OTTAWA – Provincial and territorial governments are asking the federal Liberals to loosen the strings tied to billions in upcoming infrastructure spending, including more relaxed spending requirements if it means too much of a hit to their budgets.
The group is also asking Infrastructure Minister Amarjeet Sohi to let provinces and territories move money between funding programs in case there are greater needs in one area, like transit, and leftover cash in another, such as cultural centres.
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The demands, delivered on the eve of a meeting between Sohi and his provincial and territorial counterparts in Ottawa, add to the negotiations over how $33 billion in planned federal spending over the next 11 years will be used.
The Liberals want to prevent provinces and territories from using federal dollars in place of their own. But the letter from Ontario’s infrastructure minister seems to push back at that idea, with Bob Chiarelli writing that federal funding “should not result in additional fiscal pressure on provinces, territories, and municipalities.”
In an interview earlier in the day, Sohi said he was willing to talk with provinces and territories about how best to deliver the billions the government plans to spend.
“This is a 10-year plan and having that kind of 10-year plan in place does give them more flexibility, does give them more time to plan and think about what kind of projects do they want to put forward,” Sohi said.
Concerns about the wording of those funding agreements, and issues with spending the first tranche of the Liberals’ infrastructure cash, will make up the bulk of the agenda for Thursday’s meeting.
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All those Phase 1 projects must be completed by March 2018, but Sohi said the government will grant extensions on a case-by-case basis. The provinces and territories want a blanket one-year extension, with additional time for small and remote communities given the “historic volume of projects” underway.
“Project review and federal approval has taken more time than expected. As a result, many municipalities and First Nations are experiencing challenges meeting current federal timelines,” Chiarelli’s letter says.
The slower-than-expected pace of work mirrors the pace of federal spending: The Liberals carried over $828 million in infrastructure money to this fiscal year.
On Tuesday, the Finance Department said the deficit was about $5.2 billion smaller than the $23 billion projected in the first Liberal budget, largely a result of a $3.7-billion lag in spending that included infrastructure cash.
Infrastructure spending historically falls short of federal budget projections because the government doesn’t dole out cash until after construction begins or ends on a project, meaning actual spending can happen months or years beyond federal spending projections.
Sohi also plans to talk about how federal cash flows for new roads, subways and water systems during the face-to-face meeting. He argued lower-than-expected federal spending didn’t have a “negative impact on the construction timelines or the projects not being undertaken.”
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“The allocation of money is not a problem. The approval of projects is not a problem because we have done that and the vast majority of Phase 1 resources are allocated.”
The problem appears partially to be a lack of urgency from federal departments holding the purse strings, according to documents obtained by The Canadian Press under the Access to Information Act.
A March briefing note prepared for the deputy minister at Infrastructure Canada said agencies and departments didn’t see doling out the cash as a top priority, “and may consider this imperative among several other priorities.”
The briefing note prepared for a meeting of senior officials from those eight agencies recommended that Sohi’s deputy minister prod his counterparts about the pace of spending, particularly with billions more about to become available through the second phase of the Liberal program.