The federal government has increased its infrastructure spending targets from $120 billion over 10 years to $186 billion over 12 years, including $81 billion in new infrastructure, as a means of spurring economic growth. To help fulfill the mandate, it is now calling on the global private sector to invest in Canadian infrastructure projects.
During a House of Commons fiscal update yesterday, Finance Minister Bill Morneau announced plans to create an infrastructure bank by 2017 that will be jump-started by a $37-billion infusion from the federal government. It is anticipated that every $1 of investment from the government will attract $4 of private investment, particularly from pension funds and institutional investors.
The creation of this bank will allow provincial and municipal levels of government to borrow money at a lower rate to complete major infrastructure projects at a lower cost.
“Infrastructure is the backbone of our economy and our society,” said Amarjeet Sohi, Minister of Infrastructure and Communities, in a statement. “Well-planned infrastructure generates economic growth, supports communities and leaves a lasting legacy for Canadians.”
The heightened spending and creation of an infrastructure bank was part of Prime Minister Justin Trudeau’s election promises last year to renew the country’s aging infrastucture. The Federation of Canadian Municipalities has estimated that Canada’s infrastructure deficit for municipalities alone is $123 billion in deferred upgrades and maintenance, and the deficit is growing by $2 billion annually.
Federal budget deficits are expected to reach $130 billion over seven years. The deficit for the coming fiscal year is $25.1 billion, and next year it will grow to $27.8 billion.