Prime Minister Justin Trudeau built a successful 2015 election platform around a core promise: Short-term deficits will boost the economy through a massive increase in infrastructure spending.
With less than a year to go before voters cast their judgment in the next federal election, the deficits have materialized. The promised return to balance by 2019 has not. Whether the Liberal government fully delivered on the infrastructure front remains an open question.
Now it is up to federal Infrastructure Minister François-Philippe Champagne to convince Canadians that those larger-than-promised deficits are at least contributing to new roads, transit and affordable housing.
In an interview with The Globe and Mail, Mr. Champagne said he expects to be busy in early 2019.
“I’m laser-focused on the delivery,” he said, pointing to the added incentive of ensuring construction jobs are available at a time when some provinces, such as Alberta, face economic challenges. “We want to make sure that we have projects on the go to make sure that our tradespeople will be at work this summer when construction season comes.”
Standing in front of a crane and construction workers during a 2015 campaign stop in Oakville, Ont., Mr. Trudeau outlined his plan to spend $125-billion on infrastructure over 10 years. In government, the promise increased to more than $180-billion over 12 years.
Tracking the spending is not a simple task. A Senate committee issued a report in June, 2017, that found it is spread across 32 departments and behind schedule. Bank of Canada Governor Stephen Poloz weighed in that October with a similar assessment.
"The process of money hitting the street has been slower,” he said, after releasing a report that referenced federal infrastructure spending as “persistently weaker-than-expected.”
An August report by the parliamentary budget officer is the most recent report card on the program’s roll-out. It said federal infrastructure spending “continues to be delayed” compared with the original timeline promised in the 2016 budget.
When the Prime Minister shuffled Mr. Champagne from trade to infrastructure this past summer, Mr. Trudeau’s instructions were clear.
“Your focus must be on the successful, timely delivery of our growth-generating investments,” Mr. Trudeau wrote to his new infrastructure minister in an Aug. 28 mandate letter.
One of the challenges the minister faces is that Ottawa rarely acts alone when it comes to infrastructure. Most major projects include spending from provincial and municipal governments. Approvals in Ontario, Quebec and New Brunswick were effectively on hold for parts of the past year because of election campaigns, and all three provinces elected governments with new priorities.
They may not be ready to match Mr. Champagne’s sense of urgency.
Another challenge the minister faces in getting projects moving is the Canada Infrastructure Bank. The new Crown corporation has a $35-billion budget to fund “transformational” projects that include contributions from large private-sector investors such as pension funds.
Yet, the bank has announced support for only one project to date – Montreal’s 67-kilometre REM light-rail transit system.
Pierre Lavallée, the bank’s president, said this fall that the corporation is actively engaged on a review of 10 projects and is considering dozens more. He has also said that it is hard to estimate timelines for when a project will be ready to support publicly.
While the bank was set up to make decisions at arm’s length from the government, Mr. Champagne said he is in regular contact with bank officials to discuss projects and let them know about potential investors who have shown an interest.
“I get the calls,” said Mr. Champagne, who was first elected in 2015 after a career working internationally with engineering firms. Mr. Champagne’s private-sector background included working among the global investors Ottawa is now trying to attract.
Conservative infrastructure-critic Matt Jeneroux said he hears frustration from municipal leaders across the country with Ottawa’s approach.
“It’s not just the [infrastructure] bank. Infrastructure in general is caught in this big promise with very little results,” he said. “At the local level, there’s a lot of frustrated mayors and reeves and councillors that would like their projects to get built, but unfortunately they’re tied up in this massive bureaucratic delay.”
The opposition critic expects the government will be making more frequent announcements in an election year.
Vicki-May Hamm, president of the Federation of Canadian Municipalities, said the Liberals have delivered on the 2015 campaign pledge to establish a long-term program for infrastructure spending. However, the FCM is calling for more of the money to be transferred regularly without strings attached, rather than having to apply for each project, which she said causes delays as cities wait for federal and provincial approvals.
“I can understand municipalities can’t wait to get their projects on the road, so we’re always a little bit impatient," she said.
Federal Liberals say reports of spending delays are overblown. Mr. Champagne says federal accounting rules only allow money to be transferred once a project is complete, meaning spending reports will inevitably lag the actual economic activity taking place.
To address this, Mr. Champagne approved pilot projects in Alberta, Nova Scotia and Saskatchewan to test “progress billing” that will see federal money transferred in increments as construction moves along.
He also said the size of the potential projects under consideration by the infrastructure bank mean approvals can’t be rushed.
“When you’re looking at transformative projects, usually they’re pretty complex," he said. “I think that Canadians would expect us, if you’re going to invest taxpayer money, you want to do proper due diligence."
Beyond the bank, Mr. Champagne said there is more than $20-billion worth of federal infrastructure money being spent in the economy on everything from large bridges to small projects in rural communities aimed at improving internet access. “We have about 4,400 projects undergoing as we speak,” he said. “I would say there’s not one Canadian I can think of who is not impacted by our projects. These projects are across every region in Canada.”