The Canada West Foundation has a long history of monitoring government tax and spending trends.

Buried inside my computer are several databases of federal, provincial, and municipal finance data that stretch all the way back to 1960.  Some fiscal metrics go all the way back to Confederation.  Whenever I get some free time—and that’s rare in this business—I work to update and refresh the databases.

Where Does the Money Go?

When it comes to the public expenditure of our hard-earned tax dollars, it’s often hard for Canadians to sort things out.  Part of the problem is that governments—regardless of colour, stripe, or flavour—will try and maximize political credit when they spend.  So, expenditures are often announced and flow piece-meal.

Government budgets, the public accounts, reports of the bond raters, and Statistics Canada are just some of the sources I use to get to the bottom of things.  It can be frustrating because sometimes the information is not broken out.

One question that I’ve been mulling over lately is the extent to which the federal government has worked to re-invest in Canada’s infrastructure.  Specifically, how much federal support has been flowing to the provinces and our municipalities to help rebuild the nation’s critical public capital assets?  I did some digging.  Here’s a quick summary.

The Chretien Years 

Just like today, the early 1990s were a time of recession.  In its 1994 budget, the new Chretien government announced the Canada Infrastructure Works Program (CWIP) to reinvest in infrastructure, stimulate the economy, and create jobs.  The program made available $2 billion in new federal funding.  In the 1997 budget, another $425 million was added to “top-up” the program.  The CWIP was the first programmatic attempt at boosting public capital investment in Canada.

The CWIP proved to be quite popular with municipal leaders who had been struggling for years with inadequate resources for local infrastructure.  So, in the 2000 budget, the federal government announced $3.1 billion in new infrastructure funding under the Infrastructure Canada Program ($2.05 billion), the Strategic Highway Infrastructure Program ($600 million), the Prairie Grain Roads Program ($175 million), and the Green Municipal Investment and Enabling Funds ($250 million).

The 2001 budget announced another flurry of spending, including $2 billion under the new Canada Strategic Infrastructure Fund, $600 million for a new Border Infrastructure Fund, $680 million for a new affordable housing program, and $80 million for cultural infrastructure projects.

The 2003 budget provided a $2 billion “top-up” for the Canada Strategic Infrastructure Fund and added another $320 million for the affordable housing initiative.  It also contained a new $1.0 billion program specific for municipalities—the Municipal Rural Infrastructure Fund.

Total investments under Jean Chretien:  $12.2 billion. 

The Martin Years

The Paul Martin government crafted two budgets, both of which upped the infrastructure ante in two important ways.  First, the 2004 budget provided a full rebate of all GST paid by municipalities.  This replaced the 50% credit that had existed previously.  The effect of the rebate was to release $1.3 billion for infrastructure from 2003-04 to 2005-06.  The 2004 budget went even further, announcing that the federal government would begin sharing the federal fuel tax with municipalities.  This provided a $600 million infrastructure boost for 2005-06.

Total investments under Paul Martin:  $1.9 billion. 

The Harper Years

The new Harper Conservatives inherited all of the Liberal infrastructure funding programs, most of which were designed to stretch out over several years.  In the 2006 budget, the Harper government kept both the GST rebate and fuel tax sharing in place.  The first would provide $625 million for infrastructure in 2006-07.  The second would provide $600 million.  New spending was also announced, including $745 million in “top-ups” for existing infrastructure programs and a new Pacific Gateway Initiative seeded with $24 million.

The 2007 budget was the real watershed for infrastructure.  It cemented the federal commitment by pulling together all federal infrastructure support into a broader program that would stretch from 2007-14.

The fuel tax sharing would provide $11.8 billion and the GST rebate $5.8 billion.  A new Building Canada Fund was created with $8.8 billion, and a new PPP Partnerships Fund was established with $1.3 billion.  Infrastructure for trade totalled $3.1 billion, including the Gateways and Border Crossings Fund ($2.1 billion) and the Asia-Pacific Gateway ($977 million).  A $2.3 billion commitment was made for provincial and territorial infrastructure and other existing programs were “topped-up” with $4.0 billion.  The total package in the 2007 budget was $37.1 billion.

The global economic recession prompted another round of investments in the 2009 budget.  As stimulus, the federal government committed another $4.0 billion for infrastructure, created a $1.0 billion Green Infrastructure Fund, and announced $500 million in new community infrastructure.

Total investments under Stephen Harper:  $44.6 billion (Includes $18.9 billion from the GST rebate and fuel tax sharing established under Paul Martin.)

Pulling it Together

Whew!  I think I got it all.  Some $58.6 billion in federal support for infrastructure from 1994-95 to 2013-14.  That sounds like a lot.  It is a lot.  But, we also need to put that in perspective.

First, the amount stretches out over 20 years.  The federal commitment to infrastructure averages about $3 billion annually.  The 2012 budget estimates $255 billion in federal revenue for the year.  An average annual federal commitment of $3 billion is 1.2% of total revenue.

Second, the needs are great, and the numbers tell the story.  In the 1960s and 1970s, governments spent about 5% of GDP on infrastructure.  That fell to 3% in the 1980s.  It bottomed out in 2000 at about 2%.  Since then, infrastructure investment has pushed up again to 3%, largely fuelled by increased federal support.  While a percentage drop here and there doesn’t sound like much, it’s massive.  Canada’s economy was valued at $1.7 trillion in 2011.  A 1% change in spending relative to GDP amounts to $17 billion annually.  Thus, spending 5% on infrastructure as opposed to 3% amounts to $34 billion.

In the last decade, Canada has certainly made headway on the nation’s infrastructure.  That’s good news.  The federal commitment should continue.  Work now underway for a new Long Term Infrastructure Plan to replace the Building Canada Fund should do just that.

By: Casey Vander Ploeg, Senior Policy Analyst