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Billions in promised infrastructure spending moving too slow, says PBO

PBO says of the $13.6 billion in funding from last year’s budget, departments have only identified $4.6 billion worth of projects


 
Prime Minister Justin Trudeau makes an infrastructure announcement at a municipal bus depotTuesday, July 5, 2016 in Montreal.THE CANADIAN PRESS/Ryan Remiorz

Prime Minister Justin Trudeau makes an infrastructure announcement at a municipal bus depot Tuesday, July 5, 2016 in Montreal.THE CANADIAN PRESS/Ryan Remiorz

OTTAWA – The Liberal government has brushed off renewed criticism of the slow movement of billions in new infrastructure spending that threatens to put economic growth projections at risk.

In a report released Thursday, the parliamentary budget office said that of the $13.6 billion in infrastructure money announced in last year’s budget and slated to be spent through March 2018, departments have only identified $4.6 billion worth of projects.

Infrastructure Minister Amarjeet Sohi said the government is confident cities and provinces will complete projects by the end of next March, with the exception of a few whose funding flows in 2019 and beyond, even as the budget watchdog warned of “a significant gap” to meeting that target.

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The timing of spending is critical to federal economic projections and the ensuing effect on federal finances.

The Liberals’ first budget predicted that the infrastructure work would boost the economy by 0.6 per cent over two years, but to meet that target, the government would have to see roughly $11 billion worth of federally funded work done by next March.

Sohi said the federal government has had to prod provincial officials to finalize the list of projects they want funded. Federal officials are still poring over project proposals with the expectation that the government will approve them for funding over the coming months.

Sohi himself has approved about 1,200 of the almost 3,900 projects being funded through the Liberals’ infrastructure plan, but the PBO report says that getting details of the spending has proven difficult.

The budget office said the Liberals have not provided any performance measurement framework to make sure the money is meeting its intended goals. Nor have all 31 departments and agencies responsible for the money provided enough information about where the money is being spent, the report said.

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“We do have reporting milestones to which they have to abide by and we will be seeing some more information come our way,” Sohi said.

The report suggests the lack of information may become worse when the Liberals launch their promised infrastructure bank, that would use public dollars to leverage private investment into local infrastructure projects. As it stands, the report says, it is difficult to determine the actual financial risk to federal finances for loan guarantees that will be part of the bank.

The report is the latest from the budget watchdog that has raised concerns about the pace of infrastructure spending, which often doesn’t happen as quickly as governments expect. Federal dollars only flow once project proponents submit receipts for reimbursement, often leaving a lag between when work takes place and when infrastructure money is actually spent.

The Liberals plan to spend $82.8 billion from their infrastructure program over the next decade, not including the more than $100 billion to be spent over the same time from previous infrastructure programs.

The first phase of the program was designed as a short-term stimulus package to repair aging and crumbling infrastructure in cities and on reserves and provide cash to local officials to plan for larger projects that would be eligible for funding on the second and more lucrative phase, the details of which will be unveiled in this year’s budget.


 

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