Breaking down Budget 2017
The infrastructure money train looks primed to leave the station in Ottawa, even if people aren’t quite sure when and how those dollars will be spent.
First and foremost, the Canadian Infrastructure Bank (CIB). The expectation was that details about the structure, location, and some basic information on how and where the funds would be focused was going to be included in the text of Budget 2017. It wasn’t. Instead, we received the following:
“The Canada Infrastructure Bank will be responsible for investing at least $35 billion over 11 years, using loans, loan guarantees and equity investments. These investments will be made strategically, with a focus on large, transformative projects such as regional transit plans, transportation networks and electricity grid interconnections.
To ensure that funds can begin to be invested in a timely manner, the Government will soon propose legislation establishing the Canada Infrastructure Bank.
The Government will begin a process to identify the Bank’s Chief Executive Officer and Chairperson of the Board of Directors, with the goal of having the Canada Infrastructure Bank operational in late 2017.”
A timeline has now been presented, something that wasn’t in place before, but the budget was lacking in most of the basic details on the execution of the CIB that many were expecting.
Transit was expected to be the winner of the infrastructure spending sweepstakes in the 2017 Budget, but I would hesitate to suggest that it ruled the day. Yes, the government did announce that they “will invest $20.1 billion over 11 years through bilateral agreements with provinces and territories, with provincial and territorial allocations determined using a formula based on ridership (70 per cent) and population (30 per cent).” This funding is a welcome sign, especially for the smaller cities attempting to establish a more robust transit system.
This funding did not address the needs for investment in the transit megaprojects proposed in major cities across Canada. These projects, at least, five of them, were mentioned in the budget document. But there was no funding commitment attached to them. Instead, the projects were mentioned in this context:
“In addition, the new Canada Infrastructure Bank will play a role in defining and building public transit infrastructure in Canada. As part of its mandate to structure, negotiate and deliver federal support for infrastructure projects with revenue-generating potential, the Bank will invest at least $5 billion in public transit systems.
Ambitious transit projects are expected to transform Canada’s cities over the next decade: Stage 2 of the Ottawa Light Rail Transit […], The Calgary Green Line LRT […], Metrolinx’s GO Regional Express Rail (RER) program […], The Réseau électrique métropolitain in Montréal […]. The Vancouver Broadway subway project […].”
The lack of specific funding for transit megaprojects caught the ire of Quebec Treasury Board president Pierre Moreau. Moreau was quoted in a CBC article as saying, “We are extremely disappointed and concerned that there’s no clear signal in this budget regarding the great infrastructure projects that are the rapid bus system in Quebec City, the Blue Line of the Montreal Metro and the electric train in Montreal […]”
A puzzling removal
While on the subject of transit, perhaps the most puzzling move of the federal budget was the removal of the federal transit tax credit. The tax credit, which provides the average low-income family with a credit of up to $200-$250 at tax time, comes at a time where the government is stressing the need to get cars off the road and into buses and trains.
The move was the first point brought up during Ontario Finance Minister Charles Sousa’s post-budget press conference in Toronto. Sousa was quick to distance himself from the tax credit removal, suggesting that the Ontario government is “not going to do anything to prohibit transit ridership” in the province.
Overall, the budget continued its strong investment in infrastructure, even if it didn’t provide the details that many were expecting. Record investments in affordable housing were announced, and the plans were laid out for the government’s $21.9 billion investment (over 11 years) in green infrastructure. It was clearly a win for social infrastructure in that regard, and the innovation agenda will certainly benefit from the new investments.
But with many infrastructure megaprojects dependant on investment from the federal government in order to move forward, and others awaiting details of the CIB to determine how best to move forward, the federal budget was a disappointment. Perhaps all that will change by the time the Fall Economic Statement is released when, around the same time, the structure of the CIB should be in place.
What others have said
Thomas Mueller, president and CEO of the Canada Green Building Council
“The CaGBC is encouraged to see that the federal government is investing in green building, specifically in its own portfolio, and in developing the codes, skilled jobs and renewable energy technology that will be required to support retrofitted and net-zero energy buildings. While this leadership is a strong step forward, the green building industry wants to see bolder action. The urgency of climate change demands ambitious and accelerated deployment of solutions. Building codes are an important stepping stone but at the same time, innovation toward low-carbon buildings and the retrofit economy also needs to be supported, through new mechanisms like the Infrastructure Bank. In our ongoing conversations with the federal and provincial governments, we have been working to identify and implement mechanisms to accelerate the retrofit economy, and will continue to advocate for initiatives that push the boundaries.”
Andy Manahan, executive director of the Residential and Civil Construction Alliance of Ontario (RCCAO):
“RCCAO is pleased that enabling legislation to set up the Canada Infrastructure Bank will be introduced soon. While the Trudeau government is to be commended for following through on this commitment, the budget could have signalled that a user pay philosophy for infrastructure would be applied, wherever feasible. Such a move might have entailed an admission that it would be preferable to toll, for example, Montreal’s Champlain Bridge, to recover the construction and ongoing maintenance costs for this and other trade corridors. This way, not only would government capital expenditures be reduced, but funds would also be freed up for other priorities.”
Toronto Region Board of Trade:
“The Board appreciates the clarity on federal infrastructure spending, in particular on social infrastructure, in this budget. Data on housing through the National Housing Database is a welcome and needed enhancement to Canada’s housing strategy, as transparent data on housing trends will allow municipalities to be more aggressive in meeting real market needs on zoning, approving and building new units within city limits.
However, while investments in social infrastructure are welcome, the affordable and social housing situation in cities like Toronto is urgent. We want timelines for this funding to be expedited. We are also concerned the cancellation of the public transit tax credit will increase the cost of transit for users.
The Board remains interested in the idea of the Canadian Infrastructure Bank, but we are looking for further information on its governance, structure and funding. This has the potential to help address Canada’s infrastructure deficit, notably in transportation, but details will matter.”
Jean-François Nolet, vice-president of policy and communications at the Canadian Wind Energy Association (CanWEA):
“The Canadian Wind Energy Association (CanWEA) applauds the Federal Government’s commitment to continue its transition to a low carbon economy and its recognition that doing so will provide significant economic benefits to Canada. We are pleased to see that the Federal Government will continue to collaborate with the provinces in developing and identifying green infrastructure projects that will allow the modernization of Canada’s electricity grid and the integration of clean low-cost renewable energy sources like wind energy. The wind energy industry is committed to working with the Federal Government to identify the projects that will best support the deployment, integration and optimized use of renewable power. This includes a role for wind energy in the reduction of diesel use in indigenous communities. We are also committed to collaborating with the Federal government on the development and implementation of performance standards for natural-gas-fired electricity generation. CanWEA looks forward to working with the Federal Government as it forges ahead with its commitment to achieve the deep cuts in emissions needed to address climate change while strengthening the economy.”
Oakville Chamber of Commerce
“We are concerned that trade-enabling infrastructure investments, that will boost productivity (e.g. roads, ports, bridges, airports and digital infrastructure), represent just 11% of the total $120 billion in infrastructure spending (the rest is green infrastructure, social infrastructure, etc.).”