Canada Redirects Federal Funds to Fast-Track Stimulus Projects
Canada is redirecting 10% of an estimated $25-billion federal infrastructure fund earmarked for major transportation and other large projects to smaller jobs such as school and hospital retrofits as a quick stimulus for the country's COVID-19 hit economy.
Minister of Infrastructure and Communities Catherine McKenna last month announced plans to fast-track the funds to support projects in provinces, territories and indigenous communities across the country.
The fast-track project funding plan, called “Covid-19 resilience stream,” will include funds for upgrades to hospitals and long-term care homes to deal with social distancing requirements, school rehabs and community improvement projects.
Federal officials say they will also consider mobile and cellular infrastructure projects in rural areas, and “disaster mitigation and adaptation projects, including natural infrastructure, flood and fire mitigation, tree planting and related infrastructure.”
John Gamble, president and CEO of ACEC/Canada, noted that while the smaller projects are needed, they don’t typically generate tax dollars.
“This is welcome news as far as it goes,” he said. “But it is more of a resilience package than an economic stimulus package. We need both.”
The program also comes as Canada’s large construction industry attempts to bounce back after taking an historic hit this spring amid federal, provincial and municipal coronavirus lockdown measures.
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Statistics Canada reports that the industry is pushing to recover from a record 46% spending plunge in April. The residential sector saw the biggest decline in spending, dropping more than 49%, with commercial and other non-residential building activity down by nearly 39%.
Ontario and Quebec saw the two biggest declines in construction spending, at $2.4 billion and $1.8 billion, respectively.
Quebec is set to take up in mid September its own stimulus legislation that could accelerate start of a designated list of major construction and infrastructure projects in the province, say attorneys Alexandre Fallon and Emily Lynch at Osler, Hoskin & Harcourt LLP
Facing opposition, the bill failed to pass before the legislative session ended for the summer. While still subject to change, the legislation proposes to extend certain contract authorization and project funding deadlines.
Likewise in Ontario, the government introduced an omnibus COVID-19 recovery package with "significant tools for the construction and infrastructure industry, which have the potential to increase the speed and efficiency with which projects can move from concept to completion," say attorneys Catherine Doyle and Mark Johnson at Blake, Cassell & Graydon. That also is set for more refinement this fall.
Jobs in Canada’s construction industry, a leading economic indicator, rose 2.5% in July after a 5.8% gain in June. By the end of July, construction employment increased to 91.6% of its February pre-COVID-19, level, according to Statistics Canada.
While the federal government’s new virus resilience fund is aimed at relatively smaller projects–with a $7.5 million cap- it could partially make up in speed what it lacks in volume.
The fund money is set to hit the street considerably faster than would happen for larger projects, with a “streamlining of approvals for the large volume of projects that are expected to be launched and advanced in the short term,” said Lama Khodr, a spokesperson for Infrastructure Canada, in an email.
