The Liberal government is adding tourism and recreational infrastructure to the types of projects that qualify for cash under a $14-billion program launched by the Conservatives that will be rushed out the door over the next two years.
The rule change, announced Monday by Infrastructure Minister Amarjeet Sohi via letters to the provinces, reverses a restriction that had been put in place by the previous government when the 10-year fund was first announced in the 2013 budget.
That program is called the New Building Canada Fund and about $13-billion remains to be spent. The Liberals are now promising to allocate all of that money within the next two years. The Liberals’ first budget also announced plans to spend $60-billion on infrastructure over 10 years in addition to what had been previously announced by the Conservatives.
The expanded criteria for the New Building Canada Fund opens the door to projects such as hockey rinks and community-centre repairs. While those projects can be highly popular and visible in local communities, they are frequently cited by economists as the type of infrastructure that does little to boost long-term innovation and productivity.
Jamison Steeve, executive director of the Institute for Competitiveness and Prosperity, a think tank primarily funded by the Ontario government that has studied and ranked infrastructure projects, said spending on health care, education and trade are the types of infrastructure that produce long-term gains in terms of high-paying jobs and increased productivity. Building a hockey rink, he said, only produces a short-term boost when looked at from a purely economic point of view.
“I just continue to hope that they also bring a lens of long-term productivity to something that’s going to create a long-term debt,” he said.
“So those things that we’re going to defray the cost of by asking future generations to pay for, I hope that there’s a thought to having economic benefit also accrue to that generation.”
In addition to tourism and recreation, Monday’s announcement also expands the program to allow for infrastructure related to culture, ferry services and municipal buildings.
The federal budget is based on a fiscal plan that forecasts $113-billion in deficit spending over the next five years, but that also slightly shrinks the size of the national debt as a percentage of Gross Domestic Product.
It is based on the Liberal platform, which promised to split the $60-billion evenly between green infrastructure, public transit and social infrastructure. The government has said that its program of spending and tax cuts will raise the level of GDP by 1 per cent in the second year and will ultimately lead to a stronger economy and stronger tax revenues.
But observers say much of that depends on the mix of infrastructure spending and whether it goes to projects that produce long-term benefits.
Yet in spite of those warnings, federal funding for community projects continues to grow. In response to criticism from municipalities that recreational infrastructure didn’t quality, the Conservative government announced the Canada 150 Community Infrastructure Fund on the eve of the 2015 election campaign.
The $150-million program saw projects rushed out the door and led to criticism from Liberal MPs, then in opposition, that it was being used as a political “slush fund.”
The 2016 Liberal budget doubled the size of that program and also gave an additional $30-million to a similar program called the Canada Cultural Spaces Fund.
Brook Simpson, a spokesperson for Mr. Sohi, said the expanded criteria is in response to requests from municipal and provincial governments, as well as the private sector.
Raymond Louie, president of the Federation of Canadian Municipalities, agreed that cities asked for extra “flexibility” in how to spend the money and said Ottawa is responding to those concerns.
“Those things can also help support the economy. Those types of investments help to attract and retain workers and that of course is important for our economy,” he said, in reference to cultural and recreational infrastructure.
“Certainly they’re different than what traditionally or historically might be considered an investment in economic development, but I think they certainly play a welcome piece to the overall puzzle of quality of life for Canadians as well.”Report Typo/Error