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Infrastructure Update: Investments in Provinces and Municipalities.pdf
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Summary
The Invest in Canada Plan (IICP) is the 12-year, $188 billion, infrastructure investment plan introduced in 2016 by the Government of Canada. The IICP is being delivered in two phases between 2016-17 and 2027-28: Phase 1 for short-term infrastructure needs during the first two years, and Phase 2 starting in 2018-19 for longer-term investments.
Federal infrastructure investments require cost sharing with provincial and local governments. These other levels of governments are therefore key actors of the IICP, especially since they own and maintain the majority of public infrastructure.
This report examines capital investments made by provinces and some municipalities with the objective to identify the incremental impact of the IICP on provincial and municipal capital spending.
The PBO’s results point to a clear difference between provinces and municipalities. Indeed, it appears the IICP has contributed to increase municipal capital spending, but not provincial capital spending. The main findings of this report are as follows:
- Provincial capital spending has been below budget since the start of the IICP. Based on PBO’s calculations, provincial capital spending was $3.8 billion lower than what it would have been in the absence of the IICP.
- Provincial capital spending was also $5.4 billion lower than what it should have been after accounting for additional infrastructure funding delivered through the IICP. This spending gap suggests that funding from the federal government probably displaced provincial investments after the IICP began. Another possibility is that provincial governments postponed or cancelled capital investments after the start of the IICP.
- Had provincial governments kept capital investments in line with the PBO’s benchmark post-IICP, real GDP could have grown between 0.15% and 0.16% in 2016-17, while employment could have increased in the range of 7,550 to 8,100 jobs.
- Contrary to provinces, municipal capital investment was higher than budgeted in the selected municipalities. In 2017 and 2018, actual municipal spending on capital was $1.0 billion higher than what it would have been in the absence of the IICP.
- Some municipalities (Toronto, Montreal and Calgary) have been able to leverage government funding, as evidenced by the increase in their average spending per dollar of government contribution (+$2.1 between 2015 and 2017). In contrast, all provinces have reduced their own spending relative to federal contribution after the start of the IICP.
