The Asset Maintenance Deficit: An Off-Balance-Sheet Liability with Tangible Economic Costs

Quebec’s public finances are typically assessed using a few well-established indicators. The annual deficit, net debt and how they fluctuate as a share of GDP inform most of the public debate. Debt ratios in particular provide a clear—and sometimes reassuring—snapshot of the province’s financial position.

These same indicators also shape how public investment is perceived. New projects, infrastructure spending and inaugurations play a central role in assessing how a government is performing. Politically, this focus is understandable. Projects that are financed, accounted for and officially opened are the easiest to showcase, especially given that electoral cycles are much shorter than the useful life of public assets.

Yet while attention is focused on these metrics and visible investments, another bill continues to grow out of sight. Quebec’s asset maintenance deficit now exceeds $40 billion, nearly four times its level in the mid‑2010s. The deterioration of existing infrastructure attracts less attention, precisely because it doesn’t lend itself to major announcements or ribbon-cutting ceremonies, despite its very real economic impact.

Explaining the Asset Maintenance Deficit

The asset maintenance deficit represents the amount the government would have to spend to restore all of its infrastructure to an acceptable condition. It measures the cumulative maintenance backlog on existing assets—transit networks, public buildings and other public infrastructure. Unlike investment in new projects, it reflects the government’s ability to preserve what already exists.

However, this concept differs fundamentally from financial debt in the accounting sense. The asset maintenance deficit involves no borrowing, no repayment schedule and no explicit interest charges. It doesn’t appear on the government’s balance sheet. Yet it represents a very real economic obligation: deferred maintenance doesn’t disappear and typically becomes more costly over time.

The scale of the deficit makes it a major macroeconomic issue. It has ballooned by more than $30 billion in just over a decade, from about $12 billion in 2015–16 to almost $45 billion in 2026–27. However, this increase should not be automatically interpreted as evidence of uniformly accelerating infrastructure deterioration.

Much of the spike reflects gradual improvements in how the deficit is measured. Over time, methodologies have become more sophisticated, additional asset classes have been included for assessment and existing deterioration has been more systematically documented. In other words, part of the increase stems from better measurement of existing infrastructure issues (graph 1). As assessment tools continue to evolve, the scope of the deficit could expand further.

This nuance is important when interpreting the trend, but it doesn’t diminish its economic significance. Whether the increase reflects new deterioration or delayed recognition of existing needs, the deficit ultimately points to future budgetary pressure. Unlike financial debt, where costs are explicit, regulated and transparent, the asset maintenance deficit generates costs that are uncertain, deferred and frequently underestimated. These costs will eventually materialize in future budgets, either through more extensive repairs or costlier fiscal trade-offs.

Why Delaying Maintenance Is So Costly

Delaying infrastructure maintenance doesn’t eliminate costs—it shifts them into the future, often at a premium. Routine maintenance slows the natural deterioration of assets. When it’s postponed, deterioration accelerates, repairs become more extensive and, in many cases, replacement becomes the most viable option. The immediate expense is avoided, but the total life cycle cost rises.

From an economic standpoint, the mechanism is straightforward. Timely maintenance entails known and relatively controlled costs. Allow an asset to deteriorate, and the required repairs become more complex, more expensive and riskier, from both a budget and operational standpoint. The scale and timing of the work required also become more uncertain. By contrast, financing costs for new projects are still fairly predictable in a relatively stable interest rate environment.

Data on Quebec’s asset maintenance deficit illustrate this imbalance. At the turn of the last decade, the annual deterioration of public infrastructure typically ranged from $3 billion to $7 billion. Despite a sharp increase in maintenance spending, repair efforts have rarely been sufficient to offset this deterioration. Across most networks, infrastructure continues to degrade faster than it is rehabilitated, causing the maintenance deficit to expand over time. (Graph 2 shows the trend in the estimated asset maintenance deficit by sector and body.)

This phenomenon has direct implications for Quebec’s budget. By postponing infrastructure maintenance, the government is effectively accepting a recurring “asset degradation tax”—an implicit economic cost stemming from higher future repair needs. In many cases, these costs are comparable to, or even exceed, the annual debt servicing cost associated with new capital spending. In other words, deferring maintenance does not reduce spending; it substitutes an explicit, planned and controllable cost with an implicit, less visible and potentially much larger one.

The False Appeal of New Projects

New public infrastructure projects are the ones that make headlines. They’re financed over the long term, carry clear and explicit costs, and are directly reflected in the budget indicators that structure public debate. Above all, they’re socially and politically valued, with high-profile announcements, defined timelines and, ultimately, ribbon-cutting ceremonies.

In contrast, maintaining existing assets is much less visible. Maintenance rarely attracts attention, let alone public recognition, even though it’s often the most cost-effective use of public funds over the long term. By prioritizing new projects, the government is implicitly accepting a growing liability tied to the assets it already owns. The stock of new infrastructure continues to expand, even as the cost of maintaining aging assets rises.

That said, a shift has begun in recent years. A larger share of the Québec Infrastructure Plan budget has been allocated to maintaining and upgrading existing assets rather than building new ones. This rebalancing reflects growing awareness of the issue and an implicit recognition that long-term fiscal sustainability is contingent on extending the life of existing infrastructure.

However, while this effort is commendable, the data show that it’s still not enough to reverse the trend. Sector-specific examples are telling.

The road network, which accounted for about $25 billion of the 2026–2027 asset maintenance deficit, or more than half the total, has some of the highest maintenance investments. Annual maintenance spending of more than $1 billion has not been enough to stop the asset maintenance deficit from increasing. Even in the highest-priority network, deterioration continues to outpace repairs—a reality that’s especially apparent in spring as potholes proliferate.

In the education sector, including grade schools and the higher education system, the cumulative deficit is approaching $12 billion. Although the sector’s very high deterioration ratios have gradually decreased, this doesn’t signal a rapid improvement in infrastructure conditions. Rather, it reflects a system contending with a much larger backlog, with gradual progress from a degraded starting point.

The healthcare sector illustrates the combined effect of delayed intervention and improved identification of asset maintenance projects. Its deficit rose from less than $1 billion to around $4 billion in just a few years, largely due to new findings. This increase doesn’t point to a sudden decline in conditions, but rather the maintenance backlog in a network with demanding operational requirements.

Taken together, these observations show that the QIP’s renewed focus on maintenance is necessary, but still not sufficient to offset decades of underinvestment. The appeal of new projects is that they’re visible, measured and politically rewarded. In contrast, the costs of deferred maintenance accumulate more quietly. Yet they translate into future budget pressures that often prove more difficult to manage than the predictable debt service costs of new projects—particularly when labour costs and resource availability may be more uncertain and more difficult to control in the future.

However, as mentioned at the beginning, this analysis must be interpreted with care. The surge in the asset maintenance deficit since the mid‑2010s is not just a reflection of deteriorating infrastructure but also improved identification of needs. This distinction matters for understanding the trend, but not for assessing its consequences. Regardless of how it’s measured, the asset maintenance deficit signals future fiscal pressures and difficult trade-offs that governments will eventually have to confront.

Rethinking How to Manage Public Funds

Sound fiscal management cannot be reduced to tracking the annual deficit or the trajectory of net debt. While these are vital indicators, they offer only a partial view of the government’s long-term financial position. Likewise, a steady stream of visible, budgeted projects doesn’t necessarily reflect the most efficient use of public funds.

A more rigorous approach requires accounting for the full life cycle cost of public assets—and making difficult choices about what to build, what to maintain and what to let decline. The asset maintenance deficit is a reminder that neglecting maintenance doesn’t generate savings; it shifts costs into the future, often to a time when conditions are less favourable and the budget is tighter.

Focusing on present visibility at the expense of future deterioration means accepting higher costs—not despite existing debt, but because of a failure to prioritize between new investment, maintenance and deferral. Over the long term, the sustainability of public finances depends not only on the size of the balance sheet, but on the quality of the assets it supports.