February 19, 2014
Building Canada Fund details start to emerge
The Canadian federal government has revealed details about its 10-year infrastructure plan, which includes $9 billion for provincial and territorial projects, but the terms and conditions for receiving this funding have yet to be determined.
“The plan will spend $70 billion on infrastructure over a ten year period, that’s a lot of money,” said Keith Sashaw, president and CEO of the Association of Consulting Engineering Companies – British Columbia.
“We are pleased with the new Building Canada plan and to see the government is continuing on with long-term infrastructure spending.”
Prime Minister Stephen Harper was in Gormley, Ontario on Feb. 13 to release details on the new $53 billion Building Canada Plan, which represents the federal government’s commitment to long-term, predictable and stable infrastructure funding.
The 2014 federal budget tabled in Ottawa on Feb. 11 stated that the plan will allocate $21.8 billion over 10 years through the Gas Tax Fund.
This includes an additional $1.8 billion in support over the same period through the indexation of payments at 2 per cent per year.
In addition, the plan will invest $14 billion over 10 years for a new Building Canada Fund, which will support major economic projects with national, regional and local significance.
The government is committed to launching the new fund by Mar. 31, 2014.
In terms of next steps, Denis Lebel, Minister of Infrastructure, Communities and Intergovernmental Affairs will consult with the Federation of Canadian Municipalities (FCM), provinces and territories to finalize the parameters of the Building Canada Fund.
In particular, these stakeholders are concerned and seeking more details about terms and conditions of the fund.
“Municipalities own a significant majority of public infrastructure and, for a fund that will span the next decade, we must be sure that that it is used accordingly,” said Claude Dauphin, president of the FCM.
“We are also concerned by rule changes that could force municipalities to carry a larger share of infrastructure costs in the future, the eligibility rules for local roads, the screening process for projects structured as public-private partnerships (P3s).”
Dauphin said these details must be worked out quickly because the municipal construction season begins on April 1.
“That is often the case for large government programs that have a degree of municipal and provincial participation,” said Sashaw.
“But, the government has made a commitment, which means provinces and municipalities can start putting projects forward.”
“The federal government has committed to being open to applications on April 1, so they have a lot of work to do,” said John Gamble, president of ACEC-Canada.
“Absolutely, we need them to be open for business. We are interested in what restrictions will be placed on the $14 billion. There are a few more caveats in terms of what are eligible projects. They are going to focus on projects with economic benefits.”
Gamble is also interested in how $1.25 billion will be provided over five years for a renewed P3 Canada Fund.
“There is a lot of benefit in P3s, as long as people understand they are not a panacea,” he said.
“They need to be used in the right situation and the right project. As long as people understand, the value of the project is not the most important criteria. It doesn’t always mean the project is a viable P3 candidate.”
Under the new Building Canada plan, projects with eligible costs of more than $100 million submitted for federal funding will be subject to a P3 screening.
Capital infrastructure categories that were eligible under the 2007 Building Canada Plan are eligible under the New Building Canada Plan, but there has been realignment. Categories under the Gas Tax Fund have been expanded, while categories under the New Building Canada Fund have been focused on those that have the greatest economic impact.
The $4 billion National Infrastructure Component of the New Building Canada Fund is limited to the following categories: highways and major roads; public transit; rail infrastructure; local and regional airports; port infrastructure; intelligent transportation systems and disaster mitigation infrastructure.
The $9 billion Provincial-Territorial Infrastructure Component of the fund includes the following categories: highways and major roads; public transit; drinking water; wastewater; solid waste management; green energy; brownfield redevelopment; disaster mitigation infrastructure; local and regional airports; short-line rail; short-sea shipping and northern infrastructure.
The Small Communities Fund will provide $1 billion in funding for municipalities with fewer than 100,000 residents. This is in addition to the almost $22 billion that all municipalities will receive through the permanent and indexed federal Gas Tax Fund over the next decade.
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