Ottawa’s infrastructure program falls far behind schedule with $7.2 billion still unspent, says PBO

OTTAWA — The federal government’s massive infrastructure spending program continues to lag well behind schedule, with half of planned spending in 2016 alone still not designated toward specific projects, according to a new report.

The Parliamentary Budget Officer, which released an update on infrastructure spending Thursday, collected spending plans from 32 separate government agencies, departments and crown corporations to determine how much of Ottawa’s 2016 infrastructure budget had been designated toward specific developments. It found that of the $14.4 billion planned in 2016, only $7.2 billion has yet been “attributed to projects.”

The spending delays put a damper on Ottawa’s attempt to stimulate the economy ahead of a forecasted slump in economic growth in coming years. A centrepiece of the Trudeau Liberals’ campaign platform was to run major deficits over several years, ploughing billions of dollars into major new projects like airports, ports, roads, bridges and light rail expansions in cities.

The PBO report focused on spending under the Trudeau Liberals’ new infrastructure program, and left aside so-called “legacy” infrastructure spending that was rolled out under former prime minister Stephen Harper. Thursday’s PBO report came in response to a request by the Senate finance committee for more detailed information around 2016 spending.

Ottawa plans to spend roughly $186.7 billion on infrastructure over 12 years, roughly half of which is new spending announced by Finance Minister Bill Morneau in the 2016 budget.

Thursday’s findings come after earlier warnings by the PBO that Ottawa’s infrastructure spending plans were facing significant delays.

Earlier this month the PBO cautioned that Budget 2018 “provides an incomplete account” of changes to Ottawa’s infrastructure spending plans, after Morneau reallocated billions worth of infrastructure investments, pushing back spending in 2018 and 2019 into later years.

The PBO predicted at the time that roughly 25 per cent of planned infrastructure spending between 2016 and 2018 would effectively fall behind schedule. “Both legacy and new infrastructure programs are prone to large lapses,” it said.

Marc Miller, the parliamentary secretary to the infrastructure minister, responded to criticism during Question Period Thursday about Ottawa’s lagging infrastructure investments. 

“The money will be spent as soon as our partners submit their applications,” he said. 

The report on Thursday confirmed that much of the economic boost expected from infrastructure spending will now be delayed several years.

“Overall, more than half of the money intended for short-term stimulus will now be spent beyond 2016-17 and 2017-18,” the report said.

Delays with the new infrastructure program also comes as provincial spending plans seem to lag federal expectations.

Ottawa had expected that for every dollar it spends, provincial coffers might pitch in multiples more to fund large infrastructure developments. But capital spending plans in 2018 among Quebec, Ontario Alberta and B.C. are roughly in line with the $4.5 billion invested by the federal government this year. Alberta’s overall capital spending plan, for its part, actually shrunk $1.5 billion. 

The PBO report estimated that infrastructure spending in the 2016 budget increased GDP growth in Canada by 0.1 per cent in 2016 and 2017. 

Also on Thursday, Statistics Canada reported a 0.1 per cent contraction in Canadian GDP in January, lower than analyst expectations. The drop was the first since August 2017, when the economy also shrunk 0.1 per cent.