Alberta municipalities say it’s time for infrastructure spending increases

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Alberta municipalities are calling for new infrastructure spending to stimulate the struggling provincial economy, but there is apprehension ahead of the Alberta and federal budgets that restraint will win out.

Phrases like "shovel-ready" are back on the lips of municipal leaders as they attempt to revive some of the thinking that prevailed during the depths of the recession that hit six years ago.

In an interview, Calgary Mayor Naheed Nenshi said that with current low interest rates and many Alberta construction workers facing unemployment, it makes sense to speed up and increase infrastructure spending.

"Build it while it's cheap and while people are looking for work," Mr. Nenshi said. "Because what we saw in '08-09 is that if you do stimulus right, it really works."

This week's Saskatchewan budget included a significant hike in infrastructure spending that the government says is a record high in terms of money for areas such as schools, roads and public transportation.

But it is not clear whether Alberta will follow that lead. The budget scheduled for release on March 26 will be the first official accounting of just how badly the plunge in oil prices by more than half since last summer has affected the province's finances.

Alberta did announce an extra $400-million earlier this month for infrastructure from the current year's budget, but municipalities say it is not clear whether that is new money or already promised cash that has been moved up.

Next week's budget will include the province's capital plan, which will show how infrastructure priorities have changed.

No date has been set for the federal budget, but many economists say Finance Minister Joe Oliver has virtually no room for new short-term spending in light of the slowing economy and the Conservative government's pledge to show a budget surplus in 2015-16.

Recession-era stimulus spending helped send Ottawa's finances into deficit, and the government is gradually moving back toward balance.

Mr. Nenshi says the Conservatives should re-consider their focus on returning to surplus.

"Times have changed, and I think Canadians would forgive them if they were to say: 'Look, the debt that we're taking on is debt at historically low interest rates to build really important stuff,'" he said. "I think citizens would give them permission to do that. I'm just not sure they've heard that message."

Saskatchewan Premier Brad Wall says Ottawa needs to increase its Building Canada Fund for infrastructure, but cautions against federal deficit spending.

"Infrastructure spending should not be stimulus for that reason alone. I don't think that's wise economic policy, especially if it results in deficits," he said in an interview.

The federal government is not tipping its hand on whether further infrastructure spending is in the works.

"I think it's important to highlight we're making record investments now," said Conservative MP Peter Braid, the parliamentary secretary to Infrastructure Minister Denis Lebel.

Al Kemmere, who represents rural communities as president of the Alberta Association of Municipal Districts and Counties, agrees Ottawa should increase infrastructure spending. However, given the state of Alberta's finances, he said he would be happy if it simply holds the line.

"We're looking for status quo as much as anything, hopefully," he said. "Because if we cut back in infrastructure, we're losing an opportunity to provide one sector of stimulus for the economy."

A report released on Thursday by Toronto-Dominion Bank urges the province not to "slash and burn" its way out of deficit and warns against cuts to infrastructure or transfers to municipalities.

TD Bank Financial Group deputy chief economist Derek Burleton said infrastructure spending could address long-term needs while providing short-term stimulus.

"It would provide a bit of an offsetting boost to the economy at a time when it's quite weak," he said. "You still want to spend infrastructure wisely. You want to pick your spots."