'The crisis is now': budget's trickle of infrastructure money slower than hoped

OTTAWA _ New figures in this week’s federal budget suggest billions of dollars from the Liberal government’s vaunted infrastructure program now won’t be spent until after Canadians go to the polls next year.

The sluggish pace of federal infrastructure spending has been a persistent burr under the saddle of a government that rode to power on a promise to ramp up spending for roads, bridges, community centres, transit and water systems to stimulate the economy.

Tuesday’s budget showed more than $3.8 billion from Phase 1 of the plan _ which was supposed to be spent by the end of the month _ won’t be totally out the door until at least 2021.

The second phase of spending, which is still subject to negotiations with the provinces and territories, has also seen its funding moved around. The government now says more than $3 billion won’t be spent until at least 2025, with the majority of that spending to take place in 2028.

And that might not be the end of it, since the budget also warns that further adjustments may have to be made over time.

A spokesman for Infrastructure Minister Amarjeet Sohi says the new numbers reflect when the government expects to receive expense claims from cities and provinces, a process that often creates a lag between when work takes place and when the federal money is spent.

In some cases, the government won’t receive receipts until after a project is completely finished. In other cases, projects are delayed because of labour strife, bad weather or other factors beyond Ottawa’s control.

Sohi spokesman Brook Simpson said the budget changes reflect that reality.

“It is not a reflection of project activity, which is well underway on the majority of the more than 4,000 projects Minister Sohi has approved, and which the Bank of Canada has noted are contributing to the country’s economic growth,” Simpson said.

The Liberals hope to sign funding agreements by the end of this month for $33 billion in upcoming infrastructure spending overseen by Sohi. Provinces are pushing for more leeway in how they use the money, fearing they lack the fiscal capacity to match federal spending, which is why they want to use Liberal funding for projects already on the books rather than do more as the federal government wishes.

Sohi announced last month that the federal government would pick up more of the cost for projects in small communities _ 60 per cent, up from 50 per cent _ and cover 75 per cent of costs for Indigenous projects, partly to find provinces some of that fiscal wiggle room.

The Liberals have also told provinces they have until the end of the month to allocate unspent cash from a fund set up by the previous Conservative government.

The budget shows that just over $1 billion from Conservative funds is being delayed until after next year’s election, with a further $2.4 billion scheduled for beyond 2023.

Big city mayors asked Finance Minister Bill Morneau to speed up the pace of affordable housing money to help them deal with a backlog of repairs. That didn’t happen, leading Brock Carlton, CEO of the Federation of Canadian Municipalities, to say the budget dropped the ball on the housing file.

“There is a missed opportunity here to kick-start the social housing repair dollars so they’re later on in the cycle, and we needed them up early now,” Carleton said.

“The problem is now. The crisis is now.”

The budget did add $1.25 billion to a loan program to help finance construction of affordable rental units, adding to the $2.5 billion unveiled in budget 2016.

The Liberals predict the new money will go further than the original injection: potentially 14,000 units over three years versus the 10,000 units over five years predicted in budget 2016.

The Canada Mortgage and Housing Corporation opened the first $625 million in loans under the program to bids last year, and the head of the agency has said it was over-subscribed by a factor of five.

No funding announcements have yet been made public.