The Liberals will delay billions in planned infrastructure funds until after Canadians go to the polls next year, this week’s budget shows, underlining slower-than-expected spending at a time when the government was under pressure to spend faster.
The sluggish pace of federal infrastructure spending has been a persistent burr under the saddle of a government that rode to power on a promise to ramp up spending for roads, bridges, community centres, transit and water systems to stimulate the economy.
Tuesday’s budget showed that more than $3.8 billion from Phase 1 of the plan — which was supposed to be spent by the end of the month — won’t be out the door until at least 2021. A further $3 billion from the upcoming phase of spending won’t be spent until at least 2025, with the majority of that taking place in 2028.
And that might not be the end of it, since the budget warns of further adjustments.
The Liberals said the new numbers reflect when they expect to receive expense claims from cities and provinces. The process often creates a lag between when work takes place and when federal money is spent, and that lag time can be extended by labour strife, bad weather or other issues beyond Ottawa’s control.
A spokesman for Infrastructure Minister Amarjeet Sohi said the budget reflects that reality.
“It is not a reflection of project activity, which is well underway on the majority of the more than 4,000 projects Minister Sohi has approved, and which the Bank of Canada has noted are contributing to the country’s economic growth,” Brook Simpson said.
Conservative infrastructure critic Michael Chong said the shift in spending means continued traffic congestion in urban centres, bridges in rural Canada that won’t be repaired, and delays in renovating and building affordable housing units. He urged the Liberals to ease conditions for federal funding to help projects along.
“There is no dearth of projects out there that need funding,” Chong said. “The government needs to get a better grasp of its infrastructure programs and make them more flexible to the needs of provinces and municipalities.”
NDP infrastructure critic Brigitte Sansoucy said the first phase of spending has gone from ”an urgent, two-year plan … into a disappointing four-year plan.”
Big city mayors last month pressed the Liberals to speed up the pace of affordable housing money to help with the backlog of repairs on units, but didn’t see that happen. Brock Carlton, CEO of the Federation of Canadian Municipalities, said the budget dropped the ball on the housing file.
“There is a missed opportunity here to kick-start the social housing repair dollars so they’re later on in the cycle, and we needed them up early now,” Carleton said.
“The problem is now. The crisis is now.”
The budget did add $1.25 billion to a loan program to help finance construction of affordable rental units, adding to the $2.5 billion unveiled in budget 2016. The Liberals predict the new money will go further than the original injection: potentially 14,000 units over three years, versus the 10,000 units over five years predicted in budget 2016.
The Canada Mortgage and Housing Corporation opened the first $625 million in loans under the program to bids last year. The head of the agency has said it was over-subscribed by a factor of five, but no funding announcements have yet been made public.
The budget figures land a few weeks before the Liberals hope to sign funding agreements with provinces for $33 billion in upcoming infrastructure spending.
Provinces want the Liberals to let them use the money for projects already on the books rather than do more as the federal government wishes, arguing they lack the fiscal capacity to match new federal spending.
There are signs the Liberals may bend a bit in negotiations: Last month, Sohi said the federal government would cover a larger share of cost for Indigenous and small community projects, which could begin to create some fiscal wiggle room for provinces.
The Liberals are aiming to sign the agreements by the end of the month — the same deadline provinces have to allocate unspent cash from a fund set up by the previous Conservative government. The budget shows that just over $1 billion from Conservative funds won’t be spent until after next year’s election, with a further $2.4 billion scheduled beyond 2023.
Jordan Press, The Canadian Press