Ottawa has decided to allow municipal governments to add some last-minute projects to their stimulus list, since some bids for the federal government's massive infrastructure plan are coming in well under budget.
“We are monitoring projects on a regular basis with the provinces. Where tender prices have come in under budget, we have recycled that money to create even more jobs,” said James Kusie, spokesman for Transport and Infrastructure Minister John Baird.
But there's a hitch in the effort to recycle funds.
The new projects won't get any extra time to come to completion. Like all the projects funded by the $16-billion federal stimulus money, Ottawa will pay the bills only up until March 31, 2011.
So it's not clear how many cities will actually take advantage of the flexibility.
Liberal critic Gerard Kennedy says it's too bad Ottawa is allowing this flexibility only recently.
“Here we are most of the way through the construction season. If you're going to do something to incent people to save money, you do it at the beginning of the process,” he said.
“If they'd told them earlier, they [municipalities] would have been tough on the bidders.”
In Alberta, Ottawa has found $67-million in unused funding, and has reallocated it to support an additional 27 projects, Mr. Kusie said.
Federal officials said they are in the midst of recycling some funding in Quebec and other provinces as well, but don't know how much take-up they'll have because the March 2011 deadline looms large. Indeed, the deadline for some smaller projects is even earlier, December 2010.
Already many municipalities are complaining that the deadline is too stiff.
Cities rushed to have all their stimulus applications sent in to Ottawa to meet a federal Jan. 31 cutoff earlier this year, imposed so that all the stimulus work would be wrapped up by next March.
Now construction is in overdrive, and many municipalities say they're straining to get everything done at once, without cutting corners or extending contracts at their own expense.
In Laval, Que., for example, the city wanted to do paving work in two stages to allow for a period of freezing and unfreezing, and give the project a longer life, Mayor Gilles Vaillancourt said recently.
“This standard cannot be followed if the deadline of Dec. 31, 2010, is to be met,” he said in a recent parliamentary hearing.
The Federation of Canadian Municipalities, the Union of British Columbia Municipalities and the Union des Municipalites du Quebec have all asked the federal government to show some flexibility on the March 2011 deadline.
“When delays, as were mentioned, are caused by forces beyond a community's control, governments need to use common sense to make sure the project is finished and costs are shared fairly,” said FCM president Hans Cunningham at the hearing.
Generally, the cities want Ottawa to make allowances on a case-by-case basis so that municipalities or contractors aren't left paying for events they can't control.
In Quebec and in British Columbia, in particular, many projects got off to a late start. Officials in Quebec blame municipal elections last fall for the delay, and officials in British Columbia blame the provincial election last spring.
Ottawa is still finalizing details for approvals of some Quebec water and sewer projects — even though the funding cutoff for those projects is December, earlier than other stimulus programs across the country.
But Ottawa has remained steadfast in its insistence that the March deadline is set in stone. It will allow cities to send in invoices for 90 days after the end of March, but only for work done before that date.
The deadline serves a dual purpose for the federal government. It forces all the construction investment to be made while the economy is still recovering from recession. And it cuts off funding at the point when Ottawa wants to start eradicating its deficit.
The stiff deadline has indeed done the job it was supposed to do, says Alex Carrick, chief economist for Reed Construction Data Canada.
The tough talk from the federal government spurred municipal and provincial governments, as well as contractors, to act immediately — at the very time when the recession-riddled construction industry needed the most help.
“Just the thing of setting the target of March of next year, they really did bring that work forward. They did succeed,” Mr. Carrick said.
While there are signs the economy is recovering and construction, especially in building homes, is on an upswing, building activity is still well below pre-recession levels, Mr. Carrick added.
“The work is being done right now, and the private sector is not anywhere near coming back.”
There is no way to measure exactly how successful the $16-billion in stimulus funding has been at reviving the economy. No one is counting jobs or growth created by the spending, and governments use theoretical models to estimate the impact.
But institutional construction starts — where most of the stimulus money goes — are up 161 per cent so far this year, compared with a year earlier, Mr. Carrick's research shows.
And activity in the institutional realm is helping to make up for the major lack of activity elsewhere in the construction industry, he said.
“It made a very big difference having these government projects out there.”
