Funding for infrastructure should come from Canadians who use it

CALGARY, June 6, 2012 /CNW/ - Concerns over how Canada will be able to meet its mounting transportation infrastructure needs have been exacerbated by recent government belt-tightening. In a report released today by The School of Public Policy and Van Horne Institute, author Brian Flemming argues that it is infrastructure users who should be shouldering the financial burden of new projects or upgrades.

"Only some form of road pricing will fill the coming shortfalls in funding," Flemming said today. "This means something far beyond mere traditional tolling of roads and bridges. It means creating a system whereby those who use infrastructure will --- electronically --- have to pay small and sophisticated fees for this use, the amount of which will depend on the time and place of use."

In his report, Flemming acknowledges that the issue of charging Canadians for road usage is "still a third rail for incumbent politicians" and because of this there must be "a very public and transparent debate" about the matter.

The author proposes usage fees be collected by a new entity dubbed the National Roads Funds or National Infrastructure fund. He describes this fund as having network-wide responsibility, being financially self-sufficient and holding independent executive authority for deciding which projects get funded.

Projects in modes of transport other than roads would also be allowed to compete for financing from this entity. This would ensure that Canada expands its infrastructure by the most efficient and cost-effective means, Flemming contends.

As an alternative financing mechanism, Flemming proposes the creation of provincial or federal iBanks, or infrastructure banks. Such banks would not be capitalized through usage fees but through a variety of other means that the author outlines. Among the options are having the federal government use some or all of future gas taxes and raising private funds through bonds, preference shares or mortgage-backed securities.

The report can be found online at www.policyschool.ucalgary.ca/publications.

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