August 9, 2018 by David Kennedy
Slagging slow-moving government projects and the lumbering Ottawa bureaucracy is a treasured Canadian pastime. I’m far from an exception, and enjoy heaping some well-deserved blame on Parliament Hill as often as it has it coming.
Occasionally though, I’m willing to grant the feds a bit of slack.
The slower-than-forecast flow of funds from Ottawa’s $180 billion infrastructure plan is one such case. Putting aside the fact that politicians desperately need to work on making promises they can keep, doling out billions of dollars to fix aging bridges, roads and sewers, all while ensuring public funds aren’t being misspent, is no easy task.
Ottawa has caught a lot of flak over the past few months, both from within the industry and without, over missed infrastructure spending targets and subsequent budget adjustments. For fiscal 2018-2019 alone, for instance, the spring budget delayed $896 million in new spending – about a quarter of the original total set aside for the year – reprofiling it to later in the 12-year plan. The budget did the same for six of the seven fiscal years following this one, meaning almost as much cash will be available in the final three years of the Investing in Canada Plan as in the first nine combined.
While certainly not ideal, these topline delays don’t tell the whole story.
In reality, the federal government isn’t spearheading most of the projects it’s helping to pay for. It can do little when the Canadian provinces, territories and municipalities at the helm aren’t ready to put shovels in the ground.
Meanwhile, even when construction is underway, the process for unlocking federal funds often underplays the extent of Ottawa’s involvement. Typically, once a province, territory or city starts construction on a project, they assume the full cost. The bill is only passed along to Ottawa once the lower tier government files a claim. The feds then ensure the claim is aboveboard and free up the funds to cover eligible costs.
Because of this reimbursement process, federal spending on infrastructure lags behind the actual work.
So, while Ottawa has been forced to alter its budget forecasts, this doesn’t necessarily indicate construction starts have stalled. In many cases, provinces, territories and municipalities have already begun jobs, but haven’t yet passed along the costs to Ottawa.
With a spending plan as large as this one, some delays were inevitable. Though the federal government should likely have been more realistic about how quickly it could get projects off the ground from the start, the core aspect of the plan – all $180 billion of it – remains intact. For a cyclical industry prone to boom and bust, these federal infrastructure dollars should create a degree of stability over the next 10 years.
Not to let Ottawa off the hook entirely though, it’s worth noting one major concern with the backloaded spending plan: further alterations. Much of the money earmarked for infrastructure won’t be spent until well into the next decade. More than likely the government doling it out will be headed by someone not named Trudeau. As governments change, priorities change with them. It will be up to the construction industry and other infrastructure stakeholders to ensure the funds remain on the books.
David Kennedy / Editor