Monday, May 16, 2011

Provincial and Federal cost sharing

Here in Victoria it has been suggested an LRT be built.   As normal, the local governments are saying they need funding from the province and the feds, the normal thought is 1/3 each.    I am having more and more trouble with this approach of cost sharing because it really does not make sense to me.

The money is going to all come taxpayers, but the magical thinking that goes on is that the 2/3s that would come from BC and Canada would be some form of free money.   This is where I have a concern.   The total cost of all these infrastructure projects across the nation I assume roughly balances out as an equal tax hit to all people.   No one manages to be the long term winner.  A billion dollar LRT in Victoria will in the end be a billion dollar tax hit to local people.

The addition of two more levels of government to the process actually increases the costs for a host of reasons:

  • Each government needs staff to create the funding program
  • Each government has a different set of review criteria
  • Each government advertises the projects
  • Each government has different reporting criteria.


By having three levels of government funding a project we end up with a local governments going forward with projects based on funding criteria and not local needs.    Projects are also delayed or expedited due to arbitrary funding deadlines.

How much are all these added costs?   It is hard to be entirely accurate, but it is large enough to be relevant to the overall costs of a project.   Some of the costs are not fixed financial numbers because they are costs related to delaying priority projects and building non-priority ones.  In this region the great example is the building of the Airport interchange instead of the Mackenzie interchange.

Ultimately it would be a lot easier if all decisions on local infrastructure was done by the local governments alone.   The local governments would pay 100% of the costs and the feds and province would get out of this area of infrastructure funding.   The senior governments could either reduce their tax levels to allow for higher local taxes, or they would simply make a straight annual per capita contribution to local government capital projects funds.

The one down side is that there would be fewer cheque presentation and ribbon cutting ceremonies for MLAs and MPs to go to.
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