March 29, 2012

Good News for Engineers:
Building Canada Fund Maintained until 2014 -
Some New Infrastructure Programs Revealed

The Honourable James Flaherty, Minister of Finance

Today the Minister of Finance, James Flaherty, released the 2012/2013 federal budget: Jobs, Growth and Long-Term Prosperity.  ACEC was invited to participate in a limited access stakeholder Budget Lock-up in Centre Block on Parliament Hill.  This was a private, closed door session with Senior Political Staff from Finance Minister Flaherty’s Office and Senior Officials from the Department of Finance.  This opportunity provided ACEC with a unique chance to discuss the Budget implications with key decision makers before the Minister of Finance presented the Budget on the floor of the House of Commons.

Highlights

• $33 billion Building Canada Fund maintained
• Over $480 million in new infrastructure programs over the next two years
• Reduction of red-tape and government approvals process
• Tax credits for small businesses
• Balanced budget expected by 2015/2016

Infrastructure

ACEC was pleased to learn that the seven year $33 billion Building Canada Fund will continue until 2014. It is estimated that approximately $5 billion remains for 2012/2013 and 2013/2014. At a time of fiscal restraint, this is good news.

In other good news, the government has maintained the legislated Gas Tax Fund which allocates $2-billion annually to infrastructure for municipalities.

New Programs

The government has committed to modernize Canada’s public infrastructure with the following new programs:

• $150 million over two years for a new Community Infrastructure Improvement Fund to support repairs and improvements to existing community facilities

• $105 million in 2012–13 on a cash basis to support VIA Rail Canada’s operations and capital projects

• $27.3 million over two years to support the divestiture of regional ports and the continued operation and maintenance of federally owned ports

• $5.2 billion over the next 11 years on a cash basis to renew the Canadian Coast Guard fleet

• $101 million over the next five years on a cash basis to restore and modernize the Esquimalt Graving Dock

In addition, the government will be introducing amendments to the Yukon Act, the Northwest Territories Act and the Nunavut Act to create new regulations that will ensure consistent treatment of borrowing across the three territories and with their Public Accounts.

Investments to Improve First Nations Water Infrastructure

The Economic Action Plan 2012 proposes $330.8 million over two years to build and renovate water infrastructure on reserve and to support the development of a long-term strategy to improve water quality in First Nations communities.

Reducing Red Tape

Streamlining government processes was a central theme in this budget.

Natural Resource Development

The government is proposing legislation to streamline the review process for major economic projects in the area of natural resource development. The Major Projects Management Office Initiative will be renewed for two years ($54 million) to assist with the improvement of approval processes.

In addition, $165 million has been allocated over the next two years for responsible resource development that will create jobs while protecting the environment.

The Red Tape Commission

In January 2011, the Government created the Red Tape Reduction Commission, fulfilling a Budget 2010 commitment. After a year of extensive Canada-wide consultations, the Commission brought forward recommendations to reduce irritants to business that impede growth, competitiveness and innovation.

The Government responded earlier this year by implementing the “One-for-One” Rule. Under this rule, every time the Government adopts a new regulation, it must eliminate an existing one. When a new or amended regulation increases administrative burden on business, the Government will offset—from existing regulations—an equal amount of administrative burden costs on business.

The President of the Treasury Board will develop an Action Plan to address the Commission’s Recommendations Report in the coming months to deliver better regulations that reduce frustration and lower costs for Canadian business.

Incentives for Small Business

The Economic Action Plan 2012 proposes a $205 million fund to extend the temporary Hiring Credit for Small Business for one year. In addition, the government intends to promote the involvement of small and medium-sized enterprises in shipbuilding projects.

International Trade

The government is going to continue to actively pursue new trade and investment opportunities, particularly with large, dynamic and fast-growing economies. Trade relationships will continue to grow with the United States, China, the European Union, India, Trans-Pacific and Asia-Pacific regions, the Americas and Africa.

Balancing the Budget

The government remains on track to balance the budget by 2015-2016 and possibly sooner. The largest area of cuts in this budget is within the federal service itself.

The deficit in 2011–12 is projected to be $8.5 billion lower than it was in 2010–11, and it is projected to decrease by an additional $3.8 billion in 2012–13. The deficit is projected to continue to decline to $1.3 billion in 2014–15.

Over the forecast period, the budgetary balance is projected to improve by a total of $39.6 billion compared to the November 2011 Update of Economic and Fiscal Projections.

As a share of gross domestic product (GDP), program expenses are projected to decline from 14.7 per cent in 2010–11 to 12.7 per cent in 2016–17, which represents a return to pre-recession spending ratios.

The federal debt is projected to decline to 28.5 per cent of GDP in 2016–17, in line with its pre-recession level.

Useful Links

This document has been prepared by ACEC for the convenience of its member firms. To consult the official budget documents, please visit Finance Canada.

The Globe and Mail also provides a strong budget analysis.

Sincerely,

John Gamble, CET, P.Eng.
President