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Infrastructure Advantage

Budget 2007 makes a historic investment of more than $16 billion over seven years in infrastructure—bringing federal support under a new long-term plan for infrastructure to a total of $33 billion, including the funding provided in Budget 2006. This historic investment will be dedicated to things that matter such as roads and highways, public transit, bridges, sewer and water systems, and green energy. The plan provides greater predictability, flexibility and accountability, and makes an important contribution towards the economy, the environment and our energy needs. Initiatives in Budget 2007 to create an Infrastructure Advantage include:

• Transferring $2 billion per year to municipalities from 2010–11 to 2013–14 by extending the Gas Tax Fund transfer—for a total of $8 billion. This money will be used for municipal priorities including roads, public transportation and water.


• Allocating $6 billion in new funding to the new Building Canada Fund, investments in gateways and border crossings, and the national fund for public-private partnerships, which will leverage private capital to maximize the impact of the Government’s investments.


• Providing each province and territory with an additional $25 million per year, for a total investment of $2.3 billion over the next seven years, to support investments in national priorities throughout the country. These investments include trade-related infrastructure like gateways, roads, highways and other transportation facilities.


• Bringing the total federal investment in the Asia-Pacific Gateway and Corridor Initiative to $1 billion to ensure that Canada can take advantage of economic opportunities in Asia.


• Establishing a new federal office to identify and implement opportunities for public-private partnerships in infrastructure.


• Renewing the Government’s commitment to construct a new border crossing at Windsor-Detroit including:

An Infrastructure Advantage for Canada

Canada needs modern, world-class infrastructure to make our country a world leader for today and future generations, and to create a cleaner Canada through new public transit and wastewater management.

Modern, accessible infrastructure matters to Canadians. It helps move people and goods to markets, allowing our economy to grow and prosper. Through public transit and water treatment systems, infrastructure investments will mean a cleaner, greener Canada. Investing in infrastructure:

• Helps ensure goods get to market quickly and seamlessly.


• Reduces the time people spend in traffic, getting to work and home to their families more quickly.


• Provides Canadians with clean water.


• Results in stronger communities.

Over the past two years, the federal government has made significant commitments to build and modernize Canada’s infrastructure. As part of restoring fiscal balance, infrastructure was identified as one of the joint priorities of federal and provincial-territorial governments. Early action was taken in Budget 2006 as federal infrastructure support for provinces, territories and municipalities was increased to an unprecedented level of $5 billion per year by 2009–10, a level eight times greater than those recorded during the 1994–95 to 2004–05 period.

Infrastructure support must reflect the long life cycle of infrastructure projects. The latter should be managed as strategic assets for which continuous planning and long-term, predictable funding are required. Following the tabling of Budget 2006, the Minister of Transport, Infrastructure and Communities consulted with provinces, territories and municipalities to seek their views on how to improve federal infrastructure programs.

 

Long-Term Plan for Infrastructure

Budget 2007 delivers on the commitment made in Advantage Canada by implementing a comprehensive plan for infrastructure based on the advice received during the recent consultations with provinces, territories and municipalities on the federal role in infrastructure. The plan provides greater predictability, flexibility and accountability, and makes an important contribution towards the efforts of Canada’s New Government in the areas of the economy, the environment and our energy needs.

A key element of the plan is base funding, which will consist of the Gas Tax Fund, and the increase from 57.1 per cent to 100 per cent in the rebate that municipalities receive on the goods and services tax (GST) they pay. This base funding will be significant, stable, predictable and long-term in nature, and thus will directly benefit municipalities. Budget 2007 includes $8 billion to extend the Gas Tax Fund at $2 billion per year for another four years (2010–11 to 2013–14).

Budget 2007 also provides a total of $6 billion in funding for four other key elements of the plan:

• A Building Canada Fund, with spending allocated among provinces and territories on an equal per capita basis. This will support investments in the core national highway system, large-scale projects such as public transit and sewage treatment infrastructure, and small-scale municipal projects such as cultural and recreational facilities.


• A national fund for gateways and border crossings, to be awarded on a merit basis. In order to improve the flow of goods and people between Canada and the rest of the world, this fund will help enhance infrastructure at key locations, such as major border crossings between Canada and the United States, and the Atlantic gateway. A new national gateway and trade corridor policy framework will help guide federal investment decisions.


• A national fund for public-private partnerships, to be awarded among projects on a merit basis. The fund will contribute up to 25 per cent of the cost of innovative public-private partnership projects.


• An enriched Asia-Pacific Gateway and Corridor Initiative, where the increased funding will be used to make additional infrastructure improvements at this important trade gateway, such as roads, highways, and road-rail grade separations.

In addition, Budget 2007 provides each province and territory an additional $25 million per year to support investments in national priorities throughout the country, such as trade-related infrastructure like gateways, roads, highways and other transportation facilities. This represents an expenditure of $2.275 billion over seven years. All provinces and territories will participate in building this modern transportation network in Canada, including smaller jurisdictions, which generally have limited basic infrastructure and lower population densities.

In total, Budget 2007 delivers more than $16 billion to infrastructure. Including the infrastructure funding provided in Budget 2006, federal support under the plan will total $33 billion over the next seven years (2007–08 to 2013–14), that is about $1,000 for every Canadian:

• An estimated $17.6 billion in base funding.


• $8.8 billion for the Building Canada Fund.


• $2.1 billion for the national fund for gateways and border crossings. Part of this amount will be used to make a contribution towards the cost of a new access road that will link a new crossing at Windsor-Detroit with Highway 401 (see Windsor-Detroit below).


• $1.26 billion for the national fund for public-private partnerships.


• $2.275 billion for the equal per jurisdiction funding.


• $1 billion for the Asia-Pacific Gateway and Corridor Initiative.

Table 5.3
(millions of dollars)

	2007– 2008	2008– 2009	2009– 2010	2010– 2011	2011– 2012	2012– 2013	2013– 2014	Total
Long-Term
Infrastructure Plan:
Base funding,
of which	1,515	1,750	2,790	2,830	2,875	2,915	2,960	17,635
Gas tax funding	800	1,000	2,000	2,000	2,000	2,000	2,000	11,800
GST rebate	715	750	790	830	875	915	960	5,835
Building Canada
Fund	572	926	1,186	1,401	1,427	1,636	1,655	8,801
Fund for gateways
and border
crossings	137	221	283	335	341	391	396	2,105
Fund for P3 projects	82	132	169	200	204	234	236	1,257
Equal per
jurisdiction funding	325	325	325	325	325	325	325	2,275
Asia-Pacific
Gateway and
Corridor Initiative1	108	158	118	144	172	170	108	977
Initial funding	81	115	63	79	105	94	31	567
Top-up	27	43	55	65	67	76	77	410
Total—Plan	2,738	3,512	4,871	5,235	5,343	5,671	5,680	33,050
Sunsetting
infrastructure
initiatives2	1,597	1,141	571	362	326	26	0	4,023
Grand Total	4,335	4,653	5,442	5,597	5,669	5,698	5,680	37,073
Note: Budget 2006 provides $6.6 billion over seven years (2007–08 to 2013–14) for national infrastructure programs: $4.6 billion has been allocated to the Building Canada Fund, $1.1 billion to the national fund for gateways and border crossings, $658 million to the national fund for P3 projects, and $215 million to the Asia-Pacific Gateway and Corridor Initiative. 1 Totals $1 billion, including $24 million in initial funding in 2006–07. 2 Includes the Infrastructure Canada Program, the Canada Strategic Infrastructure Fund, the Border Infrastructure Fund, the Municipal Rural Infrastructure Fund and the Public Transit Capital Trust.

This funding is in addition to approximately $4 billion still to be provided under sunsetting infrastructure initiatives. On an annual basis, total federal support for provincial, territorial and municipal infrastructure will continue to grow over the next seven years, from $4.3 billion in 2007–08 to $5.7 billion by 2013–14, the largest such investment in Canada’s history.

The plan, combined with other measures in Budget 2007, fulfills the commitments of Canada’s New Government to restore fiscal balance.

Public-Private Partnerships

Canada aspires to be a leader in public-private partnerships. Substantial investment is required in our country’s infrastructure to achieve growth in our productivity and standard of living. Public-private partnerships can be beneficial in building infrastructure projects faster and at a lower cost to taxpayers. Private capital and expertise can make a significant contribution. For example, pension fund managers have said that they are seeking to invest in infrastructure opportunities in Canada. The private sector is also better placed to manage many of the risks associated with the construction, financing and operation of infrastructure projects. The United Kingdom and Australia are often held up as world leaders in promoting and engaging public-private partnerships. In the United Kingdom, experience suggests that public-private partnerships can provide greater cost certainty and result in a more timely delivery of infrastructure.^[1] Australia, a country of almost 20.8 million people, enjoys one of the most developed P3 markets worldwide, in 2005 worth an estimated $20 billion in prospective and ongoing projects. Canada has an opportunity to take advantage of this tool on behalf of Canadians.

The national fund for public-private partnerships, which is a key part of the long-term plan for infrastructure, will encourage the development of the P3 market in Canada. In the case of large projects seeking funding from the Building Canada Fund and the national fund for gateways and border crossings, proponents will also be required to demonstrate that the option of undertaking the project as a public-private partnership has been fully considered.

Budget 2007 provides $25 million over the next five years for a new federal office that will help execute public-private partnership projects. The office’s mandate will have two main objectives:

• Identifying opportunities and executing public-private partnerships at the federal level.


• Overseeing the assessment of public-private partnership options for projects seeking funding from federal infrastructure initiatives.

The Minister of Finance and the Minister of Transport, Infrastructure and Communities will work in collaboration to set up and manage the office.

Windsor-Detroit

The Windsor-Detroit Corridor is our most important artery of trade, accounting for 28 per cent of Canada-U.S. merchandise trade. Many regions in Canada depend on the efficient movement of goods and people through this corridor. This includes not only Ontario, but also Quebec (in 2004, an estimated $5.7 billion of Quebec’s merchandise exports to the U.S. transited through this corridor). Both long-term planning studies and stakeholders have confirmed the need for a new crossing. Canada’s New Government recognizes that ensuring sufficient border capacity between Windsor and Detroit is an issue of national importance.

A binational planning process, already well advanced, will recommend a location for the new crossing by mid-2007. The International Bridges and Tunnels Act, which recently received Royal Assent, establishes a legislative framework to protect the national interest for safety, security, and the efficient movement of goods and people, and to promote competition. This law will apply to the new crossing for the Windsor-Detroit Corridor.

As promised in Advantage Canada, Budget 2007 sets out a financing strategy for a new crossing at Windsor-Detroit:

•  The Government of Canada will be responsible for the Canadian half of the new international bridge, including the Canadian plaza. Once the precise locations for the bridge and plaza have been determined, the Government will proceed swiftly with the necessary property acquisition. The Government will also create a new public entity that will own this key component of the new crossing. In concert with Michigan and its U.S. partners, Canada is exploring partnering with the private sector to design, build, finance and operate the bridge. The new public entity should help in realizing this public-private partnership.


• Responsibility for the access road that will link the bridge with Highway 401 rests with the Province of Ontario. To help support this important component of the new crossing, Canada's New Government will make a contribution to cover 50 per cent of the eligible capital cost of building the access road. This contribution will come from the new national fund for gateways and border crossings. Budget 2007 sets aside $400 million from this new national fund for this important project.

Budget 2007 provides $10 million over three years to Transport Canada to help support its legal, financial and technical work to implement this important project.

Table 5.4
Infrastructure Advantage (millions of dollars)

	2006–07	2007–08	2008–09	Total
Federal P3 office		5	5	10
Windsor border team		5	3	8
Total—Infrastructure Advantage		10	8	18

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¹PFI: Construction Performance, United Kingdom National Audit Office, February 2003.[Return]

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