August 9, 2010 / 9:27 PM / in 7 years

Report warns of delays to Canada stimulus projects

VANCOUVER (Reuters) - Project delays could cost Canadian communities millions of dollars in federal infrastructure spending aimed at stimulating the economy, Parliament’s budget watchdog warned on Monday.

The federal government has allocated nearly all of the C$4 billion ($3.9 billion) approved last year, but up to C$500 million might not get used, Parliamentary Budget Officer Kevin Page said in his quarterly review of spending.

The budget office “has identified a noticeable delay in project start and end dates against the original projections,” the report said.

The delays mean some projects will not be completed by the end of March 2011, the deadline for receiving federal aid, it said.

Most infrastructure projects are being financed through a combination of federal, provincial and local funding. More than 6,100 infrastructure projects have received funding, Ottawa said.

Conservative Prime Minister Stephen Harper said he would not speculate on the possibility of delays to stimulus spending. Some 93 percent of available funds has already been allocated in some form, he said.

“We’re optimistic at the federal level. I think virtually all our projects will be complete ... We’re optimistic that our partners will achieve the same thing in most cases,” he told reporters after announcing the government would contribute up to C$15 million in upgrades to the Vancouver Aquarium.

He said a move to restrain spending and bring government deficit and debt levels down would enhance economic recovery, an idea discussed by Group of Eight industrialized nations at their recent summit in Canada.

The federal government has said it will not continue stimulus spending after next year as it focuses on efforts to reduce the deficit.

Opposition Liberal leader Michael Ignatieff said he did not agree with an arbitrary deadline to end stimulus spending.

“You can’t go to a small town in Canada and talk to a councilor or a mayor for two seconds without them thinking we’re going to need some more stimulus after 2011 just to finish the projects that are underway,” he told reporters in Ottawa before getting on a bus to continue his cross-Canada summer tour.

“So I think they’ve got to show some flexibility at a minimum.”

The budget office, which used different models to forecast the spending, said that under its mid-case scenario 936 projects scheduled to receive C$293 million from Ottawa would miss the deadline.

Under its worst-case scenario, just over 46 percent of the total numbers projects will miss the deadline, the report said. That would mean more than C$500 million not spent.

($1=$1.03 Canadian)

Reporting Allan Dowd, additional reporting by Ka Yan Ng in Ottawa; editing by Peter Galloway

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