Infrastructure Funding In Liberals' Debut Budget Not As Advertised

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OTTAWA — The federal government is launching its ambitious plan to revamp and restore Canada's infrastructure with a lot less money than it originally promised, but is willing to pick up more of the tab for cities and provinces.

During the election campaign, the Liberals said they would add just over $5 billion in new infrastructure spending this year and a further $5 billion next year.

bill morneau budget
Bill Morneau arrives to deliver the federal budget in the House of Commons on Parliament Hill in Ottawa, March 22, 2016. (Photo: The Canadian Press)

The federal budget tabled Tuesday, however, shows that in the first year of the plan, the government will spend just $2.7 billion on green infrastructure such as water treatment plants and social infrastructure like seniors homes and public transit.

The money is part of the first phase of the Liberal spending program. The budget says the two-year, short-term plan will target the country's aging, crumbling infrastructure and help protect it from the effects of climate change, such as flooding in western Canada.

Over this year and next, the government will spend about $6.8 billion more than what's already on the books for federal infrastructure spending.

Budget documents show most of the spending in the Liberal's infrastructure plan will occur after 2019, when the next federal election is scheduled to take place.

That is part of phase two that the budget says will be "broader and more ambitious" by targeting large-scale projects that often take years to plan and start construction.

"It's also about building communities that Canadians are proud to call home."

"Investing in infrastructure is not just about creating good jobs and economic growth," the budget document reads.

"It's also about building communities that Canadians are proud to call home."

The Liberal infrastructure plan was a cornerstone of the government's election platform that promised economic spinoffs from each infrastructure dollar spent.

The budget lays out how the money will head to provinces and cities that have lobbied the Liberals for more targeted funding with fewer strings attached. Raymond Louie, president of the Federation of Canadian Municipalities said details about spending requirements will be worked out in the coming months.

He said there are a number of projects across the country that just need federal cash to get started like "transit infrastructure that is in need of refurbishment" and affordable housing in Canada's largest cities.

Jeanette Southwood, a vice-president with Engineers Canada, pointed to a small hiccup in getting projects started: "The numbers are telling us that we don't have enough engineers in the country right now."

"This is a tremendous change in policy by the federal government."

The budget shows that the government plans to cover up to half the cost of public transit projects and work on water and wastewater systems like pipes and treatment plants, evidence that the traditional funding model where cities, provinces and Ottawa each cover one-third of costs is at an end.

"This is a tremendous change in policy by the federal government," Louie said.

The federal government has no control over when those projects take place, which often means that money trickles out. There is still about $9 billion left in the government's premier infrastructure fund that the previous Conservative government started and the budget says the Liberals plan to speed up money destined for provinces and territories under the New Building Canada Fund.

The Liberals promised to give any leftover money from their new infrastructure program directly to cities through the gas tax fund, a portion of revenues from gasoline sales that's earmarked for infrastructure improvements.

For a start, the budget indicates, the government will put about $262 million in new money over the next two years into the gas tax fund from older infrastructure programs that are coming to a close with little possibility of spending the remaining cash they hold.

With files from Murray Brewster

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