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2019 Federal Budget: Infrastructure and Energy Highlights

2019 Federal Budget: Infrastructure and Energy Highlights

April 15, 2019

Author - Kurtis J. Samchee

Kurtis J. Samchee

The Liberal government’s final budget before the October 21, 2019 election was released on March 19 by Canada’s Minister of Finance, Bill Morneau. Align with the previous budget’s emphasis on the middle class, the document, entitled “Investing in the Middle Class”, unveiled $23 billion in new spending, ultimately opting for investment rather than deficit reduction—at least in the short-run.

Based on projections of government revenues and program spending, the government expects the current federal deficit to increase in the 2019–20 period and, at the end of the next five years, to decrease to just under $10 billion—down from the current $15.5 billion. These assumptions would allow Canada to remain among the fastest-growing economies in the G7 for this year and next.

Although the Government’s investment plan has a broad scope—from journalism grants to airport security screening measures to high-speed internet guarantees for all Canadians by 2030, I highlight some key elements regarding infrastructure and energy initiatives.

In 2015–16, the Government spent approximately $8 billion on infrastructure. This was largely achieved through the Investing in Canada Plan, originally announced in the 2016 budget. The level of investment grew to $14.3 billion in 2018–19 and, over the next nine years, these investments are expected to average out to more than $16 billion per year.

To date, 33,000 infrastructure projects have been approved by the Federal government and $7 billion of the total $19.9 billion in commitment to these projects has been allocated. In the broader sphere, the National Trade Corridors Fund, which appropriates money toward the development of a 7,000-kilometre transportation corridor across Canada’s North, saw an increase of $400 million over eight years.

In a narrower scope, the 2019 Budget proposes to invest $60 million in the upcoming year to the Municipal Asset Management Program, aimed at assisting small communities in being equipped with skills and training on how to grow and maintain infrastructure assets. Managed by the Federation of Canadian Municipalities, these efforts are centered around a five-year outlook.

The Canada Infrastructure Bank (CIB), which is a Federal Crown Corporation tasked with supporting revenue-generating infrastructure projects, has been allocated $5 billion for investments in green infrastructure. The budget also proposes to further add $18 million over three years to build knowledge of climate change impacts and enhance the climate resiliency of Northern communities by improving the design and construction of infrastructure in the North.

The CIB has identified clean hydroelectricity and electrical connectivity infrastructure as a focus area and will look to support them with the budget increase. Recognizing concerns over rising electricity bills, the budget outlined proposals to invest $1.01 billion in the current year to increase energy efficiency in residential, commercial and multi-unit buildings. The budget also proposes a one-time transfer of $2.2 billion through the federal Gas Tax Fund to address short-term priorities in municipalities and First Nation communities—this amount doubles the previous allocation.

Infrastructure investments create a foundation for long-term economic growth, and as economics taught us, ultimately benefit everyone. This goes for individuals as it does nations. There is more to infrastructure than jobs and growth, however, as we must also take into account how local communities are impacted. Although not reviewed here, the budget recognizes the inclusiveness behind economic growth strategies. Align with the allowances made for clean energy and green infrastructure, the budget also acknowledges the very real challenge of climate change, taking a renewed perspective on how to position the country as a leader in fighting air pollution and carbon emissions.