One way to fix Canada’s crumbling infrastructure

As an editorial in the Citizen this week correctly noted, finding innovative funding mechanisms for infrastructure renewal in Canada is long overdue. The context of the editorial was the Association of Municipalities of Ontario annual meeting, which was held in Ottawa and which was long on bemoaning the need for funding and short on tangible options to achieve it. But the “other” government in Ottawa may hold the key to solving this problem.

Most readers will recall the extensive coverage of the steps the Stephen Harper government has launched to reform Canada’s immigration system. Meanwhile, there has also been a plethora of news stories about the critical need to finance the repair and modernize deteriorating local infrastructure in Canada over the last few months. While these stories may seem unconnected, using innovative strategies to achieve the former may actually help solve the latter.

Examples of crumbling municipal infrastructure are becoming almost daily occurrences throughout Canada. From falling pieces off the Gardiner Expressway in Toronto, to broken water mains and collapsing roads in Ottawa, to the collapse of the Ville Marie Tunnel in Montreal, to blunt warnings from the Premier of Alberta, the need for infrastructure renewal is a situation that can no longer be put off.

While all three levels of government and the Federation of Canadian Municipalities have acknowledged the critical need for action, what’s lacking is a funding strategy to address what FCM has estimated as a $170-billion funding deficit over the next 30 years.

Current federal contributions to local infrastructure are insufficient to meet this daunting challenge, and current federal transfers to municipalities in this area expire in 2014. Finding a long-term, non-tax funding source is clearly a desirable strategy, and the good news is that it may be available through ongoing reforms to the immigration system.

Immigration reform is a multifaceted, complex issue which has suffered from decades of neglect and a “we’ve always done it that way” approach from government. Fortunately, former Citizenship and Immigration Minister Jason Kenney clearly immersed himself in the myriad details of how our system works and how — and why — it doesn’t. The result has been a host of much needed changes with more on the way, including to the investor program as signalled recently by new the immigration minister, Chris Alexander.

The announced reforms also include a deliberate effort to increase the economic benefit to Canadians arising from immigration. An overhaul of the entire immigrant investor program is contemplated as part of this effort. Canada is not alone in this modernization as other western countries, such as the U.S. and Australia, are taking steps to attract and retain appropriately screened and vetted individuals who wish to make a new life for themselves and their families through investments in their new home country.

Hopefully, the reforms to the immigrant investor program will include a targeted investment program with enhanced investor screening that supports defined Canadian economic priorities such as financing infrastructure modernization. Such a program could see foreign high net-worth individuals invest $5 million each into designated municipal infrastructure projects put forward by Canadian municipalities and pre-approved by Infrastructure Canada.

The funds would be secured by a municipal bond carrying a competitive rate of interest and guaranteed over a 30-year life span, both in terms of interest and principal, by the federal government.

Unlike the current immigrant investor program, the bonds should be privately transferable after five years but not redeemable until after 30 years.

Three years after making the investment, the investor and defined family members could be made eligible for citizenship, if the residency requirements were met, the investment has been made as required and no actions leading to an inadmissibility finding have occurred.

Should such inadmissibility occur from either unrelated conduct or failure to complete the investment, special expedited removal without return of funds could be a part of the original investor agreement.

In order to attract participant investors, the program should include a commitment by the government to ensure that it processes appropriately and specially screened applications within a defined expedited period. The program should be self funding with all costs of screening, matching and investment monitoring funded through investor fees paid as part of the application.

There is clearly an unprecedented need for a non-tax funding strategy to address the infrastructure deficit in Canada. Fortunately, there is an equally unprecedented opportunity to achieve this goal through the modernization of the current immigrant investor program.

These kind of “win-win” situations are relatively rare in public policy involving expenditures, so hopefully, the now anticipated throne speech will see a commitment to such a specialized infrastructure investment program.