Misdiagnosing our infrastructure issues

Opinion

Hey there, time traveller!
This article was published 15/02/2024 (593 days ago), so information in it may no longer be current.

The City of Winnipeg recently released its draft budget, with the province expected to do the same in the next month or so, which has led to all manner of discussion on what our collective priorities should be.

On one end of the political spectrum are those who believe we should have fewer services, so we can have lower taxes. On the other, are those who would like to have more services, even if it means higher taxes.

Unfortunately for all of us, we are instead stuck in a downward spiral combining the worst of both: ever fewer services for even higher taxes. We should be asking ourselves why that is.

Chris Lorenc of the Manitoba Heavy Construction Association, somewhat predictably, would have us believe our governments have not been spending enough on infrastructure (Pay now – or pay more later, Feb. 13).

But we’ve just finished five years of “record spending” on infrastructure only to find that our infrastructure deficit has worsened from $6.9 billion in 2018 to $8 billion in 2023, an amount that works out to $800 million per year for the next decade. That spending was largely fuelled by increasing debt, continuing a well-established trend. In the last 15 years alone, the City of Winnipeg has more than tripled its long-term debt, from $397.5 million in 2007 to over $1.46 billion in 2022. Per capita, it went from $608 per Winnipegger to $1,868. And that’s just the long-term debt. When including all the city’s liabilities, we’ve gone from $1,235 owing per person in 2007 to $3,359 in 2022. This, despite having added 130,000 new taxpayers to share the load.

And now the city’s Strategic Priorities Action Plan includes a line item to review the city’s debt limit. We’ve hit maximum, and we need to find ways to borrow even more.

But if infrastructure investment is so good for our economy, why is this happening? Shouldn’t “record spending” on infrastructure have helped things instead of making them worse?

Mr. Lorenc posits the reason is an unfair tax split between the different orders of government, noting that the city only collects 10 cents of every tax dollar while being responsible for 50 per cent of all infrastructure.

But with both the province and the feds already running deficits, having them share a bigger slice of the taxation pie would simply mean a new tax increase is necessary provincially or federally, rather than municipally.

And since tax cuts seem to be the order of the day, such as with the gas tax holiday, it would seem the problem isn’t so much who’s collecting the taxes, but rather that those who are paying them, us, don’t have enough to give. After all, it’s not like there’s an extra $800 million per year sloshing around in the economy just waiting to be taxed.

Which leads to the obvious response that we need to grow the economy to increase the taxable revenues that will pay for what we’ve already built. The new growth will pay for the old growth.

But that’s quite literally the mechanism for a Ponzi scheme.

Which brings us back to why. Why, if infrastructure investment is so good for the economy, are we finding ourselves with fewer and fewer means to provide services every year?

When it comes to infrastructure, as with all investments, it’s too easy to forget that there are good investments and bad investments. And if the investments we’ve made in the past have only served to dig us deeper and deeper into debt, then those are bad investments. And if you lose money on every transaction, you don’t make it up with volume.

Our new premier is fond of repeating that it’s the economic horse that pulls the social cart, but so far, it looks like no one in charge has any idea what an economic horse eats.

We’ve just continued to feed it the same, low-performing investments that got us here. But there’s more than one way to grow a city.

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A recent study of Metro Vancouver found that compact, walkable, mixed-use development requires five to nine times less infrastructure per person than low-density, single-use, car-dependent development.

If we had three times less infrastructure than we have today, we wouldn’t have an infrastructure deficit. If we had four times less, that would free up $100 million per year of revenue for additional services or tax cuts. What could we do if we had five to nine times less infrastructure? That’s the kind of economic productivity we could, and should, be demanding from our infrastructure investments.

When we do the math, it turns out economic horses don’t eat low-returning road expansions that incentivize outward sprawl. They eat bikes, buses, trees and infill development.

To improve our collective fate, our elected officials are going to have to stop basing their economic policies on the advice of a paid lobbyist and start doing their own math.

Michel Durand-Wood lives in Elmwood and has been writing about municipal issues since 2018.