Dion commits $70-billion over 10 years for infrastructure

[unimaginative2]

That infrastructure bank is definitely an excellent idea. One of the big problems that municipalities face is the cost of borrowing for infrastructure projects.

Dion commits $70-billion over 10 years for infrastructure


CAMPBELL CLARK
Globe and Mail Update and The Canadian Press
September 18, 2008 at 1:18 PM EDT

TORONTO — Liberal Leader Stéphane Dion took a ride on a Go Train to Toronto to underline his pledge to devote all annual surpluses of more than $3-billion to public infrastructure, but at a time when surpluses are disappearing, he proposed no new funds in the short term.

Mr. Dion has pledged the Liberals would spend infrastructure money differently, with more emphasis on environmentally-friendly projects.

The Liberals say they will create a 10-year, $70-billion "plan" for building infrastructure, although they are not proposing any additional new money in the next four years.

They have proposed one new initiative, essentially lifted from U.S. Democratic presidential candidate Barack Obama: an infrastructure bank.

That would see the government set up a crown corporation so that provinces and municipalities could borrow at lower interest rates to finance infrastructure projects. Canadians would be able to buy shares in the bank or "green bonds," while the debt would be backed by government guarantees.

In addition, the Liberals said they would devote any surplus over $3-billion to infrastructure, rather than debt.

Mr. Dion said Canada is facing an infrastructure deficit in the hundreds of billions of dollars and he promises to invest “aggressively†to address the problem.

He said government must make investments that will increase competitiveness and create good, well-paying jobs.

Mr. Dion said the Liberals would honour existing framework agreements between Ottawa and the provinces, and adjust the gas tax transfer to help municipalities stay ahead of rising infrastructure costs.

“Canada's cities and towns are the engines of our economy,†said Mr. Dion. “Without significant long-term investments in infrastructure, our economy and environment will suffer.

“This plan will provide Canada's economic engines with the support they need, and is an important part of our efforts to reduce Canada's environmental footprint.â€

Mr. Dion made the statements in Toronto, where he appeared alongside Toronto-area candidates and former leadership rivals including Michael Ignatieff, Bob Rae, Gerard Kennedy, and Martha Hall Findlay.

And at a time when Mr. Harper's minister is under fire – and Mr. Dion's own leadership performance has been criticized – the Liberal Leader did not hesitate to play up his team.

“I have an extraordinary team. He has a lamentable team. I work with a team. He works alone,†he said.

On Wednesday, Green Leader Elizabeth May said she would raise the GST one point to six per cent to pay for municipal infrastructure.

 

[299 bloor call control.]

I am also encouraged by the possibility of Green Bonds.

Most encouraging, however, was Dion promising to link the gas tax transfers to economic growth. That has been a huge sore point for the cities in the past. Also, he seems to be edging towards sustained funding, not pick-and-choose-your-photo-op as Harper has done over the past couple years.

 

[kEiThZ]

Finally, a Liberal idea I can vote for....this something I've been advocating for a while....

I am still waiting to see how they cost their promise though...where do they plan on getting an extra 7 billion a year?

 

[scarberiankhatru]

I wonder how much it'd cost to implement a national garbage/recycling plan...I think that'd be a good use of a portion of such an infrastructure bank. If the plan requires minimum goals but encourages municipalities/provinces to do more, the bank could provide matching funds. I'm quite sure we can get virtually everyone used to green bin programs, to properly dispose of anything that needs proper disposing, etc. On the other hand, I wouldn't be at all opposed to seeing the full $70B in the next 10 years spent on rail lines and public transit.

I'd buy green bonds to support things like wind farms and subways.

 

[unimaginative2]

Finally, a Liberal idea I can vote for....this something I've been advocating for a while....

I am still waiting to see how they cost their promise though...where do they plan on getting an extra 7 billion a year?

Remember that governments can borrow for things like infrastructure spending without affecting the operating surplus (or deficit, since Harper's been in).

 

[lordmandeep]

True and the increase in interest payments is not significant enough to bring us to debt.

 

[afransen]

On Don Newman's show today, one think-tank guest suggested that the government should print money to plow ahead with spending promises, even if the economy suffers to the extent that we enter a deficit position. Essentially, rather than borrowing, it would be implementing an 'inflation tax', since newly created money lowers the value of money already in circulation (inflation). He argued that this would be acceptable since we will likely be entering a period of quite low inflation with commodities cooling off and weak economic growth.

I think it's a reasonable idea, if done in moderation and only temporarily. It essentially allows government to keep the proceeds of some of the growth in the money supply, rather than letting banks reap that reward (as they do to the tune of tens of billions of dollars per year).

 

[Dan416]

I don't know why this announcement hasn't made a bigger splash. It seems like a big deal to me. Something we've all been waiting for.

 

[Hydrogen]

Maybe some people are trying to figure out where all the funding will come from? The Liberals are racking up the promises.

 

[kEiThZ]

The 70 billion it now appears could have been promised by any of the parties really. Only 22.4 billion of it is in the first 4 years and half of that is counting the current GST rebate and gas tax transfer to municipalities. Another chunk of it is already committed spending: Pacific gateway (0.6 bn), gateways and borders (1.4 bn). And paradoxically, some of that is to phase out existing programs (1.3 billion) and run the infrastructure bank (0.3 billion). This does not leave a lot of new spending....I'd say about 7 billion for 4 years. But that's all based on them cutting 12 billion over 4 years from the rest of the budget and on fairly optimistic GDP projections.....

 

[afransen]

Which GDP figures should they use, if not the Ministry of Finance figures? They also noted that updated figures are generally released mid-September, and mysteriously have not yet surfaced. I'll give the CPC the benefit of the doubt unless the figures are not released by October.

And, unless I misread their costing, they left themselves ~$16 billion over four years in wiggle room, so I'm not sure how tight their costing actually is.

 

[kEiThZ]

Which GDP figures should they use, if not the Ministry of Finance figures? They also noted that updated figures are generally released mid-September, and mysteriously have not yet surfaced. I'll give the CPC the benefit of the doubt unless the figures are not released by October.

And, unless I misread their costing, they left themselves ~$16 billion over four years in wiggle room, so I'm not sure how tight their costing actually is.

On this point I agree. I am dismayed that the Finance dept didn't release an economic update before the election. Anyway, I always thought parties did their own projections with their own economists.

From my read of it they have only 13.3 billion of playing room (operating balance) of which 12 billion is committed to reducing the debt, leaving only 1.3 billion to play with, really. And all that is based on 12 billion worth of reallocation. A percentage point less of GDP growth in any of the 4 years and they are sunk. They will have to make cuts to make this work. And they haven't said what's going yet.

That being said, I am still waiting to see the CPC plan. And the Liberals are at least committing something to infrastructure, though personally I'd like to see them transfer the tax points down and let the provinces deal with infrastructure. The fed should only be involved in national projects...high speed rail, olympic bids, etc.

 

[cuzzin_elias]

Dion has some decent policies actually... just too bad he's such a dick.

 

[afransen]

On this point I agree. I am dismayed that the Finance dept didn't release an economic update before the election. Anyway, I always thought parties did their own projections with their own economists.

From my read of it they have only 13.3 billion of playing room (operating balance) of which 12 billion is committed to reducing the debt, leaving only 1.3 billion to play with, really. And all that is based on 12 billion worth of reallocation. A percentage point less of GDP growth in any of the 4 years and they are sunk. They will have to make cuts to make this work. And they haven't said what's going yet.

Well, given that that $1.3 billion would merely eat into $12 billion in planned debt reduction and not actual deficit, I don't see the harm, especially since they are proposing to budget more conservatively than the Conservatives.

That being said, I am still waiting to see the CPC plan. And the Liberals are at least committing something to infrastructure, though personally I'd like to see them transfer the tax points down and let the provinces deal with infrastructure. The fed should only be involved in national projects...high speed rail, olympic bids, etc.

I think that, like it or not, the feds will be involved in infrastructure. Take for instance the Confederation bridge. It would not have been built without federal aid, as the provinces involved don't have the tax-bases to support it. Given that these kinds of projects will be financed by the feds in the smaller provinces, why not have it done within the framework of an equitable per-capita infrastructure fund and not as part of an equalization-by-stealth ad-hoc funding process?

 

[299 bloor call control.]

On this point I agree. I am dismayed that the Finance dept didn't release an economic update before the election. Anyway, I always thought parties did their own projections with their own economists.

Yes, but by using the existing economic numbers from the budget, the Liberals have pretty much set a trap for Harper.

1) They can't say that the Liberal costing is wrong, because it is based on their government's numbers

2) They can't say that the Liberal costing doesn't reflect current economic conditions, or they are admitting that they probably are in a deficit position. If they did say that, the Liberals would demand for the economic update, and that'll probably slaughter the Tories in the polls.

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The bigger picture though is that this isn't about costing. This is about putting forward a plan for ridding us of this infrastructure deficit that's been allowed to grow for so long. The fact is, the Liberals are the only party so far who have put together some sort of strategy beyond gas tax (which was a Liberal initiative to begin with) and one-off vote-buying projects (like Peterborough Rail)