Canada West Foundation Blog

By Michael Cleland

This article is the last in the Canada West Foundation’s Let’s Talk Energy (LTE) series. LTE was born of a conversation in the fall of 2010 in which then-CEO Roger Gibbins coined the notion of an “ideas agenda” as part of the ongoing discussions about a Canadian energy strategy. This notion led to the development of the LTE website. We began with some initial posts to get the conversation started and this evolved into a rich series of stimulating articles by a guest contributors.

The feedback we have gathered indicates that our modest, but loyal, cadre of readers and contributors has found the LTE website useful and constructive. However, as the Canadian energy strategy discussion has now reached something of a hiatus, this is an appropriate time to wrap-up this particular discussion. As such, this will be the final post on the LTE website. The website will be inactive as of December 31, 2012, but the full archive of LTE articles will still be accessible on the Canada West Foundation’s website (www.cwf.ca).

This article offers some last—from an LTE perspective at least—thoughts on the national energy strategy.

To begin, what do we mean by “hiatus” in this context? Hiatus can be a polite word for “stalled” or “in the ditch” or, to be more charitable, at an inflection point where momentum is rebuilding and new directions are emerging. In Charlottetown this past September, the Council of Energy Ministers said nothing about an energy strategy despite the fact that a year before in Kananaskis they had seemingly endorsed the idea in principle. The Kananaskis meeting set out a work program, but one year later, nothing has emerged. Stakeholder groups involved in the file have lost energy, interest and organization. And of course, the tentative air of cross-Canada cooperation that prevailed in 2011 has now been replaced by interprovincial rancour over the Northern Gateway pipeline. Critics of the whole idea have been vocal—and sometimes cogent—in their criticisms. On the other hand, the Council of the Federation may yet revive the idea, albeit in a form less sweeping and comprehensive. We shall see.  

As one thinks about where we go next—if anywhere—on an energy strategy it is worthwhile thinking about some of the energy, economic  and public policy realities that have defined the course of the past three or four years. The one overarching reality is the extraordinary pace of change in the real world as compared to the rather more desultory pace of the energy strategy debate.

Readers will be aware that not all participants in the discussion are convinced of the possibility of a Canadian energy strategy or of its usefulness even if it were possible. Bob Skinner caught this well in an article he and I jointly authored early this past year:

Too often strategy rests on the fallacy of “planning”—that the future is broadly predictable and all that is needed is a set of tactics to achieve a set of goals—the outcome of strategy. This deterministic approach generally fails in the private sector; it virtually always fails in the public sector.

Events Dear Boy…

Asked at one point what Prime Ministers feared most, British Prime Minister Harold MacMillan reportedly answered “events, dear boy, events.” Just for the sake of argument, let us say that the Canadian energy strategy discussion started some time in 2008 when the Energy Framework Initiative—driven by oil and gas interests—started its work aimed explicitly at an energy “framework,” not a strategy. This was followed soon after by the Senate Energy, Environment and Natural Resources Committee and later by groups such as EPIC, the Winnipeg Consensus Group and many others. In point of fact, the earliest glimmers came in 2003 from the Energy Dialogue Group, a broad industry coalition (20 associations representing the whole energy system) who engaged the Council of Energy Ministers and gained some short lived traction around what was then called an “energy issues agenda.” This agenda was not a strategy; it was not even a framework. It was a step beyond just winging it and, just maybe, a hint of where we might go next. But let’s just say that the full-on debate on what one Natural Resources Canada Deputy Minister called the “energy thingy” started to emerge in late 2008.

That year and the year following, the whole world’s assumptions about the trajectory of future economic growth were overthrown. Energy demand growth stalled, looming capacity shortages stopped looming, prices for oil and gas collapsed followed by a recovery for oil (but not for natural gas in North America) and the appetite for government activism on the energy and environment front started coming up against fiscal realities.

Starting in late 2008 in Copenhagen and then through early 2009, the climate change file went from top of mind to out of sight. Climate change was probably the single most important motivator for an energy strategy—whether from an industry perspective (never again should we do something as crazy as Kyoto) or an environmental perspective (never again should we do so little as was done to implement Kyoto). In 2012 anyone listening to the US presidential debates or what remains of the energy strategy conversation in Canada would be hard pressed to discern that the issue of climate even existed.

2008 was also the year that the impact of the so-called shale gale was getting ready to overturn all assumptions about natural gas. That spring the price of natural gas touched $12/GJ and some dire commentators were predicting still higher prices (although more knowledgeable observers could see the effects of shale coming); today it is languishing in the mid $3 range and North America, and prospectively the world, is awash in the stuff.

In 2008, there was little discussion of markets for Canadian energy aside from the US. Our natural gas production was declining as was production in North America overall. It was a reliable expectation that US oil imports would continue to grow. Since then, new drilling technology has overturned not only gas markets but oil markets as well, as hydraulic fracturing unlocks unconventional oil. As a result, North American demand growth for all energy languishes. Within a span of two or three years China and other Asian energy markets went from curiosities to topic du jour. Simultaneously, many environmental advocates, having hit the wall on carbon after Copenhagen, the recession and the failure of the Obama Administration’s climate policy, turned the full force of their frustration, anger and resources on the Northern Gateway Pipeline, resulting in a massive new political controversy and evaporation of interprovincial harmony between BC and Alberta.

Shifting Priorities

Most recently, CNOOC and Petronas have come along—names that are today bandied about by all in the know. Four years ago those names might well have been mistaken by most Canadians, respectively, for a Muppet and an incantation from Harry Potter and the debate about SOE’s in the Canadian economy mistaken for discussions about some new retirement investment vehicle. Today they are all poster children for our missing energy strategy.

In short, much of the early thinking about a Canadian energy strategy rested on knowledge and assumptions about the future that bear no relationship whatsoever to the world we find ourselves in today. Unpredicted (although not all unpredictable) changes over very few years in the world economy, public support for environmental action, technology, resource availability, energy demand, government fiscal capacity and national politics would have rendered any energy strategy agreed to in 2008 or soon thereafter utterly obsolete by today.

Against this perhaps extraordinary series of events in the real world must be set the cycle times for the energy strategy conversation itself. Simply put, the capacity of a diverse group of stakeholders to move an agenda was and is out of joint relative to the capacity of the world around us to abruptly turn itself upside down. And the stakeholders are supposed to be the nimble part of the equation; governments—especially when dealing with 14 of them—are less nimble still when dealing with large, complex issues with long time horizons.

As one of the longstanding advocates of an energy framework—a set of objectives and principles if not exactly a strategy—I am going to conclude LTE with a mea culpa and a proposition.

The mea culpa is that I and most of my colleagues were clearly naive, starting in 2003 and ever since, in believing that we could develop even a framework that would be both useful and broadly agreed, far less a fully formed strategy. Compounding the complications of a federal system of government and the extraordinary diversity of Canada has been our very Canadian inability actually to come to grips with the issues. “Everyone” or almost everyone politely agrees that we need a strategy. So far no one has succeeded in defining what it might look like far less what would be its content or how it would resolve the deeply visceral disagreements at the heart of it all. And then, of course, there were those pesky events.

As to the proposition, I would argue that there is work still to be done, perhaps more along the lines of an energy issues agenda (e.g., the agenda that emerged from the Council of Energy Ministers in 2003). At least two of the main drivers from 2003 still exist. The problems of social license in developing energy assets have grown and they risk paralyzing policy and investment. Environmental concerns about energy (even including the politically moribund carbon file) remain and we risk the worst of all worlds in which weak commitment to environmental performance is covered up by weak and inefficient regulatory action. And new issues have emerged in the form of serious threats to Canada’s ability to sustain itself as a competitive energy supplier, whether in hydrocarbons or electricity. There is a real prospect that a national economy, which is highly dependent on energy investment, production and exports, could be facing a much more challenging future as well as wrenching political choices over issues such as foreign investment.

The above are all areas where some measure of debate and discussion among various interests is going to be necessary. To achieve that, we will need an energy “thingy” of some sort. Perhaps a more issues-focused set of discussions is called for. Perhaps, as I suggested in an early LTE article, strategy is mainly about dialogue, not a document or an end point.  The failure to produce a strategy notwithstanding, the last few years has produced much healthy and useful dialogue; while it needs to be continued, we also need to focus it on the pressure points.

By: Casey Vander Ploeg, Senior Policy Analyst

One of the more enjoyable parts of my work routine over the past year has been the opportunity to pull together the weekly blog article for the Let’s TOC website. So, it is with some sadness that I am posting my last entry. The original intention of theLet’s TOC initiative was to pull together members of Canada’s infrastructure community into a conversation over innovation in infrastructure leading up to theNational Infrastructure Summit held last month in Regina. With the Summit now over, the Let’s TOC initiative is winding down.

While the site will no longer be active, all of the content—articles, ideas, suggestions, commentary, responses—will be archived and housed at the Communities of Tomorrow website, shared through the Canada West Foundation website and, hopefully, other sites as well. None of the ideas will evaporate into cyberspace.

In this blog, I want to review some of the highlights of the initiative and what we were able to accomplish. I think we did succeed in highlighting some of the more innovative approaches gathering steam across western Canada, and in other places of the country as well. Let’s TOC served as a great vehicle to get a group of folks together to consider and spread the news of innovative approaches to solving our infrastructure challenges. The weekly blog articles were sent out to some 2,000 subscribers each week and there was some really good chatter through social media.

At the National Infrastructure Summit, I was engaged more than a few times by people who were following the site and reading with interest the material that was being produced and discussed. It was also a great opportunity to meet up with many of our contributors, including people like Chris Lorenc, Charlie Clark, Gord Hume, and Clare Kirkland. The response to the transformative potential of infrastructure as seen through the “Field of Dreams” series was particularly positive. Indeed, it is a great good-news infrastructure story. There are, of course, many other good things happening right across the West.

The project established some really good links with other work that I have been engaged in, particularly around ideas related to municipal tax reform such as the “penny tax” idea and water issues in western Canada. It was interesting to catalogue some of the small but creative systems that are being developed right here in the West to tackle water concerns.

There most certainly is a connection between infrastructure and environmental protection and enhancement. I think a lot of people lose sight of that connection, but it is a vital one. Infrastructure is about accommodating growing populations, reinvesting in aging systems and investing in the future of the nation’s economy. As Dylan Jones, Canada West Foundation’s President and CEO, notes, “Canada needs to strike the right balance between spending on our current needs and investing in our future. When it comes to investment, we need to increase the development of infrastructure vital to our future prosperity and we need to be more innovative in how we finance and actually construct modern infrastructure.”

There are also important environmental connections as well. Smoother roads mean less congestion and pollution and better wastewater treatment means healthier aquatic systems. Water recycling offers opportunities to enhance the productivity of water use while making gains in conservation.

For me, one of the greatest take-aways has been a better understanding and appreciation for the multitude of opportunities and the potential afforded by a stronger commitment to new, fresh and creative approaches in addressing our nation’s infrastructure. The potential for innovation cuts a very wide swath, touching on everything from incorporating new technologies into our existing systems, new approaches to renewing and rehabilitating those systems and new methods of financing and funding.

While the opportunities are significant, innovation does not come easy. It entails risk.

When meeting with officials involved with designing the new federal Long-Term Infrastructure Plan (LTIP), I referred to the Let’s TOC initiative and emphasized the benefits that would flow from a specific federal commitment to incenting innovation. If a block of funding was made available contingent on new technologies, new systems, new approaches, or unique financing and funding, innovation would get a real shot in the arm. Canada’s municipalities and infrastructure providers are a creative bunch and some financial incentives would help unleash some of that creativity.

In closing, I’d like to include a comment from John Lee, President and CEO at Communities of Tomorrow: “This project has been a tremendous game-changer in terms of elevating the depth of discussion around the need for innovation in infrastructure. We need to keep doing things like Let’s TOC and the National Infrastructure Summit to keep the conversation going. Ultimately, we must collaborate across all kinds of boundaries to execute new and smarter solutions for our infrastructure challenges.”

It has been a pleasure writing for this initiative and I thank Communities of Tomorrow for the opportunity, and Ann Pham for making sure my weekly deadlines were met. As it turns out, I have five speaking engagements booked for October and November on this topic. I certainly won’t stop “TOC’n” about infrastructure and the need for new and innovative approaches.

By: Chris Lorenc, President, Manitoba Heavy Construction Association (MHCA)

It is well established that sustained investment in public infrastructure brings results—enhanced economic productivity, higher competitiveness, and therefore, better rates of economic growth.  And, it is this economic growth that generates revenue for governments with which to fund Canada’s globally-envied health care, education, and social safety nets.  Hence, our quality of life in this country.

In short, investment in infrastructure is Canada’s economic healthcare program.

In a set of cross-Canada roundtable meetings held this summer, the federal government explored how best to create and implement a Long Term Infrastructure Program (LTIP)that extends beyond the expiry of the Building Canada Plan in 2014.

It would appear that the Harper government’s LTIP focus will be on investments in infrastructure which support long-term economic growth and prosperity, leveraging in the process both private sector partnership opportunities and funding from all levels of government to ensure national affordability and sustainability over the long term.

An Informetrica report on infrastructure and its impacts on productivity found that for every $10 billion invested in local infrastructure, 115,000 new jobs are created and nominal GDP grows by 1.3%.  The study also found that investments funded from growth taxes—specifically sales and income taxes—deliver a bigger boost to a slowing national economy than investments funded from municipal property taxes.  And for $1 invested in municipal infrastructure, roughly 35¢ is returned to the provincial and federal governments in direct financial benefits, mainly through increased sales and income tax revenue.

A 2010 Residential and Civil Construction Alliance of Ontario report underscored the economic importance of infrastructure by concluding that continued under-investment in infrastructure over the next 50 years will slow economic growth, reduce business profitability by up to 20%, and could cost the average Canadian entering the work force today up to $51,000 in reduced wages over the course of a career.

Congestion on Canada’s transportation system—railways, U.S. border crossings, airports, marine facilities and roadways—has devastating consequences on our nation’s trade-dependent economy and our jobs.  These assets must not only be well maintained, but they must be adequate to meet the current and future needs of the economy for Canada to remain internationally competitive.

Unfortunately, according to Statistics Canada, most of the core public infrastructure upon which Canadians depend upon was built in the 1950s and is rapidly approaching the end of its useful service life.  Much of it will need to be rehabilitated or replaced within the next 10-15 years.

At the same time, Canada’s population has not only increased from 16 million to approximately 34 million, it has become more urban, increasing from approximately 70% urban back then to over 80% today.  The problem Canada faces is not only that our infrastructure is old, but in many cases, current daily demands on this infrastructure far exceed its intended design capacity.

The tragedy that occurred in Québec with the bridge collapse (shortly after a similar disaster in Minneapolis), or the bridge closure on Highway #1 east of Portage la Prairie, Manitoba, will become all too common without a concerted effort on the part of Canadian governments at all levels to accelerate and sustain the pace of infrastructure re-investment.

The investments of the past three years—as large as they have been—have made only a small dent in our national infrastructure deficit.  In its recent report card on Canada’s infrastructure, The Federation of Canadian Municipalities (FCM) found municipal infrastructure ranks between “fair” and “very poor.”  Replacing key assets such as drinking-water systems, wastewater and storm water networks, and municipal roads will cost $171.8 billion, nationally.

How Canada renews and invests in its aging infrastructure over the next 10 years will determine our nation’s economic, fiscal, and social health.  Delaying today will place an impossible financial burden on present and future generations, and will without question lower our standard of living.

Canada stands on a precipice.  While the need to return to fiscal balance is important, it must be implemented in such a way as not to neglect important investments in our economic health.  Canadians need to recognize and support the principle that investment in public infrastructure is Canada’s economic health care program.

Chris Lorenc

Chris Lorenc has been President of the Manitoba Heavy Construction Association (MHCA) since 1991 and President of the Western Canada Roadbuilders & Heavy Construction Association (WCR&HCA) since 1995.

He is an active member of the national Canadian Construction Association (CCA) and serves on a number of its committees including: Civil Infrastructure Council (CIC); Gold Seal Committee (national management education and certification program) and Industry, Advocacy & Regulatory Affairs Committee.

In addition to being frequently invited to speak on forums and comment on radio and television addressing a broad range of public policy topics, he has authored numerous published public policy opinion editorials. Furthermore, he has an extensive background in developing and writing public policy for governments on topics including government organization, intergovernmental relations, sustained infrastructure investment, and trade and transportation.

Mr. Lorenc served on Winnipeg’s City Council for nine years from 1983 until he retired from public office in 1992. During his tenure he chaired a number of City Council’s Standing Committees, including Public Works and the Environment Committees, specific task forces and was a long standing member of Council’s Executive Policy Committee (EPC).

He graduated from the University of Manitoba with Bachelor of Arts in 1973 and Law degree (LL.B.) in 1976 and then practiced general, corporate and commercial law until 1991.

Married to his wife Maria since 1981, they have three sons Marek (1984), Gregory (1986) and Michael (1988). In his spare time Mr. Lorenc enjoys reading, boating and spending time at the family cottage at Winnipeg Beach, Manitoba.

Not only are bridges plenty in Saskatoon, they are also a hot topic these days.  The conversations run all the way from coffee row on up to City Hall.

Again, the reasons are clear.  Saskatoon’s oldest bridge—the “Traffic Bridge”—is condemned.  That bridge opened in 1907 and has not always been sufficiently maintained.  Saskatoon is now looking to replace it at a cost of some $30 million.  Two of the city’s other historic bridges also require significant repairs over the next five years.

At the same time, Saskatoon is looking forward to the opening of the new $250 million “South Bridge” that will finally close the loop of the Circle Drive perimeter expressway.  But before cars have even hit the asphalt on the new South Bridge, serious discussions are underway about building another two bridges to connect the growing industrial areas in Saskatoon’s northwest to the fast growing residential communities across the river in the city’s northeast.

The state of Saskatoon’s fabled bridges is a telling example of the challenge we and many other cities face with infrastructure, especially in times of rapid growth.    How do we both maintain the infrastructure we have while responding to the immense pressure to add new infrastructure to the inventory?

Let’sTOC has put forward some great pieces on the need for engineering innovations to help us build our roads, pipes, and sidewalks in cost-effective and durable ways.  It has also put forward some provocative ideas about innovative financing instruments for how to pay for it, such as the penny tax and ideas for the new LTIP program.  The dimension I am interested in adding to the discussion is how we can effectively reduce the amount of new infrastructure we add in the first place—by changing how we grow as cities.

This is not a new discussion by any means, as pointed out in Pamela Blais’ compelling book “Perverse Cities: Hidden Subsidies, Wonky Policy, and Urban Sprawl.”  In her book Blais explores why—despite almost three decades of debate in North America about the necessities and benefits of more efficient land use practices—many cities are showing fairly dismal results in curbing inefficient outward growth, which also drives demand for more infrastructure.

Her analysis demonstrates that while many cities have “talked the talk” they have not necessarily “walked the walk” of densification and smarter growth.  At best, results have been mixed.  According to Blais, one of the fundamental issues cities have to face is achieving more efficient land use.  This means moving to more accurate pricing of land development and the civic services that are provided to that land once development is complete.

Saskatoon has been wrestling with these questions most recently in the face of a growth boom that started around 2007.  City administration began crunching the numbers on the costs of future growth over the next 50 years under a “business as usual” approach (e.g., adding more lower density and car-dependent neighbourhoods).  This projection quickly revealed that if growth rates stay anywhere near their current pace, there is no way we could pay for all the interchanges, bridges, road expansions, and sewer and water infrastructure required.  And, we would likely face gridlock on many of our existing roads.

So, like many cities, Saskatoon has begun to make paradigm shifts in how we plan our future growth.  After a fairly extensive consultation through a process we called “Saskatoon Speaks” we have launched a new Integrated Growth Plan.  This plan aims to redesign our future growth map to accommodate at least 50,000 citizens (based on projected growth to 2050) through strategic infill within the existing City limits.

That being said, this paradigm shift presents some real challenges in prairie cities like Saskatoon.  Why?  Well, we are used to space.  We don’t have mountains or oceans hemming us in, and we’ve designed our cities to suit that reality—wide roadways with center medians, wide buffers separating arterial roads from neighbourhoods, low density subdivisions with curvilinear streets, and cul-de sacs separated from regional retail malls with expansive parking lots.

We take space for granted.  But, there’s still a price to be paid for it.  Every kilometer of roadway has to be swept and cleared of snow, and the potholes patched.  Every neighbourhood needs to be served by transit in some way, patrolled by the police service, and be within 4 minutes of a firehall.  There also has to be sufficient park space and leisure amenities to provide a quality of life.  Every meter of sidewalk and pipe we build has a limited lifespan, and eventually has to be repaired and replaced.  There are huge costs to do all of this work.

Like many cities, Saskatoon has been working off the notion that “growth pays for growth.”  But this notion has mostly dealt with new neighbourhoods bearing the costs of building the pipes, roads, and parks in the first place.  The costs of maintenance, repair, and operations are tallied afterwards and are generally borne by property taxes.

A recent City of Edmonton report measured the entire cost of a new neighbourhood development, and shows how development charges and new property taxes fall short of paying for the servicing and maintenance of new neighbourhoods.

According to Pamela Blais, one of the biggest culprits in contributing to inefficient growth models in our cities is a “distorted pricing system” that favours inefficient land development.  This has also been detailed by the Canada West Foundation in reports released under its Western Cities Project.  For Blais, the only way to truly achieve efficiency in land development is to truly make growth pay for growth, by charging more for less efficient land developments that are further away and more expensive to service.

Blais points to a number of examples of innovative pricing for land development, including Ottawa and Markham Ontario, both of which have begun charging more for greenfield development than for redevelopment of existing areas.  Last year, the City of Calgary implemented a significant increase to their development charges to better reflect the true costs of building and servicing new neighbourhoods over the long-term.

On her website, Blais also points to new financial instruments such as stormwater levy systems that charge more for users with big parking lots and roofs than those with lots of grass and smaller buildings as a way of generating revenue and establishing more fairness in pricing.  In an earlier Let’sTOC article, “No Longer Oblivious to the Impervious”, Mayor Carl Zehr detailed Kitchener’s experience with such a system.

In Saskatoon we will be implementing such a stormwater utility in 2013, and we are undertaking a full review of our development levies and charges to find ways to ensure that both new growth and infill development charges are structured to better reflect actual costs as part of our integrated growth plan.

It’s no small task to change the way we design cities to use infrastructure more efficiently—especially on the prairies.  One of the critical challenges is to ensure that the design of both infill developments and new neighbourhoods is done in a way that creates great neighbourhoods and high quality of life for residents.  We will have to change the way we get around, and get used to living a little closer together.

Saskatoon is making headway on establishing new policies to ensure infill doesn’t sacrifice existing neighbourhoods.  Just this month City Council adopted a newArchitectural Control District for the fabled Broadway corridor and is currently working on new neighbourhood infill design guidelines and new standards for downtown development through the City Center Plan.  As we see in many of our great cities, the vibrancy of neighbourhoods can improve with a mix of uses and more lively and diverse streets, but it has to be done right.

Charlie Clark

Charlie Clark was elected to City Council in 2006. He is married to Sarah Buhler. They have two sons, Simon and Benjamin, and a daughter, Rachel.

Charlie has a Bachelor of Education from the University of Toronto and a Master in Environmental Studies from York University. He began his career in Alternative Dispute Resolution, practicing as a Mediator and a Conflict Resolution Trainer in a variety of government, business, and community settings.

More recently, Charlie worked in Community Economic Development and Housing, facilitating projects with the Core Neighbourhood Development Council, Quint Development Corporation, Indigenous People’s Program, Oxfam Canada, and the Saskatchewan Eco-Network.

As a City Councilor, Charlie serves on a variety of Boards, Commissions, Committees, and Advisories including:

Saskatoon Regional Economic Development Authority, Meewasin Valley Authority, Marr Residence Management, Planning and Operations, Municipal Heritage, Accessibility, Cycling Group, and the Broadway Business Improvement District.

In this personal life, Charlie expands his engagement in our community through his service on the boards of CHEP (Child Hunger and Education Program) and the Affinity Credit Union.

As a husband, father, or neighbour you might find Charlie building a snow fort or a cardboard box construction vehicle, playing squash, cycling, cross country skiing, canoeing, or camping in our great Saskatchewan outdoors.”

By: Casey Vander Ploeg, Senior Policy Analyst

Whenever I point to the Jets Stadium and the establishment of the Vauxhall Baseball Academy as an example of a very successful local and rural infrastructure investment that has yielded some great economic development and social dividends, the response is overwhelmingly positive.  Often, it’s outright astonishment.  During the course of the 2012 National Infrastructure Summit, I was pulled aside dozens of times by those who remarked, “What a great story!”

Yes, it is.  But the story’s not finished.  That’s because the Jets Stadium Society—a non-profit organization struck to develop and maintain the ball field—has no shortage of plans for the future.

Innovation:  Water

I first checked out construction at the ball field a couple of summers ago.  I think it was 2010.  At the time, my brother, Sid, was just finishing up some work on the equipment storage shed, but was quite eager to show me the irrigation set-up for the field.  In the far north-west side of the stadium stood a little shed that housed the water pumps and all pipes.  The pipes and other “guts” inside were shiny new and painted up in different colours—red and white if I remember it right.

Anyway, the irrigation system is quite unique.  Rather than increasing demand on the town’s limited supply of potable water from its small treatment plant, the Jets Stadium draws untreated water from the Bow River Irrigation District (BRID), which is also headquartered in Vauxhall and sources the town’s water.

Using untreated water for irrigation reduces the ecological footprint of the stadium, and is less expensive.  I think—again if I remember it right—that the local water treatment plant itself stands in need of some reinvestment.  Opting for untreated water avoids adding even more pressure on that piece of infrastructure.  However, the stadium does have the capacity—if it’s needed—to switch over to the town’s water supply.  So, there’s some great flexibility there too.

As interesting as that set-up is, what really raised my eyebrows was when Bob Miller shared with me his thoughts about heating the field.

“What’s that?  You’re gonna heat…”

“The field,” replied Bob.

Innovation:  Geothermal

Jets Stadium is a ball field on the western Canadian prairies, where winters are long and cold, even if they are punctuated by chinooks.  To extend the playing season by a month on either end, the plan is to eventually replace the natural grass infield with Perfect Turf—artificial grass designed in Canada, and couple that with a geo-thermal heat sink underneath the field to warm it up when the weather is cold.

Geothermal heating and cooling is a renewable source of energy that has been around for years, but it is only recently beginning to take hold in a substantial way.  Depending on local climate and soil conditions, the temperature of the earth 20 feet below the surface tends to remain at a constant temperature between 10-15 degrees Celsius, regardless of the ambient temperature at the surface.  Thus, there is a heat differential.  This heat differential can be tapped for purposes of both heating and cooling.  Geothermal is very efficient because no energy conversion is required.  Whenever energy has to be converted (e.g., burning natural gas to heat) there is always some loss in efficiency.

According to Bob, the cost of adapting this technology to the field would be around the $200,000 to $250,000 range, and the Society is looking at different ways to try and make it happen.  The concept has already been presented to the town’s local MP, with the argument being that this would be a great test case to test and prove out a unique application of geothermal.

Bob has also been talking with—well—the Hutterites at Copperfield Colony.  The colony has gone completely geo-thermal on all their new housing units.  There is no natural gas in their housing.  Members of the colony consider themselves to be “experts in the field” and are sharing their insight on how it might be applied to Jets Stadium.  According to Bob, the colony has said they would even share some of their gravel reserves for the project.  I know very little about such things, but I guess geo-thermal requires a lot of gravel, which might be in abundant supply but still not cheap.

Some quick research on the usage of geothermal reveals the following.  First, usage is growing by about 10% annually.  That’s a rapid rate of growth.  Second, it can result in 30% to 70% savings over traditional heating systems, and maintenance costs are also lower.  While recent data is hard to secure, as of 2004 about 70 countries were using it in some shape or form (Click here for more information).

Worldwide, about 30 gigawatts of energy consumed is produced geothermally. Systems in the US account for about 8 gigawatts, followed by Sweden at 4 gigawatts, and China with 3 gigawatts. Since I don’t even know what a gigawatt is, I looked it up.  It’s 1,000 megawatts or one billion watts. A standard incandescent light bulb ranges from 40 to 100 watts.

At the 2012 National Infrastructure Summit, I facilitated a workshop group session on innovative ways to finance infrastructure. A recurring theme was finding ways to secure savings in operating budgets through greater energy efficiency and technology, and then re-direct the savings to capital budgets.  Geothermal is one such potential source, and my panelists described how it can be applied to buildings to help reduce costs.  Other options included things like solar panels on rooftops and LED lighting, both inside buildings and the streetlights.

Eyebrows went up after I wedged into the discussion the prospect of using it for a ball field. As usual, commentary is more than welcome. Cheers to all from Regina.

You may also be interested in Field of Dreams (Part I).

By: Stephanie Shewchuk

When the Economist Intelligence Unit released the latest version of its Global Liveability Report two weeks ago, three Canadian cities were listed in the top five of the 140 cities surveyed. The Global Liveability Report, which originated as a means of testing whether Human Resource departments needed to assign a hardship allowance as part of ex-pat relocation packages, ranked Vancouver as third, Calgary as fourth and Toronto as fifth in the list of the world’s most liveable cities.

The top cities do well on a variety of criteria, including stability, health care, culture and environment, education, and infrastructure. While the quality of the environment is not the only measure that matters in these rankings, it certainly is a major draw for those who live and work in a city. The ability to commute by cycling on dedicated pathways, for example, or to handily access urban green space contributes to community sustainability, ecosystem stability and an overall sense of civic well-being. This is precisely why environmental initiatives should be actively supported by policymakers.

Environmental initiatives are not simply ‘nice to have’; they are must-haves for cities that are constantly competing to attract and retain the best and brightest talent. Cultivating a healthy and vibrant setting for residents fosters economic competitiveness while at the same time protecting and preserving the natural environment. Vancouver, it was cited in the report, has begun work this year on an “Evergreen” mass transit line and is considering measures such as scramble intersections and road tolls to counteract congestion. Calgary, which has previously been named as the top eco-city in the world by the consultancy firm Mercer, has a C-Train system entirely powered by wind energy, as well as one of the most extensive recreational pathway networks in North America.

As it stands, plenty of good work is being done across the country that speaks to ‘triple-bottom line’ policy-making, which equally weighs the environmental, economic and social considerations of proposed policies. Many cities in western Canada, including Vancouver, Victoria, Calgary, Edmonton, Regina, Saskatoon and Winnipeg, have formally adopted this approach into their municipal operations as a means of promoting environmental initiatives while respecting the economic and social dimensions of such decisions. Furthermore, municipal officials are finding that environmental initiatives often have positive financial impacts. Reducing building emissions through green design, for example, results in lower energy bills in the long run.

This is not to say we should sit back and rest on our laurels. All cities, regardless of their ranking or reputation, have the opportunity to be greener. With over 80 per cent of Canadians living in urban areas, environmental improvement in cities stands to impact the overwhelming majority of the population. Canadian cities should capitalize on these current gains and focus on the future expansion of environmental initiatives, as indeed many already are. Technologies which were once considered cutting edge—district energy systems, wastewater heat recovery systems and biomass combustion systems, to name a few—are becoming more the norm from Vancouver to Halifax.

Without a doubt, liveability means different things to different people, and a city’s likeability does not always necessarily correspond to its liveability. It can generally be said, however, that environmental initiatives have a positive influence on the quality of life a city has to offer. In celebrating our region’s successes, let’s hope more of the same is encouraged in the years ahead.

Canada West Foundation hosts Bridging the Gap: Shifting Urban Environmental Policy into Action on September 25th at the Telus Convention Centre. For more information, click here.

By: Casey Vander Ploeg, Senior Policy Analyst

I don’t know if Bob Miller ever heard a voice whispering “If you build it they will come.”  Maybe.  After all, Bob did much the same thing as Iowa farmer Ray Kinsella, who in the movie Field of Dreams, acted on a little voice telling him to plow his crop under and build a baseball field.  In the middle of nowhere.  Friends, family, and neighbours thought Ray was crazy.  But “crazy is as crazy does.”  At least as Forrest Gump would have it.

What About Bob?

Bob Miller is many things—businessman, former municipal councillor, hockey coach, sports enthusiast, and community booster.  He also used to ride the keyboards in a local rock band.  But crazy?  No.  Catalyst?  Absolutely.

Bob is the lead character in one of the most interesting, innovative, and successful local infrastructure and economic development stories in western Canada.  This week I’m going to start telling that story.  I’ll finish it at the 2012 National Infrastructure Summit in Regina next week, and post that conclusion here as Part II after the summit.

Setting the Scene

I’ve known Bob for a long time.  We share the same home town—the small community of Vauxhall, Alberta.  Like many rural towns scattered across the western prairies, the last few decades for Vauxhall have been a struggle.  When rumours began to circulate that the province was thinking about closing the local high school because of declining enrolment, the town was devastated.  In a small rural community, the local school is more than an educational facility.  It’s a critical community, cultural, recreational, and social institution.

You lose the school, you lose the town.

I don’t think Bob heard voices.  But I do think Bob was tired of all the bad news.  I do think Bob was tired of waiting around for something good to happen.  So, Bob decided to make something happen.  On a morning in November 2004, he jumped into one of his Hy-Hoe excavators, crawled it over to the town’s run-down ballfield, and proceeded to rip the bucket into the fence and the bleachers, and bring the whole business down.

He didn’t ask for permission.  To build up, you first tear down.  It’s just that simple, and it was classic Bob.

Flashback

I’m getting ahead of myself.  The story actually goes back a lot further.  Western Canadians all know about the Winnipeg Jets.  Their departure devastated Winnipeg.  Their return brought restoration, redemption, and rejoicing.

But few westerners have ever heard of the Vauxhall Jets.  In the early 1950s, the Jets were a baseball club playing in the top amateur league in Alberta.  The club snatched the provincial title in 1956.  On the heels of that victory, the town built Jets Stadium.  With their own venue, the Vauxhall Jets went pro in 1957 and joined a pan-western Canadian league.  For the next 20 years, the Vauxhall Jets drew talent from across the US and Canada, and entertained thousands in southern Alberta.  By 1977, rising costs forced the Jets to fold.  The fans went home.  The stadium—now empty—was largely forgotten.

Whether he heard voices, whether he was tired of the bad news, or whether he wanted to bring a piece of the town’s history back to life, Bob got busy clearing away the rubble.  Alone.

Inspiration

You can’t sneeze in a small town without everyone hearing it, and it wasn’t long before Bob was joined by a few others.  The group now included Blaine (the former high school principal), Harry (a local welder), and Sid (electrical contractor and also my oldest brother).  These guys began to dream big—not little league but major league.  They found themselves captured—perhaps obsessed—by the vision of building in Vauxhall a truly world-class baseball field.

That takes money.  So, the guys dumped in some of their own cash.  And what did they buy first?

Lights.

According to Bob, you can’t have a world-class ball field without lights.  And when they were flicked on for the first time—powered by a borrowed diesel generator—the prairie around Vauxhall lit up.  The glow could be seen for 30 miles in every direction.

Jets Stadium at night in Vauxhall, AB (Photograph: courtesy of Jets Stadium Society and Vauxhall’s Academy of Baseball)

Creating Buzz

Who’s ever heard of a lighted baseball field in a tiny western Canadian prairie town?  Not me.  The concept sparked an enthusiastic buzz with dramatic results.  Dozens of volunteers lined up to join the effort.  Local contractors donated materials, equipment, and time.  Church groups helped out.  Even the local Hutterite colony—the Copperfield Colony—came on board.  Members of the colony kept the farm’s pre-fabrication shop busy over the winter by welding the bleachers, which were later hiked to the site and set in place.

By the time the new Jet’s Stadium was finished, over 10,000 volunteer hours had been logged into the field, and $100,000 in equipment and materials had been donated.  The result?  A new stadium valued at over $1 million.

The Plot Thickens

Vauxhall Jets locker room, Vauxhall, AB (Photograph: Courtesy of Jets Stadium Society and Vauxhall Academy of Baseball)

The new Jets Stadium is right across the road from the Vauxhall Junior-Senior High School, the same school reportedly on the province’s chopping block.  That got some of the educators thinking, who hatched the idea of establishing a baseball academy, which could put the new stadium to good use.  Plans were drawn up with the Horizon School Division, and the Vauxhall Academy of Baseball opened in 2006.

Today, there is a squad of some two dozen lads from various locales across Canada and the US that have moved from home to complete their high school in Vauxhall as members of the ball academy, which is professionally staffed by a head coach, assistant coaches, strength and conditioning coaches, a sports psychologist, athletic therapist, and a sports medicine trainer.  There is also a director of operations and a fund development manager.  The academy has scholarship and bursary programs, and hosts annual fundraisers.

The academy is certainly a draw, but so is the growing reputation of the quality of education at the school.  The Vauxhall High School has been ranked within the top 10 of Alberta’s 300 public schools.  Tuition at the academy is about $15,000 annually, which generates some $350,000 a year.  Enrolment at the school has stabilized, and little Vauxhall now hosts major league scouts who are scoping out talent.  Who would have thought?  Not in my lifetime.

The dreaming continues.  The hope is to lure a major league team to Vauxhall to conduct their spring training camp.

The good news also continues.

Seeing the potential, the province provided a community capital grant to complete Jets Stadium.  And, rather than closing the school, the province decided to renovate the entire facility to the tune of $18 million.  The new school has a specialized training centre and a new dormitory for the academy.

There’s even more.

The success of the ball academy has drawn the attention of a girl’s AAA hockey team, the Medicine Hat Hounds, who play in the Alberta Major Midget Female Hockey League.  The team was hard pressed to get ice time in Medicine Hat, and decided to play all their home games at the Vauxhall Recreation Complex.  Some girls in the hockey academy are now attending the Vauxhall High School as well.

Wow!

The Jets Stadium is essentially a piece of infrastructure, a word that sounds boring, dull, and dry.  This story brings infrastructure alive, and demonstrates its transformational power.  The economic development and social enrichment levered by the Jets Stadiumhave been astounding.  What’s more, the project was innovative from top to bottom, whether it was the idea, the design, the construction, the financing, the funding, or the delivery. And the facility also incorporates some really cool innovative technology.  That has to wait until next week.

Jets Stadium is a good news story, and Bob is proud to tell it.

“A project like this is virtually impossible to pull off in a large centre.  There are things that can be done more easily in a small community.”

Bang-on, Bob.   You did a pretty good job.

Back next week with the rest of the story.

Click here to read “Field of Dreams (Part II)”

4 Responses to “Field of Dreams (Part I)”

By: Ann Pham, former Communication Coordinator at the Canada West Foundation

I recently returned for a visit to my old university campus.  I almost didn’t recognize where I was.  It’s only been two years since I graduated from the University of Calgary, but so much has changed.  Buildings have sprouted in the field where my friends and I used to play Frisbee.

When I asked a student where I could return a book, he had no idea!  That’s because “MacKimmie”—the library where I used to spend countless hours studying—has been replaced by the Taylor Family Digital Library(TFDL).  Good-bye old MacKimmie.

When I was a U of C student, the TFDL was just a messy and unsightly construction site.  Frankly, I didn’t pay much attention at all to what was going on there.  I had other things to worry about.  Now, I’m a little jealous of the students that actually get to use the new facility.  While old MacKimmie still holds a special place in my heart sentimental reasons, newer is definitely better in this case.  Gone are the old days hunching over an old wooden table with your nose buried in a textbook for five hours, suffering through the glare of fluorescent lights and the stuffy recycled air.

Students today bury their noses in a laptop, and do it with a lot better lighting and ventilation.

“The building provides an abundance of natural light and good air flow thanks to the fresh air coming up from the floor and returned from the ceiling to provide people with a healthier work environment.  LEED building standards require us to use a high percentage of fresh air over traditional building air systems.” (Digital Library FAQs).

The TFDL isn’t the only new and improved building on campus.  The Energy Environmental Experiential Learning (EEEL) building is the other new kid on the block.  It opened in September 2011, and it’s one of the most innovative spaces on campus (James Stevenson, UToday, February 16, 2012).

In February, the EEEL building received the Award of Excellence from the Consulting Engineers of Alberta (CEA). This is the highest award attainable from the CEA, whose membership boasts over 80 engineering firms across the province.

Ken Pilip is the CEO of CEA, and says that one of the judge in the competition summed the EEEL up nicely:  “It is a model of energy efficiency and sustainability that serves as an excellent example for the design of future facilities of this nature.  Each element of the design consisted of leading edge technology, that when combined, show what can be done here in Alberta.” (James Stevenson, UToday, February 16, 2012).

Casey’s blog in February, “’Biggest’ vs. ‘Best’ (Part II)”, highlighted some of the most innovative projects across Canada.  The new Calgary International Airport (YYC) Terminal was one of the contenders for his top spot of the most innovative infrastructure projects.

Well, YYC has recently made it onto another list—a global list.  YYC has been placed in an international grouping of the 100 most innovative and inspiring urban infrastructure developments.  YYC is the winner of the “global connectivity” category.  The airport will be the home of Canada’s longest runway, complete with a central de-icing facility, as well as an international concourse that incorporates principles of sustainable design (Siri Agrell, Globe and Mail, July 17, 2012).

This list was released by KPMG’s infrastructure advisory practice in the Infrastructure 100: World Cities Edition report, which chronicles creative, large scale projects from around the world that are designed to inspire cities to tackle infrastructure challenges in creative ways (Siri Agrell, Globe and Mail, July 17, 2012).

But all of this is just a small taste of things happening all over western Canada, and right across the country.  These examples are just some personal things in my own backyard.

Other Canadian projects on KPMG’s list include SAIT Polytechnic’s Trades and Technology Complex (Alberta), the University of British Columbia’s Bioenergy Research and Demonstration Facility (BC), the Harvest Energy Garden (BC), and the Durham York Energy Centre (Ontario).  For more information on these projects, check out “Canadian projects named on global list for innovation in urban infrastructure”.

Now for a real interesting statistic.  Of the six Canadian projects listed, four are from the West.  And that doesn’t even include Manitoba Hydro Place, a building widely considered North America’s greenest highrise (Brent Bellamy, Winnipeg Free Press, June 18, 2012). This building became the first office tower to receive a LEED Platinum certification, the highest honour in the Canada Green Building Council.  Nor does the list include developments at Saskatchewan’s Boundary Dam, which is the world’s largest carbon capture storage demonstration project.

Sustainable features of Manitoba Hydro Place include natural ventilation, personal lighting, temperature controls, as well as access to daylight and views. “It is a groundbreaking high-tech wonder that operates 70% more efficiently than a typical office building,” notes Brent Bellamy, senior design architect of Number Ten Architectural Group. The implementation of comprehensive sustainable-design strategy reduces the building’s environmental footprint while making it a more profitable company in the long run (Brent Bellamy, Winnipeg Free Press, June 18, 2012).

While we give very little thought to it, the fact is that buildings have a profound effect on each one of us.  Canada is a cold place!  Canadians spend 21 hours and 20 minutes indoors daily, says Bellamy.  Additionally, according to Brad Watson, head of KPMG’s global infrastructure advisory practice in Canada, “In the global and Canadian context, significant portions of our population will be living in dense urban centres, and that requires a change in the way we do things…and underneath all that is infrastructure.” (Siri Agrell, Globe and Mail, July 17, 2012).

So, take a look around.  Do you notice any innovative, green changes taking place with your local infrastructure?  Strides are being made in my own backyard, right across the West, and throughout the rest of Canada.  With all these great examples to learn from, I think we can all aim to do better.

And, I’m still jealous of the students who get to spend time in the new TFDL/EEEL buildings.

Sources:

1. “Award of Excellence”, James Stevenson, UToday, February 16, 2012
2. “‘Biggest” vs. ‘Best’ (Part II)”, Casey Vander Ploeg, Let’sTOC, February 2, 2012
3. “Canadian projects named on global list for innovation in urban infrastructure”, Siri Agrell, Globe and Mail, July 17, 2012
4. “Digital Library FAQs”, University of Calgary.
5. “Local buildings display green benefits”, Brent Bellamy, Winnipeg Free Press, June 18, 2012

By: Roslyn Kunin

A new list of the world’s most livable cities has just been released by the Economist Intelligence Unit (EIU). With three cities in the top 10 (Vancouver, Toronto and Calgary) and four in the top 20 (Montreal, ranked 16th) Canadians can be proud. Proportionally, western Canada can be even more proud. And Vancouver, the highest on the list for Canada, can be proudest of all, even if it is in the now familiar bronze position in world rankings.

Vancouver has a long history in the top ten of this list, often in the first position, but petty crime, traffic congestion and housing affordability have now pushed it down to third place.

But some readers may recall another headline just this past July saying that Vancouver was no longer in the top 10 of the world’s best cities. The confusion is due to the fact that the EIU’s list of “best” cities is different from its list of “most livable.” The list of cities examined for the “best” list is much shorter (70 compared to 140), and does not currently include Calgary or Vancouver. Toronto was the only Canadian city included in the best cities competition (it ranked eighth).

This points to the importance of understanding the methodology behind these lists.

For example, neither the livability index nor the best city index includes consideration of the opportunity to make a living. Since everyone who is not independently wealthy must take this into account, often before all other factors, when choosing where to live, this strikes me as a significant oversight.

This is the reason why Dacca in Bangladesh sees streams of incoming population in spite of the fact that it is at the very bottom of the livability list. Many Bangladeshis see Dacca as the place where they have the best economic prospects. And this strong in-migration no doubt contributes to reduced livability as congestion increases and infrastructure is strained.

Closer to home, Vancouver consistently outranks Calgary on the livability index, but does not appear to be keeping up when it comes to opportunities for making a living. Those who vote with their feet seem to be choosing Calgary. Over the last year in Vancouver, house prices, which have been largely unaffordable, have fallen 12%. This would not be consistent with a strong influx of population. Calgary, on the other hand, has seen house prices rise by 27% over the same time period.

Maybe we need an index that looks at making a living as well as enjoying living?

By: Casey Vander Ploeg, Senior Policy Analyst

The world unfolds in some crazy ways.  In January 2011, I addressed Canada’s first national infrastructure summit in Regina.  My presentation to delegates was a bit off the cuff.  As part of that presentation, I tossed out the idea of a penny tax for infrastructure.  While I had noodled the idea a bit in some of our early research work, it was not well developed.

While the penny tax idea used less than a minute of my 30 minute talk, it unleashed a storm.  Following the inevitable media interviews, I went back to our Calgary offices and got to work on a study to flesh the idea: The Penny Tax: A Timely Innovation to Boost our Civic Investments. The Canada West Foundation released that report in the spring of 2011, and the penny tax proposal continues to bubble and percolate.

New Development

The latest development was a news story in yesterday’s Saskatoon Star Phoenix and an editorial published today.  Apparently, the mayor of Estevan supports the idea of exploring the penny tax further, Saskatchewan’s Minister of Government Relations says he’s willing to discuss it but is concerned about it, and the mayor of Moose Jaw is not personally a fan of the idea.

Saskatchewan’s Minister of Government Relations is the Honourable Jim Reiter.  In his comments, he said that he wants to listen and doesn’t want to prejudge the idea.  My hat goes off to Minister Reiter for being open to innovative ideas and to engage them.  As the crafter of the penny tax idea, I suppose I should toss my “two cents” into the conversation.

The Concern

The one thing that causes Minister Reiter concern is the impact of an infrastructure penny tax on the province’s business environment. “Our government has been about cutting taxes and creating a competitive business environment.  I’d be somewhat reluctant to look at a situation where we’d be increasing taxes,” says Minister Reiter.

I’d like to address that concern.

Point Number One

First, let’s be clear on the unique features of the penny tax:

• The idea is to provide municipalities with the option of a 1% add-on to the GST.  This add-on, however, does not come about by a government decision to impose the tax.  No, the penny tax would only be imposed if taxpayers themselves decide to do so in a referendum.  It’s a voter-approved tax.  Government makes no decision to increase taxes.  Voters might.  Or, they might not.  The choice is theirs. 

• All revenues from the penny tax would be used for a basket of specific infrastructure projects, announced in advance, and also subject to approval in the referendum.  It’s a dedicated tax.  Voters approve how the money is spent. 

• The tax would be in force across two municipal electoral cycles, after which another referendum has to be held if it is to be imposed again.  It’s a temporary tax with an automatic sunset. 

• The tax rate would be capped at 1%, any excess revenue would be returned to taxpayers via property tax reductions, and a separate annual report would report on tax collections and usage of funds.  It would be Canada’s most visible, transparent, and accountable tax. 

All of this is very important.  What we’re talking about here is providing voters and taxpayers with a choice that drives from the bottom-up and not the top-down.

Point Number Two

My second point is more substantive.  We need to unpack an assumption here.  Are taxes always bad for the economy, bad for the business environment, and bad for private investment?  A lot of us have bought into that assumption to the point where it is treated as axiomatic.  But, it’s not entirely correct. A lot depends on what tax is in view, how it is administered, and how the revenues are used.

What we have here is a local, voter-approved, and value-added sales tax that lands on consumption and exempts personal savings, business investment, and business inputs.  Economically, that’s the best tax going. Also, the revenues are tied to a specific purpose—infrastructure.  That’s key.

Public infrastructure is a necessary and critical support for business.  Without infrastructure, private production is not even possible.  It also lowers the cost of private production.  It makes private production more profitable.  It increases the return to private capital and can stimulate even more private investment.  It gets private production to markets.  And it makes private production more productive—the fuel of long-term and sustained economic growth.

So, taxes are only one side of a larger equation.  Sure, taxes impose a cost to the economy.  But, those taxes also provide critical services like infrastructure that benefit the economy by providing a valuable input for businesses.  Whether or not “cutting taxes” equals a competitive “business environment” is not the relevant question.

What is relevant, however, is whether the infrastructure funded by a specific tax has economic benefits that exceed the economic costs of the tax.  In other words, what’s the net benefit?  That’s what we ought to be talking about, frankly.

State of the Debate

Discussion over the penny tax is great to see.  Stimulating debate on important policy issues is what the Canada West Foundation is all about.  Prompting innovative solutions to pressing infrastructure challenges is what Communities of Tomorrow is all about.

It would be nice, however, if the debate could move past the “taxes are bad” mantra.

Does the penny tax idea have wrinkles?  Yes, it does.  Preventing potential local economic distortions is one such wrinkle.  How government can manage different GST rates across the country might be another.  We should do a little more talking about that.

Manitoba has a long history of innovative support for its municipalities.  While the Manitoba Premier is not in favour of a penny tax idea, Manitobans might well be.  The Association of Manitoba Municipalities polled Manitobans in January of 2012, asking whether they supported a “one-cent” municipal sales tax dedicated for infrastructure.  Almost two-thirds (64%) supported the idea. 

I got more than a few sideways glances and chuckles from colleagues at the Foundation about the penny tax idea.  Still do.  But, maybe it has more traction than we think.

3 Responses to “The Infrastructure Penny Tax: Can we Talk About the Real Issues Now?”

1. 3
   Mark Says: 
   August 31st, 2012 at 12:31 am

   Thanks for the response, Casey. All very solid points.

2. 2
   Casey G. Vander Ploeg Says: 
   August 24th, 2012 at 10:39 pm

   Hi Mark. Using a property tax within the model is certainly possible. But there are numerous advantages to considering a broad-based value-added sales tax. For example, sales taxes capture revenue from outsiders who come into our cities but pay their property taxes elsewhere while still imposing a load on city services and infrastructure. Sales taxes are also more responsive to economic growth, and generate better revenue over time. They capture any increase in sales volume and any inflation caught up in prices. It has a built-in escalator. Property taxes don’t. Property taxes are a fixed cost for business, while VAT sales taxes simply flow through. Also, the GST was dropped from 7% to 5%, and the Prime Minister himself stated in an address to municipal leaders at an FCM gathering that the drop should be seen as the federal government vacating tax room to the provinces to use for their own local funding challenges. So, there’s opportunity there. In the end, the infrastructure challenge is so large that it cannot be solved on the property tax base. Revenue diversification is required. The nice thing about the penny tax model we’ve designed is how it keeps the property tax as a fundamental tax source for most municipal operations, with a supplemental optional sales tax for specific and high-priority infrastructure projects.

3. 1
   Mark Says: 
   August 24th, 2012 at 7:25 am

   Any thoughts on using this model (i.e. voter-approved, dedicated to a specific purpose, sunsetting) with a special infrastructure-devoted property tax rather than a sales tax? This approach might remove the added complexity of having to gain approval from other orders of government.