‘We’re delivering’: Ottawa defends infrastructure program critics say has been hobbled by delays
OTTAWA — The federal government on Thursday defended the pace of its infrastructure spending, noting that it had launched 28,000 projects valued at $11.8 billion under its 2016 plans, amid criticism the $187-billion infrastructure spending program remains hobbled by delays as it enters its third year.
Under its 2017 plans, which include $81.2 billion in planned spending, only 11 of 24 programs have been launched.
The result is an improvement from a report by Ottawa’s budgetary watchdog last month, which found that just $7.2 billion of planned spending in 2016 had been designated toward specific projects, and called on Ottawa to disclose more details around its plan to spend $186.7 billion on infrastructure over the next 12 years, about $92 billion of which was designated under the previous Harper government.
The PBO has levelled sharp criticism against the government in recent months for failing to report detailed information on the program, which has been marred by delays since the outset. The program is one of the centrepieces of the Trudeau Liberals’ plan to take on steep deficits in a bid to spur economic growth.
Infrastructure Minister Amarjeet Sohi said infrastructure spending was “definitely helping” to grow the broader Canadian economy, despite widespread delays that led the government to extend the end dates for some projects. In its latest budget, Ottawa pushed back billions in spending to future years as investment dollars failed to get out the door.
“I’d say that we’re delivering as we thought we would,” he said to reporters Thursday.
Analysts think the government is unlikely to meet its spending goals, with many predicting investments will be extended beyond the 12-year timeline. The massive infrastructure spending program unveiled under former prime minister Stephen Harper in the wake of the economic recession met similar pitfalls.
“It’s not a shocking story — I think what’s more surprising was government’s own expectations rather than the outcomes,” said Brian DePratto, the chief economist at TD Bank in Toronto.
DePratto commended the government for releasing more details around the infrastructure program, which included the ticket prices of major projects and whether or not those projects have begun construction.
However, he said there was still detail lacking for when projects were expected to be completed and the current status of those projects.
“It doesn’t really give a whole lot of colour,” he said, adding that the lack of some details makes the program’s economic impact less clear.
“Without that kind of information it’s challenging to make that assessment,” he said.
Many economists and analysts have criticized the program more broadly for coming at the wrong time.
The Bank of Canada on Wednesday decided to hold its key interest rate, but overall the economy is running close to its full capacity, potentially neutralizing any efforts by Ottawa to spur growth.
“I don’t have an issue with stimulus spending per say, I just don’t think we need any more. There’s no need at this point to be adding to deficits,” DePratto said. Ironically, prolonged infrastructure delays could actually translate into a better outcome for the overall Canadian economy, according to Andrew Grantham, an analyst with CIBC based in Toronto.
“With the timing delays we’re seeing now, (the spending) could be coming at a time when the economy is slowing down and is in need of stimulus,” he said.
However, analysts also say that infrastructure spending today could provide a much-needed boost to Canadian business investment, which has slackened amid economic uncertainty spread by U.S. President Donald Trump.
The Bank of Canada estimated in its monetary update Wednesday that the threat of corporate tax reform and protectionist trade polies in the U.S. could reduce Canadian business investment by three per cent over the next three years.
“It would be nice to have something that counterbalances that a little bit,” Grantham said.
Sohi also confirmed Thursday that the Canada Infrastructure Bank has not designated any specific projects to invest in. The bank was established under the Liberals to work with the private sector on major infrastructure developments that wouldn’t otherwise get built, the government has said.
“I am very excited about the bank engaging private sector and institutional investors to build more infrastructure that our communities need,” Sohi said.
Ottawa has designated $15 billion of its $186-billion infrastructure budget to the Canada Infrastructure Bank, which will be complemented by another $20 billion from Canadian banking institutions.
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