NDP Leader Thomas Mulcair warns of a municipal ‘infrastructure cliff’

We've all heard of the 'fiscal cliff' in the United States.

Well, Thomas Mulcair is evoking the 'infrastructure cliff' in Canada.

According to the Canadian Press, the NDP leader is warning that Canada's municipalities are heading toward an 'infrastructure cliff' if the Harper government doesn't step up with a long-term funding commitment for Canada's crumbling roads, bridges, sewers and waterworks.

The fact that local governments — and now the NDP — are seeking an additional $2.5 billion a year to pay for infrastructure projects shouldn't come as a surprise to anyone.

A recent report from the Federation of Canadian Municipalities (FCM) claimed that more than half of all municipal roads in Canada "require attention" while 40 per cent of wastewater plants and pumping stations need to upgraded or replaced.

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But are there other solutions besides the Feds just handing over more money to the municipalities?

Charles Lammam of the Fraser Institute thinks so, suggesting that municipalities be given more taxing authority.

"Higher levels of government should scale back in certain revenue raising areas (i.e., the federal gas tax) and pass on the capability to raise revenues to lower levels of government that have the responsibility for delivering particular policy initiatives," he said in an email exchange with Yahoo! Canada News.

"In other words, there needs to be a better matching between revenue raising and spending by level of government depending on the area of responsibility. Infrastructure is a good example. It's not necessarily about raising more revenues in aggregate."

Lammam also suggests that municipalities should look towards a controversial funding model known as public-private-partnerships (or P3s) — contracts for private financing, management or even ownership of public assets.

"When properly structured, evidence suggests P3s can achieve better and lower cost results," he said.

Historically, P3s have been the realm of provinces rather than municipalities but a Financial Post article claims that could be changing.

"Municipalities looking to fund everything from water systems to rapid transit will likely drive the next wave of public private partnerships," the column notes.

"Across Canada, there are 180 P3 projects (the development of public services or infrastructure through a mix of private and public funding) worth more than $58-billion.

"Much of the activity is concentrated in sectors such as transportation and health care. This year, funds have been raised to build part of the ring road around Edmonton and to extend Highway 407 north of Toronto."

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Local governments and big unions have traditionally resisted P3s, but municipalities might have little choice.

According to the FCM report, the replacement cost of municipal infrastructure assets is pegged at $171.8 billion — that's billion with a 'b' — nationally.