Feds pledge $2.2 billion to municipalities for infrastructure
The federal government introduced Bill C-25 in the House of Commons on March 25. The proposed legislation contains more than $7 billion in new spending on health care, COVID vaccine roll-outs and local infrastructure projects.
"COVID-19 has placed extreme pressure on health care systems across the country. The pandemic is still here and many parts of our country are facing the threat of a third wave right now," Finance Minister Chrystia Freeland said in a virtual press conference. "This money will ensure that our health system will not buckle under the continued strain of the pandemic, under the pressures of the third wave and new variants."
The proposed funding includes a one-time top up of $4 billion for the Canada Health Transfer to help provinces and territories address immediate health-care system pressures, including addressing backlogs in access to care as the pandemic continues.
A further $1 billion will be issued as a one-time payment to the provinces and territories to ensure the COVID-19 vaccine roll-out continues to accelerate, keeps pace with growing supply, and does not encounter any delays.
Meanwhile, municipalities and First Nations communities will share in $2.2 billion to address short-term infrastructure priorities. Those funds would flow through the federal Gas Tax Fund—which the government proposes to re-name as the Canada Community-Building Fund.
The additional funding is significant for municipalities, which have seen revenues plummet and their abilities to fund operations compromised since the onset of the pandemic in early 2020.
The additional spending would double the federal government’s regular funding for municipalities, and provide much needed funding for communities of all sizes to help reduce the risk of infrastructure projects being delayed or cancelled.
“As we rebuild from the greatest public health and economic crisis of our time, I understand the vital role that immediate investments in infrastructure will play in addressing the needs of municipalities and Indigenous communities, reviving local economies and improving the lives of Canadians,” said Infrastructure Minister Catherine McKenna. “The Government of Canada is taking decisive action to support communities across Canada by proposing to double this year’s federal Gas Tax Fund payment and rename it the Canada Community-Building Fund. This would put $2.2 billion in the hands of communities to fund projects like high-speed broadband, public transit and recreation centres, and get Canadians to work.”
That funding announcement is welcome relief to municipalities—and to the construction industry—says the Residential and Civil Construction Alliance of Ontario (RCCAO).
“We commend the federal government for the co-operative approach it has taken with provinces and municipalities since the beginning of the pandemic and the leadership it is taking on providing much-needed funding to municipalities in 2021,” says executive director Nadia Todorova. “It is critical that the proposed funding be swiftly approved by Parliament to prevent municipalities across Ontario from being forced to use money from their capital budgets to pay for higher operating expenses caused by the pandemic.”
RCCAO has advocated for increases to municipal funding since the summer, when the financial effects of the pandemic became clearer, and local governments began cutting capital projects in an effort to balance their books.
The alliance says it looks forward to further funding commitments from the federal government in its April 19 budget.