Liberals tell provinces infrastructure cash tied to helping economy, environment

The Trudeau government is telling provinces and territories that billions in new infrastructure money won’t flow from federal coffers unless lower levels of government can show that the spending will boost the rate of economic growth.

Nor will projects likely be eligible for federal funds if they can’t show a benefit to the environment — particularly reducing greenhouse gas emissions — as the Liberals place conditions on $33 billion in planned spending over the next 11 years.

In letters being delivered today, Infrastructure Minister Amarjeet Sohi tells his provincial counterparts that the government is taking an outcomes−based approach to funding decisions, which means projects have to meet national objectives and not just local interests.

Under the terms of federal funding outlined in Sohi’s letters, provinces will have to publicly report on the environmental and employment benefits from any project.

Sohi is putting an emphasis on thinking big, prioritizing new projects — not renovations, as the Liberals allowed under their short−term plan introduced last year — and insisting that the provinces agree not to use the federal dollars in place of their own.

"We want the new programs announced in Budget 2017 to focus on outcomes that will have a positive, real impact on Canadians for generations to come," he writes.

The $33 billion is part of $81.2 billion in the Liberals long−term infrastructure program that Sohi specifically oversees, with the remainder to be doled out under the watchful eyes of two other ministers and the soon−to−be−created federal infrastructure bank.

None of the money can flow to projects without funding agreements in place with provinces. The letters sent Thursday set the parameters for those negotiations. Sohi writes that the government wants to have agreements in place no later than March 2018.

The Liberals have banked on their infrastructure program as a key driver of economic growth, the hope being it can help increase government revenues and thereby do battle with the deep deficits the Finance Department predicts will continue for years to come.

The government plans to cover up to 40 per cent of the cost of new city projects, with provinces expected to pony up at least 33 per cent of eligible costs. Federal dollars will cover up to half the cost of provincial projects, and 75 per cent for Indigenous projects.

Territories and their cities will be eligible to have up to 75 per cent of project costs covered by Ottawa.

Private companies will also be eligible to have the federal government cover one−quarter of their cost, unless they are a community, cultural or recreation facility in which case the Liberals won’t cover any of the costs.