Budget watchdog warns slow infrastructure funding puts economic stimulus goals at risk

A new report from Parliament’s budget watchdog says the federal government is well behind not only on spending infrastructure money, but also on identifying projects on which to spend it.

The report released this morning from the parliamentary budget office says that of the $13.6 billion in infrastructure money slated to be spent between 2016 and 2018, departments have only identified $4.6-billion worth of projects.

The report says departments have committed to spending all the allocated money by next year, but the data show “there remains a significant gap” to meeting that target.

It means there is a serious risk of the government not realizing its economic growth projections, which would have an impact on federal finances.

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The report also takes the government to task for its transparency on spending, saying the Liberals have not provided any performance measurement framework to make sure the money is meeting its intended goals.

The report comes just as the government and the Federation of Canadian Municipalities are set to unveil details of a $50-million fund unveiled in the 2016 budget designed to help cities better plan infrastructure work.

Two new programs to be administered by the FCM are intended to “reduce greenhouse gas emissions, build resilience to the impacts of climate change, and support better planning and management of municipal infrastructure,” according to a Thursday press release.

Idle infrastructure money now allocated

Newly released documents show the Liberal government is expecting to send some $30 million in unused infrastructure money directly to cities through a temporary top-up to the gas tax fund.

The party has long promised to shift unused infrastructure money to the fund, which allows cities to spend on roads, highways, transit, water and sewer systems without having to apply for federal funding.

The $30-million sum is the bulk of what’s left of $837 million from four separate programs, set up under previous governments, that had yet to be spent when the Liberals took office in November 2015.

The Liberals gave the provinces and territories until last March to allocate as much of the leftover money as possible to new projects.

Cities and provinces have long argued the money was difficult to access because previous governments had put various restrictions on how the money could be spent.

More than $800 million of what was left over had been allocated; one document tabled in Parliament this week showed that just prior to the March deadline, there was less than $32 million still left.

“That money (the $837 million) we could have delivered through the gas tax fund,” Infrastructure Minister Amarjeet Sohi said Wednesday on his way into a caucus meeting.

“The vast majority of those dollars are now allocated to new projects and only a few million will be delivered to municipalities through the gas tax fund.”

Time lags complicate analysis

The documents tabled in Parliament this week show the government now expects to send about $30.3 million through the gas tax fund at the end of March, with Ontario receiving the biggest top up at $13.7 million, followed by Quebec at $5.8 million.

Since taking office, Sohi has approved more than 1,200 projects. Construction is underway on about 60 per cent, he said.

The problem for the Liberals is that infrastructure money doesn’t flow quickly.

It only leaves the federal treasury once project proponents submit receipts for reimbursement, often leaving a lag between when work takes place and when infrastructure money is actually spent.

Projects in Quebec, for instance, don’t typically seek reimbursement until the project is completed, meaning that money is often not spent in the year that the federal government projects.

Earlier this month, the parliamentary budget office said Ottawa’s planned infrastructure investments did not materialize in the first half of the year and there’s a growing risk the spending will have to be pushed into 2017-18. That could have an effect on the economy and delay growth the Liberals predicted to see this year from their infrastructure program.

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Article source: http://www.cbc.ca/news/politics/infrastructure-pbo-delays-sohi-1.3963108?cmp=rss