Thomas Walkom: The case of the missing infrastructure money
In 2015, Justin Trudeau won power on a promise to build infrastructure.
Stephen Harper’s Conservative government had already committed billions of dollars to projects, such as roads, sewers and public transit. Trudeau’s Liberals pledged to commit billions more.
They argued that infrastructure was economically necessary and that it was worth going into debt for.
Hardly a week went by in the 2015 campaign without Trudeau showing up somewhere, surrounded by people in hard hats, to deliver the gospel of infrastructure.
Eventually, enough Canadian voters agreed with the Liberals to give them a majority government.
But as the pesky Parliamentary Budget Office keeps reminding us, there is often a gap between promising and delivering. Last week, the PBO issued a report pointing out that — thanks in large part to provincial government recalcitrance — there has been less to federal Liberal infrastructure spending than meets the eye.
In effect, the PBO says, the wily provinces have hosed the feds.
Infrastructure spending is one of those shared jurisdictional endeavours that bedevil Canada. Provinces and municipalities are responsible for things such as roads, bridges and subways. But Ottawa controls a good chunk of the tax revenue needed to build and maintain them.
In 2016, Finance Minister Bill Morneau ushered in what the Liberal government now calls its Investing in Canada Plan, a scheme to spend $188 billion on infrastructure over 12 years. To qualify for funds from this program, provinces and municipalities were required to pony up a chunk of money themselves.
According to the PBO, for the first two years of the program municipalities played fair. The five cities it looked at — Toronto, Montreal, Edmonton, Calgary and Ottawa — not only paid their share of infrastructure money but in some cases spent more.
For the provinces, however, the story was very different. The PBO calculates that provinces ended up spending $3.8 billion less on infrastructure between 2016 and 2018 than they would have had there been no federal program.
And they spent $5.4 billion less than the PBO calculates they should have if they were serious about meeting the terms of the federal infrastructure scheme.
How exactly this happened is unclear. The PBO says the provinces may have simply used the federal money to displace their own spending.
Or they may have compensated for their participation in jointly funded projects by postponing or cancelling others that were their sole responsibility.
In any case, the PB0 says, the results should come as no surprise. Even as the federal government was publicly ramping up its planned infrastructure spending, the provinces were equally publicly scaling back theirs.
Among other things, infrastructure spending is supposed to create jobs. The PBO says this didn’t quite work out either. It calculates that the provinces’ failure to adequately match federal funding cost between 7,500 and 8,100 jobs in the 2016-17 fiscal year alone.
This is not the PBO’s first look at federal infrastructure spending. An earlier report noted that it was taking an undue amount of time to roll out the money. As well, the infrastructure plan itself is designed so that most of the proposed spending is set to take place far in the future — meaning that it may never occur at all.
None of this is meant to disparage infrastructure spending. Sewers and roads are necessities. But it is a reminder that when it comes to government, nothing is simple.
It is easy to promise to build something. It is more difficult to get it built. On the eve of yet another Morneau budget, this is worth keeping in mind.
Thomas Walkom is a Toronto-based columnist covering politics. Follow him on Twitter: @tomwalkom