OTTAWA – The coffers of Canadian provinces and municipalities will get a long-awaited boost when it comes to federal infrastructure money, but its scale and impact depends on who is counting.
Finance Minister Jim Flaherty’s math shows the federal government is investing $53 billion over the next 10 years as an extension of the existing $33-billion Building Canada plan.
“I am pleased to announce the creation of the new Building Canada plan, the largest long-term federal commitment to Canadian infrastructure in our nation’s history,” Flaherty said as he unveiled his budget in the House of Commons.
The plan includes $1.25 billion to support public-private partnerships, $14 billion for major infrastructure projects, and a $32 billion fund to build roads, bridges, recreation centres and public transit.
The funding comes as a response to a long-standing call from the stakeholders like the Federation of Canadian Municipalities.
Coupled with funding from gas tax and GST exemption, the current Building Canada money delivers annual funding of $3.25 billion. The FCM has been lobbying the government to come up with a new plan, one that last 20 years and increases the annual funding to $5.75 billion.
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They’ll get that increase eventually, but it will take 10 years.
The payout of the new Building Canada money is back-ended, with the largest impact kicking in after 2020. The combined total of the gas tax, GST rebate and Building Canada fund will reach $5.75 billion in 2023.
While the Conservatives are billing it as a historic investment, the math done by David MacDonald, a senior economist the Canadian Centre for Policy Alternatives, tells a different story.
“This is not investment in infrastructure. This is un-investment in infrastructure,” MacDonald said.
The first year of the program will actually see a $150-million drop in revenues cities and provinces get from the gas tax, GST and Building Canada funds. The numbers bounce back after two years and continue to climb after that.
“We should have it front-end loaded, not back-end loaded so we have more spending up front, we get that stimulative effect on employment and GDP growth,” he said.
The Opposition slammed the federal government for not doing enough to help cities and provinces.
NDP leader Tom Mulcair said the funding simply wasn’t enough, considering municipalities bear 40 per cent of the responsibility on infrastructure and only get eight per cent of the fiscal pie.
”It’s an impossibility. There should have been a lot more on infrastructure. Great way to create jobs, come to grips with long-standing problems in the crumbling infrastructure in our country,” he said.
But the slow ramp-up makes sense for a federal government that is consumed with slashing it $19 billion deficit by 2015, according to Sonya Gulati, a senior economist at TD Economics.
“(Infrastructure) is deteriorating and money is now being allocated and that was something municipal government and provincial governments were looking forward to,” she said.
“Although the annual amount is not exactly what they wanted, I think a 10-year plan is something they are going to be looking quite favourably towards.”
FCM President Karen Leibovici applauded Flaherty for maintaining and extending infrastructure spending.
“By maintaining and extending unprecedented investments in our cities’ infrastructure, it will spur growth and job creation while laying the foundation for a more competitive economy,” Leibovici said in a press release.
The budget also indexed the gas tax to inflation, a move FCM said will add another $9 billion for infrastructure funding over 20 years.
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