February 21, 2012
Drummond report recommends changes to infrastructure asset reporting in Ontario public service
The much anticipated report from the Commission on the Reform of Ontario’s Public Services calls public infrastructure, from a fiscal perspective, a double-edged sword for the province.
“Built infrastructure depreciates over time, representing an inevitable but predictable draw on the government’s fiscal position,” reads the report. “Yet done properly, these assets improve the productivity of a jurisdiction and either create returns elsewhere (through greater tax revenue) or offset future opportunity costs (such as traffic congestion).”
The Commission, chaired by former TD economist Don Drummond, made numerous recommendations across Ontario’s sectors, such as health care and education, in an effort to reduce the province’s deficit, which is expected to hit $16 billion this year.
The Dalton McGuinty government has stated it aims to eliminate that deficit by 2017-18.
“The only way to get out of deficits and stay out, in a period of limited economic growth, is to reform government programs and the manner in which they are delivered,” stated Drummond.
The report recommends placing “more emphasis on achieving greater value from existing assets in asset management plan reporting requirements than is currently proposed in the Long-Term Infrastructure Plan (LTIP) for certain organizations (e.g., universities, municipalities, etc.).”
The LTIP commits to requiring universities, municipalities and other transfer payment partners receiving significant provincial capital funding to publish a detailed asset management plan.
The report identifies public infrastructure as roads, subways and buildings. If leveraged properly, public infrastructure can be a key enable of economic growth. The report points out that since 2003 about $62 billion has been spent and $12.8 billion was planned for public infrastructure in the most recent fiscal year.
“Ontario’s fiscal context will complicate matters further. Funding additional infrastructure investments in the years ahead will be more difficult than it is now,” it reads, adding that more can be done in other areas where public funds are spent on infrastructure.
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