A Liberal government plan to stimulate the Canadian economy with $180 billion in infrastructure investments has gotten off to a rough start, Parliament’s fiscal watchdog is confirming, with half of the money set aside for Phase 1 still not linked to any project.
It’s not the first time that the Parliamentary Budget Officer has flagged challenges linked to Ottawa’s stimulus plan. But a PBO report tabled in the House of Commons on Thursday provides some of the clearest indications to date that things have not unfolded as hoped.
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In their first budget after coming to power, the Liberals promised that Phase 1 of the infrastructure roadmap would be rolled out swiftly, and would “focus primarily on infrastructure investments over the next two years.”
Two years later, the PBO is reporting that, of the total $14.4 billion budgeted for Phase 1, just $7.2 billion has so far been attributed to a real-world project.
That means another $7.2 billion in infrastructure investment earmarked for spending over the last two years is still waiting to get out the door. More and more spending has, as a result, been punted down the road.
“In December 2017, the PBO submitted information requests to 32 departments, agencies and Crown Corporations responsible for all Phase 1 NIP projects,” the report explained.
“PBO was able to build an inventory of 10,052 projects, which we believe to represent a substantial majority of total planned NIP Phase 1 funding.”
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Not all provinces have benefited equally, however.
“A greater proportion of Phase 1 funds are centered in a small group of provinces, representing the majority of the Canadian population,” the report notes.
“Projects in Ontario, Alberta, Quebec and British Columbia account for a combined 70 per cent of total Phase 1 funding. In contrast, projects based in Prince Edward Island, New Brunswick, Nunavut, Yukon and the Northwest Territories represent an aggregated 9 per cent of total funding.”
The PBO said it also had difficulty identifying the start and end dates for many of the projects that had been given funding.
Economic stimulus?
The stated purpose of the infrastructure spending back in 2016 was to stimulate the Canadian economy, with the government identifying the modernization of public transit, improvements to wastewater systems, expansion of affordable housing and the shoring up of existing infrastructure as top priorities.
At the time, Finance Minister Bill Morneau’s department estimated that the influx of cash would result in a 0.2 per cent increase in the level of real gross domestic product in 2016-17 and an increase of 0.4 per cent the following year.
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That hasn’t happened either, according to the PBO.
“Based on the updated profile provided in Budget 2018, we estimate that Budget 2016 infrastructure spending raised the level of real GDP by 0.1 per cent in 2016-17 and 2017-18, increasing the overall level of employment by between 9,600 and 11,100 jobs in 2017-18.”
But, the report warns, as the economy improves as interest rates rise as a result, the impact of the Phase 1 funding on GDP will be “fully offset by 2021-22.”
Missing deadlines
The PBO also flagged some issues with how various government departments cooperated with its effort to track the money.
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Of the 32 federal departments and agencies that were asked to provide the watchdog with information, for instance, just eight were able to do it by the original deadline set by the PBO.
Another 18 were able to get the information organized in time to meet an extended deadline, but six (include the Canada Border Services Agency, Parks Canada and the RCMP) seemed incapable of adhering even to that timeline.
An unknown number of those stragglers didn’t hand over the requested data in time for it to be included in the report.