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2016 Federal Budget Update Includes New Infrastructure Funding

2016 Federal Budget Update Includes New Infrastructure Funding

On Tuesday November 1st, Finance Minister Bill Morneau presented plans for additional infrastructure spending in the coming years. In March, the federal budget set aside $120 billion for infrastructure over the course of 10 years, which has now risen to $186 billion. The new package includes several new items:
 
  • $22.6 million in added infrastructure spending the two years following the 2025-2026 fiscal year
  • A new trade and transportation program worth $10.1 billion over 11 years starting in 2017-2018
  • A new rural and northern communities fund worth $2 billion over 10 years starting in 2018-2019
  • A proposed new Infrastructure Bank
 
Funding details regarding the Infrastructure Bank will be presented in 2017 budget; Minister Morneau has alluded to $15 billion in government monies and $20 billion from private investors. The Federation of Canadian Municipalities (FCM) voiced last week that the Bank should be funded with new capital rather than taking from already-promised infrastructure funding. After the update, however, FCM President Clark Somerville expressed support for the plan, acknowledging that total funding for infrastructure has increased and that some projects are better suited for P3 partnerships that would be managed by the Bank. 
 
With the added spending, the budget update does not provide a projection for a balanced budget. Instead, the update projects a shrinking of the debt-to-GDP ratio from 31.8 percent in 2016-2017 to 30.4 percent in 2021-2022.
 
All the money set aside as a contingency fund in March ($6 billion) in anticipation of a sluggish economy has also been used up. The update does not account for any type of new safety net. 

 

From The Globe and Mail and CBC News