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Liberals’ budget proposes $120 billion in infrastructure spending

0 698 Infrastructure

by Russell Hixson

Prime Minister Justin Trudeau's Liberals have announced a ten-year, $120-billion infrastructure plan to be rolled out in two phases according to their 2016 budget. The proposed investments, picked with a focus on long-term value, are expected to result in an eventual $29.4 billion deficit.
Liberals’ budget proposes $120 billion in infrastructure spending

Of the announced infrastructure funds, $60 billion would be new infrastructure spending. Improved infrastructure results in not only better economic activity but also quality of life improvements for Canadians, the government stated.

"It means a father will make it to his daughter's soccer game on time, a small business owner in rural Manitoba will get her website up and going, and our communities will be better places to live," said Finance Minister Bill Morneau.

The first phase of infrastructure spending includes $11.9 billion in spending to take place over five years, starting immediately. The three main funding silos are:

$3.4 billion to support upgrading and improving public transit systems over three years, funded by a new Public Transit Infrastructure Fund;

$5 billion over five years allotted to spend on water, wastewater and green infrastructure projects; and

$3.4 billion over the next five years to support social infrastructure, including affordable housing and child care.

As Trudeau warned while campaigning, the improvements would push the country into a deeper deficit while his government aims to build stronger communities and invest in both green and social infrastructure.

The 2016 budget, titled "Restoring Hope for the Middle Class," is expected to show deficits of $5.4 billion in 2015–16. It could then jump to $29.4 billion in 2016–17. Over the remainder of the forecast horizon, deficits are expected to decline gradually from $29.0 billion in 2017–18 to $14.3 billion in 2020–21. The federal debt-to- GDP ratio is projected to decline beginning in 2017–18 to the end of the fiscal horizon.

The 2016 budget also proposes money to assist municipalities with asset management. A new $50 million capacity building fund would support best practices guides to better inform building and caring for core infrastructure assets. In addition, Infrastructure Canada would work with Statistics Canada to improve data on the state and performance of government's infrastructure assets.

The plan includes $3.4 billion over five years, on a cash basis, to maintain and upgrade federal infrastructure assets like parks, small craft harbours and federal airports and border infrastructure. The money also will pay to clean up contaminated sites.

Ottawa also intends to help municipalities build. The plan provides $3 billion in municipal infrastructure project funding via the Gas Tax Fund and the incremental Goods and Services Tax Rebate for Municipalities. $9 billion in spending under the New Building Canada Fund's Provincial-Territorial Infrastructure Component and other programs will also be accelerated. As well, remaining funds from older federal infrastructure programs will be transferred to municipalities. To spur infrastructure innovation, PPP Canada Inc. would fall under the responsibility of the Minister of Infrastructure and Communities.

According to the budget, phase two of the government's infrastructure plan, intends to be a "broader and more ambitious" one which focuses on trade corridors, integrated transportation networks and a low carbon economy. This phase will be announced next year after engagement with various stakeholders.

The 2016 budget attributed its approach to recommendations from the Organization for Economic Co-operation and Development and the International Monetary Fund.

"As important as government help is, what the Canadian middle class needs most is strong economic growth," Morneau said. "That is why the government will make new investments in infrastructure from coast to coast to coast."

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