Introduction

On March 22, 2016, Finance Minister Bill Morneau tabled the 2016 federal budget (the “2016 Budget”). As had been announced, the Budget sets out the new Liberal government’s priorities with respect to infrastructure and promises significant expenditures with respect to infrastructure.

Canada’s New Infrastructure Plan

A cornerstone of the 2016 Budget is Canada’s New Infrastructure Plan. Under the New Infrastructure Plan, the federal government intends to spend $120 billion over the next 10 years. This spending is divided into two phases: an initial phase providing for immediate infrastructure spending, primarily over the next 2 years (“Phase 1”), and a second phase focusing on long-term objectives (“Phase 2”).

Phase 1

Phase 1 of the New Infrastructure Plan provides for $11.9 billion of short-term spending and is primarily divided into 3 large spending categories:

  1. public transit;
  2. water, wastewater and green infrastructure; and
  3. social infrastructure.

Public transit

The 2016 Budget provides for the creation of a new Public Infrastructure Fund, which provides for $3.4 billion over 3 years. Under the Public Infrastructure Fund, the federal government will fund up to 50% of eligible costs of projects that upgrade and improve public transit systems, either by increasing capacity, enhancing service or improving environmental outcomes.

Such a funding structure is in contrast to the typical three-way split between federal, provincial and municipal governments and could allow certain municipalities to immediately proceed with transit projects they would not otherwise have been able to afford.

The Public Infrastructure is allocated to municipalities based on their share of national public transit ridership. According to this formula, the bulk of the funding will be allocated to municipalities in Ontario ($1.5 billion), Quebec ($900 million), British Columbia ($460 million) and Alberta ($347 million).

Water, wastewater and green infrastructure

The 2016 Budget also provides for significant spending on water, wastewater and green infrastructure, to the tune of $5 billion over 5 years.

Of this amount, $2 billion is dedicated, over four years, to the creation of a Clean Water and Wastewater Fund. Under this fund, the federal government will fund up to 50% of eligible costs of projects providing for immediate improvements to water distribution and treatment infrastructure.

In addition, $1.8 billion, over 5 years, is earmarked to address health and safety, facility operations and maintenance and water treatment issues in First Nations reserves.

Large amounts are also dedicated to specific projects, notably providing funding to the Green Municipal Fund of the Federation of Canadian Municipalities ($125 million over 2 years), the Lake Manitoba and Lake St. Martin Outlet Channels Project ($248 million), which seeks to regulate water levels and provide flood protection around those lakes, and to upgrade the Lions Gate Wastewater Treatment Plant in Vancouver ($212 million).

As for the balance of the $5 billion, the majority is dedicated to investments in electric vehicle and alternative transportation fuel infrastructure, in fostering regional electricity cooperation and in the development of building codes and standards that include climate resiliency requirements.

Social infrastructure

The 2016 Budget provides for spending of $3.5 billion on social infrastructure over the next 5 years.

Of this amount, a considerable amount, $2.3 billion over 5 years, is dedicated to affordable housing projects, divided between different initiatives. As such, $500 million will be spent over 2 years on the Affordable Housing initiative, a program through which the federal government matches provincial and territorial funds for the construction of new affordable housing. An additional $200 million over 2 years if dedicated for the construction, repair and adaptation of affordable housing for seniors, without any requirement for provinces or territories to match federal funding. $574 million over 2 years is also dedicated to retrofitting and renovating existing social housing in order to improve their environmental profiles. The majority of the balance, $739 million is dedicated to First Nations, Inuit and northern housing.

In addition to investments in affordable housing, the 2016 budget also sets aside $500 million to support the establish a National Framewrok on Early Learning and Childcare, $168 million to renovate and build arts and heritage facilities and $150 million over 2 years to renovate, expand and improve community and cultural infrastructure.

Phase 2

As for the remaining $108.1 billion to be spent during Phase 2 of the New Infrastructure Plan, this amount will be spent on renewing and modernizing infrastructure over the longer term. According to the 2016 budget, the long-term priorities for this funding will be set out by the federal government in the coming months.

Other infrastructure funding

In addition to the New Infrastructure Plan detailed above, the 2016 Budget also proposes to invest up to $3.4 billion over the next 5 years to maintain and upgrade existing federal infrastructure. In particular, the 2016 Budget refers to investments on trails and highways in national parks ($191 million), small craft harbours ($149 million), environmental remediation of contaminated sites ($217 million), National Defence infrastructure ($232 million) and airports and ferries ($91 million).

Also of note is an amount of $30 million over 3 years which is set aside to provide financial support to Quebec homeowners affected by pyrrhotite issues and one time funding of $7.7 million to Via Rail to support technical studies and other activities for the renewal of Via Rail’s fleet and for safety and security upgrades and $34 million for improvements at stations and maintenance centers.

Conclusion

Although the 2016 Budget provides for relatively interesting short-term funding for infrastructure projects, the bulk of the New Infrastructure Plan is still to be allocated and the long-term vision of the federal government remains to be seen.