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Strings attached to infrastructure funds

From Wednesday's Globe and Mail

OTTAWA — Ottawa will pump $12-billion over the next two years into infrastructure projects from bridge repairs to hockey rinks, but Canada's cities warn that many of the projects will not get moving this year unless there are rules to ease the impact on municipal budgets.

The federal budget calls for provinces to pony up $9-billion in matching funds – plus a still-unspecified sum from towns and cities – and imposes a “use-it-or-lose-it” threat that the funding will disappear if the projects are not under way within two years.

In addition to those shared-cost projects, the federal government will spend $515-million on decrepit schools and water-treatment facilities in aboriginal communities, and pump money into a long list of the infrastructure it owns, such as the Peace Bridge connecting New York State and Ontario and Via Rail lines between Montreal and Toronto.

Finance Minister Jim Flaherty touted the package as “one of the largest infrastructure building projects in our country's history.”

But Liberal Leader Michael Ignatieff said one of the key tests of this budget is whether the plan will become reality: “Infrastructure is key to stimulus. Are they going to get the money out the door?”

Canada's municipalities have complained that billions of dollars already allocated from Ottawa's existing seven-year, $33-billion infrastructure program have not been spent because of delays in negotiating program details with the provinces, and red tape in approving projects.

That program requires municipalities to pay one-third of the cost of their infrastructure projects – and they warned that many towns are too cash strapped to do so right now.

While Tuesday's budget said Ottawa will pay “up to 50 per cent” of the cost of projects under the new funds, Transport Minister John Baird said that will apply to provincial projects such as highway repairs, while towns will still have to pay one-third of the cost of municipal projects.

“There's still a lot of things to clarify,” said Jean Perrault, mayor of Sherbrooke and president of the Federation of Canadian Municipalities. He added most towns have committed all they can to infrastructure for this year.

“Asking municipalities today to increase infrastructure spending in 2009 is a tall order. And it's not a quick way to put people to work.”

But Mr. Baird said that the budget offers municipalities a $2-billion fund for low-interest loans, and said he is sure many will be willing to pay a third of a project's cost. “I am confident that we will have to turn down projects,” he said.

“I would hope that we'll be able to see shovels in the ground for some of the projects this spring,” Mr. Baird said.

Eager to reassure people that the money will be put to work soon, Mr. Flaherty even rhymed off a list of “priority” infrastructure projects that are nearly ready to go, such as PEI's Summerside Wind Energy Project or refurbishing Toronto's Union Station, but most were already in the pipeline under the existing infrastructure program.

The provinces had clamoured for increased infrastructure spending, and Ontario Finance Minister Dwight Duncan and B.C. Premier Gordon Campbell said they expect to spend their share of matching funds.

The biggest infrastructure sum in Tuesday's budget was placed into a two-year, $4-billion “infrastructure stimulus fund” to repair provincial or municipal infrastructure such as roads or sewage systems. Another $2-billion will be spent to repair university and college facilities.

But the budget also included a few items Canadians are expected to notice near them: A $500-million boost to infrastructure funding for small communities with projects that are ready to go, and a $500-million plan to upgrade recreational facilities such as municipal hockey arenas, tennis courts and swimming pools.

In addition to the shared-cost programs, Ottawa will embark on its own revamp of federal infrastructure, including some high-profile projects and, in theory, construction on those could start sooner – within months.

Montreal's aging Champlain Bridge, an overburdened span to the suburban South Shore, will receive $212-million for repairs. Two border bridges, the Blue Water Bridge in Sarnia and Peace Bridge in Fort Erie, Ont., will get up to $15-million. And other federal bridges will get a pot of $42-million.

Via Rail will get $407-million to update rail lines in the Montreal-Ottawa-Toronto corridor to upgrade passenger service. Sections of the Trans-Canada Highway running through provincial parks will be twinned.

The budget also sets aside $515-million to build and repair decrepit schools, water-treatment plants and other community-service infrastructure in aboriginal communities – the kind of spending that governments have for years conceded is needed, but that is getting fast-tracked because of a need for economic stimulus.

“These are, quite literally, nation-building projects,” Mr. Flaherty boasted in his budget speech.

And amid the long list of so-called shovel-in-the-ground, bricks-and-mortar infrastructure projects on the Conservatives' list, one big-ticket virtual infrastructure project was also funded: a $500-million injection to the Canada Health Infoway to fund projects to transfer Canadians' health records to electronic formats.

The government's budget documents promised that the plan would not only improve the efficiency and quality of the health-care system, but also create “thousands of sustainable, knowledge-based jobs throughout Canada.”

A plan for troubled times

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