PM, provinces facing road blocks
INFRASTRUCTURE EMERGES AS POINT OF CONFLICT
The Liberal government is increasingly at odds with some provinces over its sprawling infrastructure program, with provincial officials saying that a focus on “green” or other specific project types could limit Ottawa's ability to build projects following the COVID-19 pandemic.
Concerns among some provinces comes as federal Infrastructure Minister Catherine Mckenna readies roughly $3 billion in COVID-19 infrastructure spending, aimed at public health efforts like encouraging outdoor activities or providing sanitation in facilities. Provinces are broadly supportive of the funding, but say the program remains overly rigid, amounting to what one provincial official called a “public relations campaign” by the Trudeau government to prioritize the sort of projects that fit with its wider political message.
Recent differences over the infrastructure program are an intensification of what has been a years-long disagreement between the feds and some provinces over the structuring of Ottawa's $187-billion spending plans.
Provinces say they would prefer funding for basic projects like roads or waste water treatment centres, for example, while the federal program forces them to apply through specific project streams like public transit, which they say could hamper their ability to build necessary projects following the crisis.
The National Post reached out to 11 provincial and territorial infrastructure offices about the federal program, and spoke directly with five officials, who were granted anonymity due to their ongoing discussions with Ottawa. Four provincial and territorial offices responded with written comments about the program.
“The streams have been very prescriptive in what we can do with them,” said one provincial official. “It's frustrating because the province does not necessarily share the same the priorities as the federal government, especially when it is very ideologically driven like this one.”
Another lamented that Ottawa is considering a short, 18-month window for the COVID-19 infrastructure stream, saying it would provide a “ridiculously short timeline” to complete projects.
Smaller rural communities, the person said, might have little need for public transit funding, but have a major demand for new roadways and sewer systems — a need that is not always recognized under the current program structure.
“What's the point of this, aside from having a lovely public relations campaign?” the person said.
A third official said funding for COVID-19 infrastructure amounts to a repackaging of existing funds, and does not provide new funding that would help stimulate the economies of cash-strapped provinces.
“They're just moving pieces around on a chessboard,” the person said.
Ottawa is considering pitching in 80 per cent of the cost of projects for the pandemic response, up from an earlier portion of around 30 per cent. Final details of the COVID-19 package have yet to be released.
Governments have for some time urged Ottawa to remove some restraints on its Investing in Canada Infrastructure Plan (ICIP), saying they don't allow the flexibility required to meet the needs of individual communities.
“We have shared our concerns that the infrastructure priorities Canada has identified for funding through the ICIP do not match the kinds of infrastructure Saskatchewan communities most need,” a spokesperson for Saskatchewan deputy premier Gordon Wyant said in a written statement.
Provincial officials in Yukon and Nova Scotia said they have not had differences with Ottawa over the program.
“They've been very receptive to our requests for flexibility,” said a spokesperson for the Yukon infrastructure minister. Yukon's infrastructure budget under the Liberal program has tripled, from around $30 million under the previous Conservative government to $75 million today, the person said. Nova Scotia said the talks have been “very positive.”
In a written response on Wednesday, Mckenna's office said it has approved “hundreds” of applications in recent weeks under its COVID-19 infrastructure plans, saying the new stream of funding would promote “a broader range of projects that can start quickly and be built in the next year or two.”
The funding will allow for projects like expanded bike lanes as a way to enable better social distancing, for example, or for the installation of handwashing stations.
Observers in Canada have long warned against Ottawa funnelling money into specific project types, saying it should instead focus on developments that will increase Canada's economic productivity.
In a report by C.D. Howe Institute on Monday, a group of 11 academics and corporate lobbyists said they were “skeptical of the push for broad 'green' stimulus” under the Liberal infrastructure program. The report said those efforts risked “subsidizing assets like renewable generation for which market forces and carbon pricing should provide commercial incentives.”
The report also warned against forcing projects into overly tight timelines, saying that “many 'shovel ready' projects may not be the most effective use of public funds compared with transformative projects that enhance productivity or connect markets.”
One provincial official who spoke to the National Post said tight timelines proposed by Mckenna on the latest round of projects risks repeating past faults in the infrastructure program, which caused spending delays. Phase one of the ICIP program included $14 billion that was expected to be spent within a roughly twoyear window, beginning in 2016. Today, that initial $14 billion won't be spent until 2022 at the earliest, according to the 2019 budget.
Prime Minister Justin Trudeau introduced the $187-billion infrastructure program as part of a 2015 campaign promise, in which Ottawa would run budget deficits in part to fund critical projects, and to close Canada's long-standing infrastructure gap.
The Parliamentary Budget Officer, in a separate report released on Wednesday, said it was unsure whether funding under the COVID-19 stream would boost economic activity due to the depleted financial positions of the provinces. “Given the significant fiscal pressures faced by provinces and municipalities, it is unclear whether federal funding will be able to leverage new provincial and municipal money over the medium-term for new projects,” the report said.
It found that total spending under ICIP has now reached $51 billion, or roughly $2 billion less than was projected in 2019. Compared with 2016 estimates, which projected that spending would have reached $59 billion, total spending is $8 billion shy of targets.
That has in turn limited the economic impact of the program, down to 0.74 per cent of GDP, which was “primarily attributable to delays in the roll-out of the program,” the study said.
In January, the federal opposition passed a motion that called for an official audit of the infrastructure program to determine the full scope of funding. Mckenna in February said the federal government has spent $57 billion across 52,000 individual projects.
Conservative infrastructure critic Luc Berthold on Wednesday said uncertainty around the full scope of the program points to the need for an official audit.
“These failures demonstrate why it was important to have Parliament call on the Auditor General to audit the entire Investing in Canada Plan, and why it is essential that the Office of the Auditor General be properly funded in order to do their job.”
WHAT’S THE POINT ... ASIDE FROM A LOVELY PR CAMPAIGN?