Canadian budget promises $47bn in new infra spending

While the rise will add to Canada’s budget deficit, the Trudeau administration sees it as crucial to boost "growth for the middle class well into the future".

Following on with campaign promises, Prime Minister Justin Trudeau's administration has released a budget proposal that calls for more than C$120 billion ($94.8 billion; €83.4 billion) in infrastructure spending over the next 10 years.

Total infrastructure spending in the 2016/17 fiscal year will near C$2.7 billion, and for the following fiscal year it will be roughly C$3.9 billion, according to the proposal. The increase will bring the Canadian budget deficit to C$29.4 billion for 2016/17, from C$5.4 billion in 2015/16. The plan shows a gradual deficit decline down to C$14.3 billion by 2020/21.

The bulk of infrastructure spending in the budget is weighted toward the tail end of the 10-year period it covers. All told, the proposed scheme aims “to invest almost C$60 billion in new infrastructure funding”, with long-term priorities set to be laid out “in the coming months”. 

Phase one of the two-phase capital plan will focus on adding C$11.9 billion over five years for public transportation, water and wastewater systems, providing affordable housing and protecting existing infrastructure from the effects of climate change. During the second phase, the budget noted, “goals will be broader and more ambitious [such as] a more modern, cleaner economy; a more inclusive society; and an economy better positioned to capitalise on the potential of global trade”.

The proposed budget is entitled “Growing the Middle Class”, in line with one of Trudeau's key talking points since he set out to take on the mantle of Prime Minister.

“By investing in infrastructure now – in the projects Canada needs and the people who can build them – growth for the middle class can be secured well into the future”, the proposal says. 

Transit infrastructure will receive C$3.4 billion over three years through a new Public Transit Infrastructure Fund, C$852 million of which will be disbursed in the 2016/17 fiscal year, roughly twice that amount will hit the books in 2017/18. Ontario, which comprises 44 percent of total public transit ridership across Canada, will receive the bulk of the funding, followed by Quebec (27 percent), British Columbia (13 percent) and Alberta (10 percent). 

Green infrastructure will receive C$5 billion over five years, with C$650 million set for spending next year 80 percent of which is earmarked for drinking and wastewater systems. Social infrastructure gets C$3.4 billion over five years, and will next year receive the bulk of the infrastructure budget at over C$1.1 billion.

Environmental considerations include C$62.5 million for alternative fuel infrastructure, including electric vehicle charging stations and natural gas and hydrogen stations and another C$56.9 million which is being earmarked for creation of a cleaner transportation sector – a plan that calls for the establishment of new international emissions standards for air, rail and marine transport.

The government also plans to continue to allocate about C$3 billion a year for municipal infrastructure projects through a gas tax fund and an incremental goods and services tax rebate for municipalities. Plans are in place to transfer remaining uncommitted funds from older federal infrastructure programmes to municipalities through the gas tax fund in 2016/17.

The Trudeau administration also looks to transfer responsibility for PPP Canada to the Minister of Infrastructure and Communities, a post currently filled by Amarjeet Sohi.