In tight-fisted times, cities and towns push for federal money

Opposition politicians are eager send the right signals to the visiting mayors and councilors

by John Geddes

With many federal departments quietly coping with budget cuts (as we’re reminded by the Parliamentary Budget Officer going to court to try to find out more about exactly how they’re managing it), the possibility of new infrastructure spending offers a rare whiff of fresh money in the air around Parliament Hill.

This week the Federation of Canadian Municipalities is holding what it calls its “advocacy days” (i.e., lobbying days) here, bringing more than 100 politicians from cities and towns to Ottawa to “build relationships” (i.e., apply pressure) with federal politicians and bureaucrats.

Naturally, opposition politicians are eager send the right signals to the visiting mayors and councilors. Earlier this week, Bob Rae, the interim Liberal leader, called for $2 billion more a year in gas tax for the cities and towns, doubling what they now get from that key federal transfer. Today it was NDP Leader Thomas Mulcair’s turn to address an FCM lunch, and he surprised nobody by endorsing the group’s call for long-term, predictable infrastructure funding from the federal government, especially to ease traffic congestion in big cities.

Mulcair also took the opportunity to slam what he called the Conservative “hands-off, fend-for-yourself approach.” He went on to warn: “Make no mistake, if we continue down this path we will be the first generation to leave less to our own children than what we received from our parents.”

It’s not so clear, though, that the Tories are viewed by municipal leaders as quite so detached and parsimonious as Mulcair repeatedly let on. Back in 2007, after all, the Harper government created the $8.8-billion $33-billion (I mistakenly went first with the much larger number from page 98 of the 2011 budget, rather than the more accurate, lower number here) seven-year infrastructure fund called “Building Canada,” and in his 2013 budget, Finance Minister Jim Flaherty is expected to renew that plan, in time for a replenished, multi-year fund to be in place for the 2014 construction season.

The big question is how close Flaherty comes to meeting the FCM’s ask: they want the feds to boost support for municipal infrastructure from $3.25 billion to $5.75 billion a year, and commit to that level for two decades. Now, that’s a lot of money for a long time. A Tory strategist told me today, while not claiming to know budget details, that Flaherty’s office has been sending stern signals that any new spending next year will be very modest.

Still, the FCM approach contains elements that make it well worth watching in the run-up to the tabling of the next federal fiscal plan. For starters, the Conservatives grew awfully fond of putting up self-congratulatory signs on construction projects as they spent billions earmarked in the emergency 2009 budget on special stimulus projects meant to blunt the edge of that year’s recession. That spree is over. But the FCM allows for plenty of that sort of visible credit for Ottawa under the shared infrastructure plan it envisions.

Most of the speculation going into the budget season will be about where cuts will have to come to keep the government on a credible deficit-reduction track. If that wasn’t obvious before, it certainly should be after Flaherty recently had to push off his target for balancing the books by a year.

Against that backdrop of general tight-fistedness, any move beyond holding infrastructure funding at about the level of recent years could be one the most significant stories of next spring’s budget. If, on the other hand, the infrastructure pot is too small to stand out from a broader budget story of restraint, then expect to hear plenty more from Mulcair about the Tories’ lack of vision on, as he put it today, “the places we live.”




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In tight-fisted times, cities and towns push for federal money

  1. FCM has been pushing for this for years now, and the country really needs the upgrade.

    Feds missed a perfect opportunity with the stimulus….they could have solved two problems at once.

  2. Over the past 25 years of right-wing cheaponomics, Canada amassed a $125B infrastructure deficit while government debt skyrocketed to 85% debt/GDP. Obviously the people did not benefit from all these “savings.”

    In the post-war Keynesian era, governments invested in infrastructure because they knew it was an investment that paid off. Not only did it provide things that benefited society and greased the wheels of business, it created jobs, economic spin off, GDP growth and higher tax revenues. Back then the government not only spent more but paid down its debt from 100% to 17%.

    A society is like a business: it takes money to make money. The people need to invest in physical infrastructure and human capital to create the most productive economy. Like a business that fails from scrimping on equipment maintenance and investment, a country’s economy will fail by letting everything fall apart.

    • BTW, it should be noted that Budget Officer Kevin Page factored Harper’s austerity measures into his 2012 GDP growth forecast and predicted 1.9%. Mark Carney did not and originally forecast 2.4%. Page turned out to be right.

      Since Flaherty based his budget on 2.4% growth, when he revised the figure down to 2.0%, he also had to revise the deficit from $21B to $25B.

      So the truth is macroeconomics are very different from household economics. When a household cuts back on spending its income remains steady. When a country cuts back on benefits, services, investments in infrastructure it can reduce its income making the austerity measures self-defeating.

      As Keynes said, “The boom, not the slump, is the time for austerity.”

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