Provinces call on Ottawa for more infrastructure cash

“We will continue to hammer away on this point between now and the (spring) federal budget,” Quebec Finance Minister Carlos Leitao said after emerging from a federal-provincial meeting in Ottawa.

“I noticed that Mr. Oliver showed some openness, (but) there were no extravagant promises, either.”

Ontario Minister Charles Sousa called on the federal government to match infrastructure spending pledges by the provinces — even if it means taking out loans.

He said Ontario has committed $130 billion to infrastructure in the province over the next 10 years. The federal government, meanwhile, says it has allocated $75 billion for infrastructure across Canada over the same time period.

“We’re asking the federal government to increase that pool of funds for the benefit of these projects overall — $70 billion is not enough when you look at one province alone putting $130 billion,” Sousa said.

He suggested Ottawa take advantage of currently low interest rates to borrow for the projects, which would not have a significant budgetary impact because they would be capital investments.

“We’re calling on the federal government to be a little more assertive in that regard,” said Sousa, who noted that Ontario, Quebec and Manitoba made a joint presentation to Oliver on the merits of increased infrastructure spending.

“Mr. Oliver has suggested that the timing by which further infrastructure spending would occur would happen when he has more certainty, I presume, with the global economy. But it’s exactly contrary to what’s been suggested by so many other economists and specialists, including (Bank of Canada) governor (Stephen) Poloz.”

Before the meeting, Oliver said the Harper government had made record infrastructure investments. He also said the Conservative government had transferred more cash to the provinces than its previous administrations.

On Monday, Oliver also announced increases to federal transfers to the provinces next year, bringing the total to almost $67.9 billion — up from about $64.8 billion last year.

“These financial payments are only one part of our partnership with provinces,” said Oliver, who pointed to its infrastructure promises, including the $53-billion New Building Canada Plan.

“We’ve also, for example, made historic investments in infrastructure and we will invest over $75 billion in infrastructure over the next decade.”

A spokesman for Oliver later said the federal government helps fund these projects, but noted the provinces and municipalities are responsible for more than 95 per cent of public infrastructure.

The transfer payments announced Monday, which included health, social and equalization payments, would mean 20 cents out of every tax dollar paid to the federal government in 2015-16 will be handed over to provinces and territories, Oliver said.

The figures said Ontario, Canada’s most populous province, will receive about $1.25 billion more in federal transfer payments next year.

Sousa criticized Ottawa for “shortchanging” Ontario last year, but he said the transfer figures for 2015-16 will put the province where it should be.

“Notwithstanding that, it’s important for us to move forward,” Sousa said. “This enables us to do that.”

Leitao was satisfied with the sum due to Quebec next year: more than $20.3 billion. That amount includes equalization money because Quebec is a so-called “have-not” province.

“I hope that one day, ideally, we are no longer eligible for such a program,” Leitao said. “But we still are, so that means our fiscal capacity is still lower than the Canadian average.”

At least one provincial minister was disappointed with his transfer number.

New Brunswick Finance Minister Roger Melanson said while there will be 4.5 per cent growth in transfer funding nationally, his province will only see an increase of 1.7 per cent — to around $2.6 billion.

During the talks, the finance ministers also heard from Poloz and explored the potential consequences of sinking oil prices, which has contributed to the falling dollar.

Some provinces will see benefits from the low price of crude in the form of cheap gas at the pump and a better environment for exporters.

On the other hand, the bottom lines of oil-producing provinces and the federal government have taken financial hits from the rapid fall in crude prices.

On balance, experts say the sharp drop in oil prices since the summer has been a net negative for Canada. On Monday, oil was below US$56 a barrel, compared to its US$107 price tag in June.

Oliver said his department is monitoring price changes closely, but he maintained Ottawa is still on track to run a budgetary surplus next year.

He wouldn’t say how low oil would have to go before the federal government could no longer be able to fulfil that promise.

“I’m not prepared to come up with a number at this point,” Oliver said.

“I don’t want to engage in negative hypotheticals. The oil market is quite volatile now and I don’t want to make any assumptions about further declines.”