Trudeau con­fi­dent in­fra­struc­ture spend­ing will jump-start econ­omy

The Guardian (Charlottetown) - - BUSINESS - THE CANA­DIAN PRESS

Even with the Cana­dian dol­lar and en­ergy prices at rock-bot­tom lev­els, Prime Min­is­ter Justin Trudeau re­mains con­vinced that his long-promised, big-bud­get in­fra­struc­ture in­vest­ment will be the an­swer to all short- and long-term ills.

The orig­i­nal Lib­eral plan was to di­vide $60 bil­lion be­tween pub­lic tran­sit, green projects, and so­cial in­fra­struc­ture like af­ford­able hous­ing over 10 years, with just $17.4 bil­lion ear­marked to flow dur­ing the party’s first man­date.

On Mon­day, how­ever, Trudeau sig­nalled that he is will­ing to bend the bound­aries of that plan.

“We’ve al­ways said we’re al­ways open to a cer­tain de­gree of flex­i­bil­ity in or­der to make th­ese things hap­pen,’’ Trudeau said in Saint An­drews by-the-Sea, N.B., af­ter sev­eral hours of meet­ing with his cab­i­net.

A new re­port re­leased Mon­day by the Fed­er­a­tion of Cana­dian Mu­nic­i­pal­i­ties said in­vest­ment is needed now to pre­vent “a rapid de­cline’’ in the con­di­tion of much of the coun­try’s in­fra­struc­ture, which is over­seen by lo­cal gov­ern­ments.

The an­nual re­port on the state of Canada’s mu­nic­i­pal in­fra­struc­ture showed cities weren’t spend­ing enough on up­keep, and that were that trend to con­tinue, main­te­nance costs alone would con­tinue to in­crease.

Lib­eral min­is­ters meet­ing with pro­vin­cial and mu­nic­i­pal coun­ter­parts have been warned of a ca­pac­ity gap that could mean cities and provinces don’t have enough money to cover their por­tion of con­struc­tion costs.

Not only could the tra­di­tional fund­ing model for such projects change, but so too could how much will be made avail­able to projects in the three ar­eas the Lib­er­als want to fund.

Ahead of the morn­ing meet­ing, part of a three-day cab­i­net re­treat and strat­egy ses­sion in New Brunswick, In­fra­struc­ture Min­is­ter Amar­jeet Sohi said the govern­ment is also look­ing at the shared fund­ing for­mula to see if provinces would also end up pay­ing less, which would leave the fed­eral govern­ment on the hook to pay more.

But given the chance to elab­o­rate on how far he is will­ing to bend in other ar­eas — the size of the deficit, whether it would ex­ceed his pre­vi­ous $10-bil­lion thresh­old, mov­ing up the bud­get timetable — Trudeau would only say his govern­ment would put for­ward a bud­get that is “the right one for Cana­di­ans.’’

He also talked about the ra­tio of govern­ment debt to the size of the econ­omy when asked about the $10-bil­lion deficit prom­ise from the elec­tion.

Econ­o­mists call the ra­tio a key in­di­ca­tor of the health of govern­ment fi­nances, more so than the size of a deficit. So long as the deficit con­tin­ues to de­cline, which Trudeau said he was com­mit­ted to do, the fed­eral govern­ment could run deficits of more than $10 bil­lion.

That fig­ure will be un­veiled in the Lib­er­als’ first bud­get, ex­pected in March. Trudeau said cab­i­net would de­cide the size of the bud­get and not him alone, but he had in­structed Fi­nance Min­is­ter Bill Morneau to build a bud­get that is “fo­cused on growth while re­main­ing fis­cally re­spon­si­ble.’’

Paired with the steady de­cline in the value of the Cana­dian dol­lar, the drop in com­mod­ity val­ues has de­liv­ered a fi­nan­cial one-two punch to re­source-rich provinces like Al­berta.

Bat­tered by the plung­ing price of crude, the mar­ket is now brac­ing for what ex­perts pre­dict will be a flood of Ira­nian oil af­ter the United States and the Euro­pean Union lifted eco­nomic sanc­tions against Iran.


Prime Min­is­ter Justin Trudeau and House Leader Do­minic LeBlanc lead the Lib­eral cab­i­net at a re­treat and strat­egy ses­sion in Saint An­drews, New Brunswick, Mon­day. Agri­cul­ture Min­is­ter and Cardi­gan MP Lawrence Ma­cAulay, se­cond left, at­tended with the rest of the cab­i­net.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.