Federal government gives cash boost to municipalities as infrastructure plan stalls

Thestar.com
March 20, 2019
Alex Boutilier

Ontario municipalities will receive an unexpected $819.4-million election-year cheque from Ottawa as the Liberal government seeks to speed up the roll-out of its signature infrastructure plan.

Finance Minister Bill Morneau’s 2019 budget includes a one-time $2.2 billion transfer from the federal gas tax fund to cities and towns across the country to address “serious infrastructure deficits” and the “short-term priorities” of municipalities and First Nations communities.

Eglinton Crosstown construction near Kennedy station. The federal budget will see Ontario municipalities share roughly $1.64 billion this year for infrastructure projects like the Crosstown.

The move effectively doubles the federal government’s transfers through the gas tax fund for 2019-20 to $4.4 billion. That means a roughly $1.64-billion share for Ontario municipalities this year.

Toronto is expected to see a large portion of that funding, which Morneau dubbed a “municipal top-up,” although Finance Canada officials could not provide specific figures Tuesday.

A government official, not authorized to speak on the record, said there are three main goals: to provide a cash injection to address the softening economy, to make sure municipalities have funds available to address urgent needs, and to address the fact it’s taking longer than anticipated to work with provinces to get infrastructure money out the door.

“What we’ve seen is we’ve not been able to get as many projects done in some places, places like Ontario, Saskatchewan, Manitoba and New Brunswick as we’d like,” Morneau told reporters at an afternoon press conference, naming the provinces currently run by conservative governments.

“So we put in a municipal infrastructure top-up to make sure that more projects get done across our country. We’re going to work with people who want to work with us to make sure that happens.”

The “Investing in Canada Plan” was one of the Liberal government’s signature policies after taking power in 2015 -- a $95.6 billion, 12-year bump in infrastructure spending meant to spur economic growth.

According to Budget 2019, phase two of that infrastructure plan has stalled.

“The pace of spending under the Investing in Canada Plan has been slower than originally anticipated,” the document reads.

“(Reasons for) that include delays between construction activity and receipt by the government of claims for payment, and some jurisdictions being slower to prioritize projects than expected.”

Officials said the government has made a political commitment that any funds that go unused in one year will remain dedicated to infrastructure projects when shovels can go in the ground.

But even allowing for the delays, Finance Canada officials estimate that the Liberals’ infusion of infrastructure cash to date has had a measurable effect on national GDP growth. The department estimates that the funding in phase one and phase two of the infrastructure plan will boost real GDP by 0.4 per cent by 2020-21, which they translate into 42,000 jobs “created or maintained” by that year.