OTTAWA – A new report from a bipartisan think-tank says the federal government should scale back its spending on water and sewage systems in Canadian cities for each community’s financial good.
The Ecofiscal Commission report being released today makes the case that the fees homeowners pay for the water running through their taps and down their drains don’t cover the full cost of service, leading to gaps in funding that upper levels of government have been trying to fill for years.
So long as fees don’t cover costs, that gap is likely to remain.
“While most of us have access to good water, some of us don’t,” said Chris Ragan, the commission’s chairman.
“If your infrastructure deficits are there, there’s always the possibility that we might run into a problem tomorrow.”
The recommendations in the report about how to fund thousands of municipal water systems run upstream to the billions in new spending federal and provincial governments are pouring into infrastructure to close a funding gap that the commission estimates at $142 billion. The report says that at start of 2015, there were at least 1,838 communities under drinking-water advisories, the result of crumbling infrastructure.
The Liberals plan to pour some $9.2 billion into so-called green infrastructure funding over the next 11 years, with an extra $5 billion through a new infrastructure financing agency with the hopes that it pries two or three times that amount from private sector investors wooed by the idea that they can charge user fees for water and waste water systems to see a return on their investment.
About 90 per cent of all the homes in Canada receive water and waste water services from their local municipality, with the remaining 10 per cent using a well or septic tank and a tiny percentage in communities that have to haul in water.
The cost to homeowners has increasingly fallen further away from the costs to run a system and expand it to handle long-term growth expectations, the report says.
As long as the cost of water remains relatively cheap, consumption will remain high and put a greater burden on community systems, adding more strain to existing water systems, said Ragan, an economics professor at McGill University.
Ragan said upper levels of government could help small communities where there aren’t enough taxpayers to make covering costs easy for each taxpayer, or help cities design user fees to ensure low-income households aren’t overwhelmed by rising rates.
Canada ranks fourth in OECD in per capita water use, even though consumption has dropped by about 35 per cent to 223 litres a day in 2013 from 343 litres a day in 1999, according to Statistics Canada.