TORONTO (Reuters) - Canada’s Liberal government has been urged to move more quickly to roll out a C$180 billion ($135 billion) infrastructure spending program and provide more details on how its planned infrastructure bank will work.
Prime Minister Justin Trudeau’s Liberals came to power in October 2015 promising to spend big on infrastructure to stimulate Canada’s economy and address an infrastructure deficit estimated at C$123 billion by the Federation of Canadian Municipalities, which represents Canada’s mayors.
Construction and engineering companies as well as infrastructure investors were hoping Finance Minister Bill Morneau would use Wednesday’s budget to provide more details on specific projects and the infrastructure bank, which is being set up to facilitate private investment in large-scale projects. But it contained little new information.
“The government is looking for infrastructure to grow the economy and create wealth and revenue. We don’t want to push that too far down the road,” said John Gamble, president of the Association of Consulting Engineering Companies.
“We’re supportive of this government’s commitment to infrastructure,” he added. “What we don’t see is enough of a roadmap or a timetable of how we’re going to get there.”
The government has been courting Canada’s largest pension funds as well as overseas investors to finance projects facilitated by the infrastructure bank.
It hopes the agency will give it an edge as it competes for capital with the United States, where President Donald Trump is planning to finance a $1 trillion infrastructure spending program entirely from private sources.
Hugh O’Reilly, chief executive of OP Trust, one of Canada’s biggest 10 public pension plans and a big investor in infrastructure, said the government should take whatever time it needs to get the structure of the bank right.
“If this agency gets set up the right way and has political consensus behind it, it will stand the test of time,” he said. “I would have been more concerned if they were rushing it to the gate.”
Veteran pension fund executive Jim Leech was appointed last month as a special adviser on the infrastructure bank, but the government has yet to answer key questions on how it will function, including how it will select projects and how much investment it will seek from private sources.
The government’s economic advisory council, which recommended the creation of the bank, had suggested it could raise C$4 to C$5 of private financing for every C$1 invested by the state.
“There is still not enough clarity around what the bank will do and how it will operate. Everyone was hoping that the government would reveal more,” said Mark Romoff, chief executive of the Canadian Council for Public-Private Partnerships.
Canada’s parliamentary watchdog said in February that the government had so far only found projects for a small amount of its planned spending, putting at risk the likelihood the economy will see as much of a boost as expected.
In its 2016 budget, the government said it would invest C$11.9 billion in public transit, green infrastructure and social infrastructure such as housing, which it described as phase 1 of the investment program.
Last November, Morneau said the government planned to invest an additional C$81 billion over the next 12 years in infrastructure including transport systems that support trade, marking phase 2 of the program.
The government said C$35 billion will be made available to the investment bank. According to Wednesday’s budget, part of that will be for public transit, green infrastructure and transport systems that benefit trade.
Along with commitments made by the last government, the combined initiatives bring Canada’s total planned infrastructure spending to more than C$180 billion.
Reporting by Matt Scuffham