May 14, 2009 / 5:46 PM / in 9 years

Canada assailed for slow infrastructure spending

OTTAWA (Reuters) - The Conservative government came under fire from the opposition on Thursday for the slow pace of infrastructure spending aimed at stimulating the economy and for its accounting for what has been spent so far.

<p>Liberal Martha Hall Findlay smiles during a news conference in Toronto, March 18, 2008. REUTERS/ Mike Cassese</p>

“We’re in the middle of May and we still don’t have shovels in the ground. The whole purpose of this was to take advantage of this construction season,” said opposition Liberal Member of Parliament Martha Hall Findlay.

Findlay was speaking at a House of Commons committee and addressing Conservative Transport Minister John Baird, who is responsible for billions of dollars of infrastructure spending set aside for the budget year that started on April 1.

Construction opportunities are limited during Canada’s harsh winters.

Baird was only able to provide a couple of examples of projects that have actually begun as the result of the government’s spending program, but said he would make a full report to Parliament next month.

He said he has tried to cut red tape to get money moving faster, but this prompted questions about whether he was eliminating necessary accountability and due diligence.

“How do you expect your bureaucrats ... to apply the same kind of oversight to this scatter-gun, free-for-all spending as they do to a normal spending package?” asked Pat Martin of the left-leaning New Democratic Party.

Douglas Porter, deputy chief economist at BMO Capital Markets, said the government was in a tough bind on infrastructure spending, demonstrating that such spending is not a perfect way to stimulate an economy fast.

“The main argument for urgency is that we are now in the heart of the downturn, especially on construction, and public spending now could do the most to cushion the blow,” Porter said.

“The longer the projects are delayed, the greater the risk that the spending merely pushes on an economy already into recovery, risking cost pressures.”

The NDP’s Martin suggested that rather than trying to approve thousands of municipal projects, with one-third funding from provincial governments and one-third from the federal government, it would be better just to transfer money broadly to cities.

Baird said the rationale was to leverage the federal spending with additional contributions from lower levels of government.

“We wanted to get provinces and municipalities to have some skin in the game to match our investments, so instead of creating one job we can create three,” he said.

Reporting by Randall Palmer; editing by Frank McGurty

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