petroleum-rich provinces to those with little of the black gold -- were united in their view Ottawa needs to drastically change the funding of health services and infrastructure, or risk the fiscal collapse of the provinces and local governments.

This will be the issue for Winnipeg's next mayor. Although the mayor will have to respond to many different needs, infrastructure will be the most pressing. And if the new mayor is to have any hope of doing better than his/her predecessor, it will have to involve a change in federal policy.

Unfortunately for the new mayor, it is widely believed the federal Conservatives will use next spring's budget to announce two things: first, that the budget is balanced, if not in surplus; and second, a balanced budget is an opportunity to cut more taxes.

Although the fiscal equation is quite complicated, it is not unfair to say that every tax dollar we get back from that budget will be a dollar that cannot be spent on meeting provincial and local government infrastructure needs.

We should hold our next mayor to account for every decision he/she makes. However, it's also fair to remember the next mayor can only be as good as the resources he/she gets to meet our most pressing needs.

Right now, it looks like the next mayor is going to be dealt a pretty bad hand.

dan.lett@freepress.mb.ca

Republished from the Winnipeg Free Press print edition September 2, 2014 B3

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