NOTE: This opinion piece ran in the Hill-Times’ print and online editions on Monday, April 1, 2019.
Justin Trudeau and his Liberal government came to power in 2015 after promising massive changes to Canada’s infrastructure.
“We will run modest short-term deficits of less than $10-billion in each of the next two fiscal years to fund historic investments in infrastructure and our middle class,” reads the Liberals’ 2015 election platform document.
“After the next two fiscal years, the deficit will decline and our investment plan will return Canada to a balanced budget in 2019.”
Everything about that statement—we now know—is untrue. The budget will not be balanced this year, as Finance Minister Bill Morneau admitted when he unveiled the 2019 budget on March 19. The government predicts the deficit will be $19.8-billion, though the Parliamentary Budget Office has warned that the deficit could be even higher amid weakening economic conditions.
The Parliamentary Budget Office (PBO) released an update on the Investing in Canada Plan on March 13, 2019. It found provincial capital spending on infrastructure has been lower than the federal government predicted and there are approximately 8,000 fewer jobs as a result.
The report also found the infrastructure program has failed to grow the economy in the way promised by Justin Trudeau. Had the program been run as intended, it could have grown the economy between 0.15 per cent and 0.16 per cent, and even that would have been below the 0.4 per cent growth rate predicted by the government in its 2016 budget.
In addition to this, another PBO report published in 2018 found infrastructure funding was so slow to get out the door, that it delayed many projects from getting shovels in the ground.
The government admitted this in the budget, stating: “the pace of spending under the Investing in Canada Plan has been slower than originally anticipated, for reasons that include delays between construction activity and receipt by the government of claims for payment, and by some jurisdictions being slower to prioritize projects than expected.”
It’s disappointing, but not surprising, that the infrastructure program has been a failure. It’s a program based on nice-sounding platitudes instead of evidence and research on economic benefits.
The Liberals have not met a single GDP target since the development of the program. In fact, it’s underdelivered for both the economy and in creating jobs. It was developed without considering the importance of working with the provinces and territories to ensure the infrastructure promised would be delivered to Canadians.
It’s clear the Liberals didn’t do a thorough research into federal infrastructure before launching their 12-year, $188-billion program (from the PBO report: “As it stands, the federal government does not have a framework to identify the incremental effect of the IICP on capital spending from lower levels of government.”) As a result, communities aren’t receiving essential infrastructure upgrades like roads, bridges and community spaces.
And then there is the Canada Infrastructure Bank. This $35-billion bank was also promised by the Liberals in their 2015 election platform. In the two years since it was officially founded, the bank has announced only one project: electric rail for Montreal.
However, that project had already been announced by Justin Trudeau through an infrastructure announcement a year prior. The big players involved in this project were also heavily involved in the development of the Infrastructure Bank, but that might deserve its own investigation.
The Infrastructure Bank was designed to leverage the federal government’s credit rating and lending authority to make it easier for communities to access funding for infrastructure projects. Now its website says it will use federal money to “attract private sector and institutional investment to new revenue-generating infrastructure projects that are in the public interest.” Essentially, it uses public money to underwrite loans to protect private investors from losses, putting all the risk on taxpayers.
While we wait to hear about a second project, the Infrastructure Bank continues to request money from the government; it requested more than $11-million in 2018 to cover salaries, legal services, travel and expenses for its board of directors.
That’s $11-million that could have gone to tangible infrastructure projects in Canadian communities. Instead, it was wasted on unneeded bureaucracy.
Infrastructure is essential to all our lives. We need infrastructure investment in the roads we drive on, the public buildings we use and the public transit we ride on. The infrastructure program promised by Justin Trudeau was supposed to be transformative, but it has unfortunately fallen short on all these promises.
This Parliamentary Budget Office report should serve as a wake-up call to the Liberals that the infrastructure program isn’t stimulating the economy or getting more projects built. Instead, it’s failing Canadians.