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Canada Federal government hopes funding change solves infrastructure spending, cost concerns

Minister of Infrastructure and Communities Francois Philippe Champagne speaks at the Vancouver Island Conference Centre during day two of the Liberal cabinet retreat in Nanaimo, B.C., on Aug. 22, 2018.

CHAD HIPOLITO/The Canadian Press

Canada’s infrastructure minister says an overhaul of how the government approves funding for projects should solve concerns about construction delays and escalating costs.

Internal documents show that federal officials have been told that the first chunk of the Liberals’ infrastructure program – $14.4-billion aimed at fixing roads, bridges, highways, transit and water systems – pushed up prices as demand for work outstripped the supply of companies available to do it in many parts of the country.

During a late-2017 meeting of federal, provincial and territorial infrastructure ministers, the provincial ministers noted some municipal projects were “way over budget” – a problem because federal infrastructure programs don’t normally cover cost overruns after funding is approved. (The Canadian Press obtained notes from the meeting under the Access to Information Act.)

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In response, the government has agreed that for the rest of the winter, federal officials will sign off on plans so money and work are ready to roll come spring, which Infrastructure Minister François-Philippe Champagne says will finally align bureaucratic processes with Canada’s construction season.

“If you don’t give the answer at the right time in the calendar year, you might delay a project by 18, 20 months,” Mr. Champagne said recently during a wide-ranging interview.

“It’s about doing things better and smarter,” he said, adding later: “I know that may sound very logical, but trust me, it might not always have been the case.”

The backroom change is one Mr. Champagne hopes will address public concerns that cities hold off work until they are sure the Liberals will chip in money, which also worsens cost overruns.

Mr. Champagne said a pilot project to run next year with Nova Scotia, Alberta and Saskatchewan will test making payments when projects hit particular milestones, as opposed to waiting to reimburse municipalities only after they submit receipts.

The idea, he said, is to see if milestone payments put government accounting “more in line with the impact and the percentage of completion.”

Under the Liberals, planned federal spending on new roads, bridges, rail projects and water systems has risen to $186-billion over 12 years. Provinces, territories and cities are expected to put up varying percentages of project costs, with municipalities paying the smallest share.

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Mr. Champagne said there likely won’t be any change to lessen the share cities have to pay for projects, noting 10-year funding agreements with provinces have set the rules for the next decade.

As 2018 comes to a close, Mr. Champagne said there are some 4,400 projects worth $50-billion on the go, of which about $20-billion is from federal investments – a word the Quebec MP used often during the roundtable interview.

“I’ve banned the word ‘spend.’ I said, we don’t spend, we invest, because if you look at the outcomes we’re going to provide, those are all investments,” he said. “We need to move from numbers to impact.”

The government has been criticized for the slower-than-anticipated pace of infrastructure dollars leaving the federal treasury.

Previously, government officials have quietly suggested they weren’t overly concerned about delays in some projects funded through the first tranche of the Liberals’ infrastructure program because voters would see work under way around election time next fall.

But the Liberals told the late 2017 meeting with provinces and territories that they were “getting pounded” by the opposition and media over the issue. They pressed lower levels of government to report on progress faster so federal officials could put those details out to the public.

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The documents also show concerns from Indigenous communities and territorial governments about the reporting requirements, which require project proponents to detail the jobs created by federal dollars.

Mr. Champagne said he has met with Assembly of First Nations to look at ways to ease reporting requirements for Indigenous communities.

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