A shrinking budget deficit is usually good news, but a drop in federal debt in Canada is raising concerns over delays in government efforts to funnel infrastructure money into projects. The country’s federal deficit is poised to drop by $1.1 billion, mainly due to government delays in keeping up with ambitious infrastructure spending pledges, says a report by the Parliamentary Budget Office. Only about half of the $2.9 billion budgeted for infrastructure in 2016-2017 actually got out the door.
The report comes as the government prepares to release in March its budget for the coming year; it previously pledged to spend more than $142 billion over the next decade on everything from new roads to affordable housing. “There is some anticipation and reservations about how quickly the dollars are getting to the projects,” said Matti Siemiatycki, an associate planning professor at the University of Toronto.
But more infrastructure work is actually taking place than the federal government is credited for, says Brook Simpson, a spokesman for the federal infrastructure ministry. The federal government only reimburses municipalities on public works projects after construction is finished. “The reality is that information our partners have provided shows that the vast majority of projects are underway,” he says. Chris McNally, chair of the Canadian Construction Association, agrees, but wants myriad infrastructure initiatives already in place to be consolidated. Each pot of money includes its own restrictions and approved uses, requiring provinces to sign agreements with the federal government on how infrastructure dollars are spent. The multiyear plans tend to overlap, he says.
The new Canada Infrastructure Bank will start investing in projects by year-end, with plans to leverage $27.7 billion in federal dollars into hundreds of billions in private capital. Montreal’s $5-billion light-rail project, which selected contractors earlier this month, is considered a top prospect, says Siemiatycki. Quebec’s Caisse de dépôt pension fund is overseeing the project and providing $2.3 billion in financing. With heated debate in Parliament last year over need for the bank, “all eyes are going to be on what that institution’s first moves are,” he says. Montreal also just announced a plan to spend another $5 billion on road, transit and water projects in the next three years.