Cities get decade-long promise
New building fund, gas tax revenues to support roads, transit, water, schools
OTTAWA— The Conservative government provided Canadian cities with more predictable funding by renewing an infrastructure deal for a full decade and increasing the amount of money it transfers to municipalities through the federal gas tax fund.
“Infrastructure drives productivity and contributes to long-term prosperity. We have done a great deal to support infrastructure renewal — more than any other federal government — but there is much left to do,” Finance Minister Jim Flaherty said in his speech on the annual federal budget Thursday.
A renewed Building Canada Fund worth $14 billion over 10 years will replace the existing seven-year deal, worth $8.8 billion, set to expire next year. It will give provincial and municipal governments time to plan projects and figure out a way to match the funding.
“This is the longest-term plan we have ever seen with a federal government, so it is good news,” Karen Leibovici, president of the Federation of Canadian Municipalities, said Thursday.
The renewed program will include a $4-billion fund meant to support infrastructure projects of “national significance,” especially those that lead to the creation of jobs and economic growth, such as public transit and highways. About $155 million of this money will go to improving infrastructure for First Nations communities over 10 years.
The other $10 billion will go to a wider range of projects of “national, regional and local significance,” including waste water, drinking water, Internet connectivity and broadband service, and infrastructure at colleges and universities related to advanced research and teaching.
The Building Canada Fund begins with $210 million in fiscal 2014-15 and ramps up to a final amount of $2.1 billion annually beginning in fiscal 2021-22.
The fund is part of a package of $53.5 billion in infrastructure money for cities, provinces and territories over 10 years, beginning next year.
Most of the rest is funding that already exists, but the budget does commit to indexing the federal gas tax fund, currently set at $2 billion annually, at 2 per cent per year starting in fiscal 2014-15, increasing the municipal transfer in increments of $100 million. Federal legislation made the gas tax fund permanent in 2011.
The Conservative government is also bringing more flexibility to that fund by expanding eligibility criteria to include infrastructure projects such as highways, airports, Internet connectivity, disaster mitigation, tourism, culture, sports and short-line rail.
The budget also continues the GST rebate for municipalities, now worth about $1 billion annually, for 10 years.
And the government is replenishing the P3 Canada Fund for five years, to provide a total of $1.25 billion for projects built and maintained through public-private partnerships.
The budget announced a further $10 billion over 10 years for federal infrastructure assets, including $25 million over three years for the Windsor-Detroit International Crossing project, $113 million for VIA Rail and $19 million this year to improve highways and bridges in national parks.