Federal Infrastructure Minister Amarjeet Sohi talks with reporters at a cabinet retreat at the Algonquin Resort in St. Andrews, N.B. on Sunday, Jan. 17, 2016.Andrew Vaughan/The Canadian Press
Canadian Infrastructure Minister Amarjeet Sohi said the federal government is considering funding extensive repairs to buildings, pipes and other structures across the country to kick-start a "two-phased approach" to infrastructure spending.
In his first speech as minister, Mr. Sohi told a Board of Trade audience in Toronto on Thursday that the initial phase of the multibillion-dollar infrastructure spending plan would lay the foundation for the rest of the decade. He later added that the intention is to boost the economy this year.
Repair and modernization of existing infrastructure is an area Mr. Sohi thinks would be of benefit to communities and to the economy over all – keeping people employed and adding new workers. It's also an area where capital can be quickly deployed. The government plans to fund $20-billion in infrastructure projects over the next two years. Mr. Sohi estimated that each $1-billion spent on infrastructure would directly create about 18,000 jobs.
"We recognize that there is a backlog of deferred maintenance that has been ignored for decades," Mr. Sohi told reporters after the speech. "But that does not mean that we will not support new projects, if there are projects out there that are worthy."
The Liberal government pledged during the election campaign to hike spending on infrastructure by $60-billion over the next decade. In combination with previously promised spending, that would bump the total federal budget for infrastructure up to about $125-billion. Mr. Sohi's mandate focuses on three key areas including public transit, social infrastructure such as affordable housing, and "green" infrastructure projects such as those that support clean water and the environment.
Since the election, Prime Minister Justin Trudeau has touted infrastructure spending as a way to boost the economy and generate jobs. That message has intensified as the country grapples with a diving loonie, global market volatility and the falling price of oil.
Finance Minister Bill Morneau is also holding infrastructure spending up as an important piece of the federal budget. And when Bank of Canada Governor Stephen Poloz stood pat on the overnight interest rate of 0.5 per cent Wednesday he indicated that the budget was a key factor in that decision, saying that "the likelihood of new fiscal stimulus was an important consideration."
Provinces and municipalities have long lists of projects that they would like to see completed, from ambitious new commuter rail lines to repairing old roads.
One challenge for the government is to find a balance between immediate-term infrastructure spending to develop "shovel-ready" projects that get money to work quickly, and the major longer-term projects that will take years to develop, but will likely have a greater economic impact. "It's not enough for a project to be shovel ready; a project needs to be shovel worthy as well," Mr. Sohi said.
The framework for selecting those projects is still being developed as consultations with municipalities continue, Mr. Sohi said. But he identified some critical areas, including repairing water and waste-water systems to improve health, communities and the economy.
Drinking-water pipes and storm-water maintenance are among the most underfunded projects identified by the Canadian Infrastructure Report Card, released by the Federation of Canadian Municipalities this week.
Money will reach projects after the budget has passed, Mr. Sohi said. "We will start getting more out to the communities as quickly as possible. My goal is to insure that we invest in the next construction season. The last thing we want to do is lose another construction season," he said, noting that the last season had been lost.