OTTAWA – From roads, sewers and bridges to classrooms, office buildings and research labs, the Conservative government is proposing to pour nearly $12 billion into infrastructure projects in an effort to pump up the economy and save jobs.
But much of the spending will require matching funds from the provinces, municipalities or other partners if it’s to have the desired effect.
It may also require legislative or regulatory changes to cut red tape and ensure the money gets spent over the next two years.
Finance Minister Jim Flaherty’s budget, tabled Tuesday, foresees total federal expenditures of $11.8 billion on infrastructure by the end of fiscal 2010.
The biggest single chunk would come from a new $4-billion stimulus fund aimed at repairing and renewing existing facilities, with other levels of government expected to put up additional cash.
Another $1 billion is earmarked for a separate federal-provincial fund that will emphasize projects considered “ready to go.”
There’ll be an additional $1 billion for environmentally friendly “green” projects, $500 million for community recreational facilities, and $500 million intended specifically for projects in small towns.
Another $2 billion will be set aside to repair, retrofit and expand facilities on college and university campuses, again with matching funds needed from other partners.
Investments that won’t require matching funds include $515 million for schools, water and other services on First Nations reserves and $716 million in Ottawa-only spending on everything from new track for Via Rail to federally owned bridges, border facilities, offices and research establishments.
The spending reflects a conventional wisdom that construction and renovation are a tried-and-true way to create jobs and inject cash into a troubled economy.
“The biggest bang for the buck comes from infrastructure spending,” said Derek Holt, a senior economist with Scotia Capital.
That’s because it not only generates short-term spinoffs but also pays future dividends by providing crucial services that underpin the economy as a whole.
“The downside to an infrastructure focus is that it takes a while to get off the ground,” Holt cautioned. “By the time you get everyone onside and all the approvals in place and you’ve lined up your contracts, you’re not looking at infrastructure stimulating the economy until well into the second half of this year.”
The government hopes to speed things up with legislative and regulatory reforms that will eliminate federal-provincial duplication for things like environmental assessments.
But that proposal has already drawn political fire, with the release last week of a leaked government memo that the NDP interpreted as an effort to gut federal environmental rules.
Government officials insist that’s not the case and say they only want to streamline the process.
They also dismiss suggestions that the stimulus plan could falter if cash-strapped provinces and municipalities can’t participate in some projects.
Transport Minister John Baird, who was entrusted with the Tory infrastructure plan, has spent weeks trying to line up support from other levels of government.
Just in case, however, background documents for the budget note that, should other partners fail to pony up, some of the money intended for shared-cost projects could be shifted to projects totally within federal jurisdiction.
Officials also note that the two-year plan makes money available on a “use-it-or-lose-it” basis, meaning there will be pressure on all sides to reach agreements and get projects moving before time runs out.
–
A look at the major infrastructure projects to be financed under the federal budget:
-Up to $2 billion to repair and expand facilities at colleges and universities.
-$750 million for research facilities financed through the Canada Foundation for Innovation.
-$515 million for schools, water systems and services in aboriginal communities.
-$500 million to repair or build new community arenas, swimming pools and other recreational facilities.
-$407 million to Via Rail to improve train service in the Montreal-Ottawa-Toronto triangle.
-$323 million for repairs to federal government buildings.
-$250 million to refurbish federal laboratories.
-$200 million for dredging and other improvements to small craft harbours across the country.
-$212 million to repair Montreal’s Champlain Bridge.
-$130 million to twin a section of the Trans-Canada Highway through Banff National Park.
-$47 million for repairs to the Peace and Blue Water Bridges to the U.S., as well as several other federally owned spans.
