New to Asset Management?

Are you and your community new to Infrastructure Asset Management?
Not sure what it is or how to get started? We can help!

History of AM in Canada

Construction of infrastructure surged across Canada from the 1950-1970’s due to growth, modernization, and urbanization following the end of the Second World War. This meant the construction of a lot of roads, bridges, water distribution, wastewater treatment, buildings, schools, hospitals; everything that communities needed. However, the following 30-40 years saw little investment in the sector, failing to provide the necessary investments in proactive and preventative maintenance of our infrastructure. The result is a significant proportion of our assets have fallen into disrepair, and are now in desperate need of substantial rehabilitation and, in some cases, full reconstruction. Nearly 40 per cent of roads and bridges, 30 percent of recreational facilities, and 30 percent of water infrastructure need attention, increasing the risk of service disruption.1

Asset management provides communities with the opportunity to do more with less by providing a system for thoughtful, timely spending on municipal assets.

It was 2009 when all Canadian municipalities were required to change their financial reporting by incorporating Tangible Capital Assets (TCAs) into their financial statements. This was mandated by the Public Sector Accounting Board (PSAB), and became PSAB Standard 3150. It gave municipalities a better understanding of what assets they owned and their financial value. By accounting for TCAs through recognizing the annual amortization, the asset’s rate of “consumption” would be recorded. Not only did this accounting change mean that the presentation of financial statements would be altered, but it also resulted in some municipalities reporting a surplus, or for others, a deficit.

Then come the catalysts

The population change

Growth and population increase across Canada was 12.0 per cent from 2009 to 2019, which was unexpected for many communities and puts a strain on their existing infrastructure. Some communities have experienced population decreases which causes other challenges around rationalizing the asset base.

The challenging municipal funding model

Municipalities only receive ten per cent of every tax dollar collected across Canada, yet are accountable and responsible for the stewardship of 60 per cent of infrastructure assets in Canada. 3

The impacts of climate change

Natural disasters have become more prevalent in urban and rural Canadian communities. These events – like floods, high winds, drought and more – can have a very direct impact on our communities’ infrastructure and our ability to provide services. 4

Unrealistic service expectations

Most citizens do not have a full understanding of what their municipal tax goes towards, and the services they get – and that’s something that we as municipalities in general need to be better at explaining.

“Municipalities are leading locally, with innovative solutions that can ultimately be scaled up to help tackle some of this country’s biggest challenges — from climate change to sustainable growth.”

Garth Frizzel, Past FCM President

Government Support

The Government of Canada recognizes that major funding of infrastructure renewals and new infrastructure assets is required for communities to prosper. Through the Investing in Canada Plan, the Government of Canada is more than doubling past infrastructure funding to spend $180 billion from 2016 to 2028.5  But without proper asset management practices in place, how do we know we are funding the right infrastructure projects?

From a provincial perspective, there are also efforts to improve infrastructure investments and asset management practices, both at a regional and local community level. More on this in the next section.

Infrastructure funding has also been used to support the response to and recovery from the COVID-19 pandemic. A new temporary COVID-19 Resilience stream for the Investing in Canada Plan was created for the pandemic response, with over $3 Billion in flexible, accelerated funding available.6  Gas Tax Funding was also accelerated during the pandemic.7

“As we continue to face the greatest public health and economic crisis of our time, immediate investments in infrastructure will play a vital role in addressing the needs of municipalities and First Nations communities, reviving local economies, and improving the lives of Canadians.”

The Hon. Catherine McKenna, Minister of Infrastructure and Communitiesnt

Are other countries and industries doing asset management?

Globally, Canada certainly isn’t the only country and population that is affected by infrastructure and service challenges. Countries like New Zealand, Australia and the UK have made great progress on public sector asset management. These are all places we can learn from, and adapt their good practices in Canada. Other industries are also working on introducing better asset management practices into their organizations, including energy utilities, airports, oil and gas companies, port terminals, railways, and more. Any organization with infrastructure has a lot to gain from improving their AM efforts and formalizing an AM approach to manage their infrastructure and services.

The future of asset management

While we don’t have a crystal ball, we know that AM is here to stay. As a nation, communities and their services are the foundation of our day-to-day lives, even if that’s often forgotten. And infrastructure is crucial for those services to be delivered. Provincial governments across Canada continue to develop and refine AM policy and some have introduced specific legislation. Getting better at AM is an important part of managing our communities that isn’t going away.

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