September 30, 2004

Eastern Ontario Municipal Water Association and Eastern Ontario Waterworks Association Joint Conference
by David Caplan, Minister of Public Infrastructure Renewal

Check against delivery.

Good afternoon ladies and gentlemen. Thank you for inviting me to join you today.

When I was preparing my remarks for this noon hour, I paid a lot of attention to your program for today and tomorrow.

I was trying to decide if there was some special significance in the fact that I am appearing between Minister John Godfrey, who spoke to you this morning about the federal agenda for municipal infrastructure …

And Bill Ralph, from the Ontario Strategic Infrastructure Financing Authority, who will tell you this afternoon how to pay for it.

I know we are all deeply interested in the answer to that question.

I have to congratulate your conference organizers for the thoroughness of the material being covered in these two days.

When I look at your agenda, I see most of the issues that engage my ministry every day, all of them concerned with the fundamental issue we all face: how to plan, finance and build the public infrastructure our citizens need and deserve.

I’m not sure you’ll walk away tomorrow with all the answers to those questions; but I’m pretty sure you’ll have a better idea about where to find them.

What I would like to do today is outline the challenges we see from a provincial perspective, and then discuss some of the steps we are taking to respond to those challenges and the implications this may have for municipalities and other public agencies.

Then, I would like to respond to your questions about the points I have raised, and about infrastructure renewal as seen from your perspective. That kind of dialogue is invaluable to me and I welcome every opportunity.

The challenge

Let me begin by pointing out that the issues, challenges and solutions I will touch on today are not unique.  Governments everywhere, of every size, face the same challenges and pressures.

• Better public services – in education, healthcare, transportation, water quality – depend on effective public infrastructure. And the demand for those services is increasing.
• The cost of infrastructure is also increasing – both the cost of building anew, to keep up with population and economic growth, and the cost of maintaining and repairing existing facilities.
• The financial resources, especially public tax resources, available to meet these needs are not increasing, or not increasing quickly enough to meet the demand. That’s true for us at the provincial level, but it is also true at the municipal level, where the property tax base is relatively static. 

For at least two and a half decades, there has been a chronic underinvestment in Ontario’s public infrastructure. During that period, investments in public infrastructure did not allow for adequate repair and maintenance and did not keep pace with population growth and economic expansion.

Roads, public transit systems, hospitals, university classrooms and water and sewer systems are all wearing out, and not being repaired or replaced quickly enough. And new infrastructure isn’t being built fast enough to meet new growth.

As a result we have accumulated an infrastructure deficit, made up of pent-up demand for new infrastructure and deferred maintenance and replacement for existing infrastructure.

The cost of meeting these twin demands – to repair what we have and build for the needs of the future – are enormous, far beyond the means of any government acting alone.

The TD Bank Financial Group estimates that Ontario needs at least $50 billion dollars to correct past underinvestment in public infrastructure.

The new facilities we need for the future will double that figure at least. 

Over the course of the next generation or so, we need to invest more than $100 billion in public infrastructure.

To place that in context, this year our budget for capital investments is about $3.3 billion. That’s more than the previous government invested – about 17% more – but it clearly won’t meet the need.

And given the fiscal constraints we face, it is not likely that we can allocate two or three times as much for capital in the next budget, or the one after that.

So there is the problem in a nutshell. What can we do about it?

Solution

Ralph Waldo Emerson, the American philosopher, used to ask his friends: “What has become clear to you since the last time we met?”

What has become clear to us, in the McGuinty Government, is that we can’t keep on doing the same old thingsand having the same old results.

This government was elected to bring real, positive change to the people of Ontario. And one of the changes needed most urgently is a better way to manage the business of selecting, building, financing and managing public infrastructure.

Perhaps the most important change is to start considering infrastructure issues in a rational, systematic way, instead of as a series of piece-meal, last-minute decisions.

We need – and we are developing – an infrastructure process that is based on the public good, rather than political advantage. And that is a profound change.

New era of cooperation

For example, it seems clear to us that all of the participants in this process – the federal and provincial governments, municipalities, public agencies like hospitals and universities – have to co-operate with each other.

We can’t be successful unless we work together. Political sniping just slows the process down, and we can’t afford to waste time. The future is coming too fast.

So we have deliberately set out to create an atmosphere of co-operation and collaboration with our partners in the federal and municipal governments.

A number of you may remember the announcement we made about the Canada-Ontario Municipal Rural Fund or COMRIF last May.

For the first time we are asking municipalities, through the Association of Municipalities of Ontario, to help design a program that will provide almost $900 million for municipal infrastructure in small and rural communities. That has never happened before.

The result will be a program that meets real needs at the local level.

Places to Grow

We are also starting to manage the demand for new infrastructure, by planning for the growth that leads it.

As you may know, after extensive consultation, I released our vision – a discussion paper on how to plan growth in the Greater Golden Horseshoe that will help control urban sprawl – and the demand for new public facilities – in the fastest-growing region in Canada. I can tell you there was an incredible response to our broad-reaching consultation and invitation for submissions 1,600 came out to share their thoughts and close to 500 individuals and groups sent in-depth submissions.

And believe me, this kind of planning is essential. The way we live tomorrow – our quality of life and our children’ s quality of life – depends on how we plan today.

This fall, in the 905 area of the GTA, we have new schools that opened for the first time after Labour Day and were overcrowded within hours. They had more students than they could accommodate literally as soon as they were built.

The pace of development is moving faster than the ability to provide necessary public facilities.

And it isn’t going to slow down. It’s going to move faster. Within a generation there will be almost four million new people living in the Greater Golden Horseshoe and two million more jobs.

If we want to avoid a future characterized by clogged roads, overcrowded schools and a degraded environment, we have to control urban sprawl by targeting growth to the places that can best accommodate it. We have to control the pace and the location of development.

That’s what the growth plan does and it has a beneficial side effect: it will reduce the investment we need for new infrastructure by tens of billions of dollars.

You can see why we are so enthusiastic about rational, systematic planning for infrastructure needs.

Investment framework

We have also made substantial changes in the process we use to manage our infrastructure investments.

Earlier this summer, we released a framework for public infrastructure investments that sets out the process we will follow with planning, financing and procuring public infrastructure assets and that we expect our partners in municipalities and in public agencies to follow when they bring projects forward for consideration.

This is a tremendous tool for ensuring effective and efficient infrastructure investments across the province, and it will give municipalities and others enormous help in deciding what to build and how to build it and especially how to pay for it.

The framework is a major improvement in the process of planning, financing, building and managing public assets. It will help everyone involved get the best possible return on the money we invest.

Other initiatives

Over the next 12 months we will be introducing a number of other initiatives.

• We are developing a 10-year public infrastructure plan that will outline our investment priorities over the near future.
• We will be bringing forward a comprehensive water and wastewater strategy based on three key principles: financial sustainable public systems, affordable rates for consumers and achievable, practical solutions. This strategy will help municipalities provide clean, safe drinking water and effective wastewater management. Much of our water infrastructure was built by our parents – in many cases by our grandparents. Much of it now needs to be replaced and the cost will be substantial. An expert panel has been appointed to advise us on the substantive policy issues involved.
• We are taking steps to help municipalities meet the financial obligations involved in rebuilding our public infrastructure. I have already spoken about federal-provincial-municipal partnerships, such as COMRIF. Later this afternoon you will hear from Bill Ralph, the head of the Ontario Strategic Infrastructure Financing Authority. He will tell you how 90 municipalities have already been able to access almost one billion dollars in debt financing for infrastructure. And next month my colleague Harinder Takhar, Minister of Transportation will be presenting details of our plan to make a portion of gas tax revenues available to municipalities.

We understand the fiscal realities. And we are taking steps to help deal with them.

Infrastructure plan

All of these initiatives are important. None are patchwork, band-aid solutions to a single issue. Instead they are part of a coherent, comprehensive plan that attacks a persistent social problem: restoring the public amenities that support a prosperous economy and the delivery of important public services.

This plan is based on five broad principles.

• Better planning and coordination of infrastructure investments.
• Utilizing best practices to get the greatest value and longest life from existing facilities.
• Greater concentration on key priorities in deciding what to build and where to build it.
• Developing innovative methods of financing infrastructure investments, including the participation of both the public and private sectors.
• Setting out clear principles and practices to guide our infrastructure financing and procurement plans, including appropriate public control and ownership, value for money, accountability and transparency.

We are coordinating investments across economic sectors, so that decision-makers can weigh the benefits of an investment in one sector against the benefits of similar investments elsewhere.

We are planning capital investments over a much longer time period, so the money we invest today will help promote economic growth in the future.

And we are paying much more attention to the kinds of projects we undertake, to make sure that they have a reasonable and measurable economic payback, and that they correspond to the government’s strategic objectives.

For our government, those objectives are not defined in terms of specific projects, or even specific kinds of infrastructure, but in terms of the outcomes and results we hope to achieve.

We are not so much interested in bricks and mortar and asphalt as we are in the public services infrastructure can deliver.

And we will measure the value of our investments not in terms of inputs – how much money we invest – but in terms of results.

All of these initiatives affect our infrastructure decisions and yours.

They affect what you build, where you build it, and what your buildings and assets are used for.

Conclusion

I will leave you with these final thoughts. I believe we are entering a new era of infrastructure renewal. I call it the infrastructure renaissance.

But we are not building monuments.

The purpose of this government’s infrastructure strategy is to improve the public services available to the people of this province.

Our purpose is to build strong communities and to help the people of Ontario improve the quality of their lives.

Our purpose is to make Ontario an attractive place for investments that will strengthen our economy and create jobs.

Ultimately, our plan will re-shape the kind of society we – and our children – live in.