Provinces make late push for federal infrastructure money

Premiers want more of what cities already have
Ontario Premier Kathleen Wynne addresses the media on the final day of the Council of the Federation summer meeting in Niagara-on-the-Lake, Ont., Friday, July 26, 2013. THE CANADIAN PRESS/Aaron Lynett
Aaron Lynett/CP

Another day at the premiers’ summer summit, another major pillar of last spring’s federal budget under attack. On Thursday, the premiers unanimously slammed Ottawa’s proposed “Canada Job Grant” training plan. Today, the host premier, Ontario’s Kathleen Wynne, took aim at the federal infrastructure spending strategy.

The common denominator, as you might have guessed, is money. The big kind. On the job grant, the provinces are howling over the Harper government’s proposal to pay for a new training system by repurposing $300-million a year it currently transfers directly to the provinces to help fund their existing training programs. On infrastructure, the friction is over how much (or little) Ottawa contributes toward provincial projects and the hoops provinces must leap through to get their share.

Wynne announced today at the end of three days of meetings in Niagara-on-the-Lake, Ont., that she will be leading a provincial and territorial working group on “strategic infrastructure investment.” At a news conference, she didn’t sound much impressed by the $53-billion over 10 years pledged by Finance Minister Jim Flaherty for municipal and provincial infrastructure as a centerpiece of his budget last spring.

Flaherty touted it as a landmark commitment; Wynne shrugged it off as small beer. “Let me just put it in perspective,” she said of that $53-billion over a decade in federal funding. “In Ontario alone we’ve put up $35 billion over the next three years.”

But the absolute dollar figure the feds have in the window isn’t the only issue. There’s also the way it breaks down. Of that $53 billion, fully $32.2 billion goes directly to cities and towns for local priorities, like roads, waterworks and arenas. Only about $14 billion is available for the provinces to compete for to help pay for “projects of national, regional and local significance.”

Wynne pointedly observed that municipalities get so much of the money, leaving too little, in her view, to support major economy-building projects driven by provinces. “The scale of the issues,” she said, “the scale of the backlog and the need in terms of infrastructure investment; whether it’s mining infrastructure or transit infrastructure or roads and bridges, there’s a huge need across the country.”

The fact that the premiers are only now creating a working group to press Ottawa on this file is telling. The mayors, through their Federation of Canadian Municipalities, have long made squeezing more infrastructure dollars out of Ottawa an obsession. The FCM’s well-researched reports, shrewdly attuned to the concerns of federal politicians, have dominated the debate over infrastructure in recent federal budget cycles. That’s largely why the municipalities have fared well.

The lobbying challenge for provinces is inherently trickier. Unlike city governments, which tend to have a non-partisan feel, provincial interests are closely identified with whatever party is in power—creating obvious strains, in many cases, with the federal Conservatives. As well, policy experts tend to view municipalities as hard-pressed, given their reliance on cumbersome property taxes, to raise the money they need on their own.

But the provinces, like Ottawa, collect income and consumption taxes, and so they are viewed as having greater capacity to pay for their own infrastructure priorities. And that raises the question of exactly which provincial projects should be getting federal support, and which should be funded entirely out of provincial revenues.

This fundamental question has never been clearly answered. Consider the $35 billion over three years that Wynne’s government plans to spend on infrastructure. It covers transit and highways, which Ottawa might reasonably support on economy-boosting grounds, but also hospitals and schools, which are traditionally paid for by provinces alone. Beyond those broad strokes, sorting out where Ottawa should be involved is a complicated task.

The federal government has, up to now, preferred to consider which provincial infrastructure projects it backs on a project-by-project basis. Provincial governments, notably including Wynne’s, want a broader federal commitment to whole categories of infrastructure. They don’t want to pitch particular transit extensions, say, or new highways. They want the sort of guaranteed, long-term, non-targeted funding the municipalities already have.

In theory, predictable federal support for whole classes of strategic provincial infrastructure sounds sensible. In practice, though, it would hand provincial planners much more power, and mean Ottawa would lose the final say-so on individual projects. Politicians and senior bureaucrats, in my experience, don’t easily give up that sort of clout.

They are perhaps even more reluctant to give up money. And the strong implication of Wynne’s comments today is that cash is at the core of the provinces’ infrastructure complaint. Mayors get much more from Ottawa for public works; no wonder premiers look on with envy.

But launching their working group only today—four months after Flaherty tabled what the Harper government regarded as a 10-year fix for the infrastructure issue—feels like an awfully late start. If the provinces really expect to change Ottawa’s ways on infrastructure, they must, like the municipalities before them, be ready to engage on the issue for the long haul.