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The Globe and Mail

End of stimulus program produces construction scramble

Finance Minister Jim Flaherty tours the Art Gallery of Ontario's Weston Family Learning Centre, a construction project backed by stimulus cash.

The Globe and Mail

Darryl Hickie says the recent string of hot days is finally drying up the muddy, flood-soaked construction sites scattered across Saskatchewan that have put dozens of stimulus projects behind schedule. Mr. Hickie, the province's Minister of Municipal Affairs, knows the pressure is on: His government and the cities and towns under his watch risk having to pay Ottawa's share of the tab if all the projects don't finish before winter.

"We're not panicking yet," said Mr. Hickie, who estimates about $13-million worth of projects are at risk of missing the deadline. "We are hopeful Mother Nature co-operates and we have an extended construction season."

A new report from Parliamentary Budget Officer Kevin Page, released Monday, offers some context to the national construction scramble. It warns that as of March 31, 2010, only 24.5 per cent of the projects approved as part of the two-year, $4-billion Infrastructure Stimulus Fund were complete. And the federal government is standing by its use-it-or-lose-it warning that it will pull its share of stimulus projects that fail to wrap up by Ottawa's deadline of March 31, 2011.

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According to the PBO report, an optimistic projection would see all projects finished on time; a middle scenario would see 936 projects unfinished by the deadline resulting in $293-million, or 7.3 per cent of federal infrastructure stimulus money, going unspent. A pessimistic scenario would see 1,814 projects missing the deadline, resulting in $500-million - or 12.5 per cent - of the infrastructure stimulus lapsing.

The projections are based on an economic model created by the PBO. The report notes that because there is a gap between the actual start of some construction projects compared to when they were initially projected to begin, there is a risk that some projects will not meet the deadline.

Prime Minister Stephen Harper said such speculation is "premature."

"Generally speaking, we're pretty with happy with how the projects are proceeding," he told reporters following an event in Vancouver. "At the moment, this is not a significant concern, but we're obviously monitoring our partners very carefully as they move forward with rolling out these projects."

Federal officials added that Mr. Page's numbers fail to account for the significant amount of construction taking place this summer.

Finance Minster Jim Flaherty stressed the need to turn off the taps on schedule as he played down concerns about the deadline.

"We want to end the stimulus," he told The Globe and Mail in Toronto, where he toured the construction of the Art Gallery of Ontario's new Weston Family Learning Centre, a project that received $7.5-million in stimulus funding and is currently on schedule. "We need an exit strategy: [March 31, 2011] isn't an arbitrary date. This was, from the beginning, two years. That was our commitment in the G20, in the leadership of the G20."

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Most infrastructure projects now under way are being financed through a mix of municipal, provincial and federal money.

Ottawa set the deadline as a way of ensuring the stimulus money entered the Canadian economy when it was needed most, rather than after the economy had recovered from the recession.

Liberal MP Gerard Kennedy said there is no reason why the Conservatives could not be more flexible in responding to construction delays, accusing the Tories of wanting to "dine and dash" on their stimulus pledges.

"We're going to get a car crash at the end of the program, which could be avoided," he said. "I don't know if the government really believes it can simply pocket the money and look like good fiscal managers while local rate payers pick up the difference. I don't see how they really are going to get away with it."

With reports from Ian Bailey in Vancouver and James Bradshaw in Toronto

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