IICP still $2 billion short, says PBO
The Parliamentary Budget Officer (PBO) released its latest report into the impact of the federal government’s Investing in Canada Plan (IICP), and finds that program spending to date is $2 billion behind where it was projected to be at this stage when the plan was put into effect in 2016.
The report, which looked at spending on more than 33,000 projects funded by the IICP since 2016–17, shows that the federal government has spent $51.1 billion on projects through the end of 2019–20. That figure, it says, is $2 billion less than what was forecasted by the government in Budget 2019.
What’s more, says the PBO, it’s not altogether clear that increased IICP spending is triggering further provincial infrastructure investments.
“Consistent with previous findings, there is limited evidence that increased federal money has resulted in increased provincial infrastructure spending,” said Parliamentary Budget Officer Yves Giroux. “While federal infrastructure transfers increased by $1 billion in 2018–19, overall provincial infrastructure spending decreased by $800 million.”
The PBO report comes at a time when federal Infrastructure Minister Catherine McKenna is working with her provincial counterparts to spend up to 10 percent of the $33.5-billion provincial and territorial component of the IICP as part of a new COVID-19 funding stream. Under the arrangement, the federal government will fund a much larger share of project costs than usual—up to 80 percent, where it would normally carry about 30 percent.
The federal government also announced on June 1 that it would inject $2.2 billion from the Gas Tax Fund to municipalities for local infrastructure.
The PBO warned that despite the extra money being put into the system, municipal governments may have trouble spending the extra cash.
“Given the significant fiscal pressures faced by provinces and municipalities, it is unclear whether federal funding will be able to leverage new provincial and municipal money over the medium-term for new projects,” the report said.
The PBO report helped clarify some confusion over why more than 20,000 of the 53,000 projects funded under the plan had been unaccounted for. The report found that 20,500 projects were funded through Canada Mortgage and Housing Corporation (CMHC) and the Gas Tax Fund.
Those projects funded by CMHC are women’s shelters, the details of which are withheld by the organization to protect the people who use such services. Those funded under the Gas Tax Fund are not recorded in a centralized database.
Finally, the PBO report pours cold water on the economic impact of the IICP. It estimates that the IICP raised the level of GDP by 0.74 percent and added approximately 65,900 jobs by the end of 2019–20. The report says that lower-than-expected spending compared to the plans set out in Budget 2018 resulted in GDP contributions that were 0.03 percent and 0.04 percent lower in 2018–19 and 2019–20, respectively.
Similarly, full-time equivalent employment was 2,200 lower than planned in 2018–19 and 4,400 lower in 2019–20
Under the IICP, the federal government has committed to spend $187.8 billion between 2016–17 and 2027–28.