Point of View: Is 2017 the Year that Infrastructure Trumps All?

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Alan Siebenthaler

Siebenthaler

It’s been a maelstrom of change in the past 12 months across North America. Canadians welcomed new Prime Minister Justin Trudeau, and citizens of the United States voted in President Donald J. Trump.

And while Canadian and American priorities differ significantly, both politicians have made their priorities clear. And at the top of their list? Infrastructure.

Both leaders have suggested that it’s time to start investing more in infrastructure projects across Canada and the United States to keep communities safe and economies growing.

Each country has released report cards for their infrastructure over the past three years. The United States 2013 report card from the American Society of Civil Engineers gave them a score of D+ and suggested an estimated investment of $3.6 trillion by 2020. A new report card is set to be released in 2017.

The 2016 Canadian Infrastructure Report Card found that one-third of Canada’s municipal infrastructure is at risk of rapid decline and deterioration. The Canadian government released its budget on March 22, 2016. The budget doubled funding for Canada’s infrastructure, but there have been some recent changes since then—meaning more investment, and more deficits for the country.

According to the Federation of Canadian Municipalities (FCM) every $1 billion invested in infrastructure generates between $1.20 billion and $1.64 billion in real GDP growth.

We still have to wait on proposals from President Trump, but what he has suggested so far points to significant funding and investment changes country-wide.

So where will you see these changes?

Canadian Infrastructure Promises

The Canadian Liberal Government added to their 2016 budget in early November bringing the total investment up to $186 billion over 11 years. This is a change from the initial designated $120 billion over $10 years promised in the spring. It combines a budget being put out by the liberal government, as well as money that was already designated toward infrastructure by the previous Conservative government through the New Building Canada Plan.

This extra funding is set to be split evenly across each province and territory—with $11.9 billion of the funds already being used for projects, including $5 billion for investments in water, wastewater and green infrastructure.

The November budget changes mean a $25 billion deficit for 2016-2017, bringing the projected total between 2016 and 2022 to approximately $130 billion in deficits.

Canadian Budget Rollout

More infrastructure funds are also continuing to flow each year from the Gas Tax Fund and Incremental Goods and Services Tax (GST) Rebate for Municipalities ($3 billion), and from the New Building Canada Fund’s Provincial-Territorial Infrastructure component ($9 billion).

Any money that the government has leftover each year will go to municipalities via Gas Tax payments to make sure that all of these funds are being allocated.

The new government is also planning on starting the Canadian Infrastructure Bank (CIB) as a means of ensuring that projects are selected through a smarter, more transparent and well-planned screening system. Finance Minister Bill Morneau has cited that $35 billion will be put into this bank to encourage foreign investments, with $20 million to be sourced from private investments, while $15 billion sourced from the existing budget.

Canadian Projects

There is a list of the top 100 infrastructure projects in the works across Canada at top100projects.ca.
You can also look at water infrastructure projects across the country that are being funded by Public-Private Partnerships (P3) under the New Building Canada Plan at p3canada.ca.

What does the future hold for America?

As a part of his 2017 budget, President Obama proposed adding $158 million to an Environmental Protection Agency (EPA) program called the Drinking Water State Revolving Fund (DWSRF). It’s an 18 percent increase over this year’s funding and will directly help communities affected by water contamination. The 2016 fund has $20 million, with an assumed state match of $5 million.

However, under the new Republican government, President Trump is proposing to triple the funding for state revolving loan fund programs in order to make clean water a high-priority.

His platform pushed the American Energy and Infrastructure Act which will put $1 trillion of funding into infrastructure over the span of 10 years. The plan, however, is to remain deficit-neutral. Instead of depending on loans, the government will encourage public-private partnerships with infrastructure tax-credits, and keep projects on track with incentive-based contracting.

The Organization for Economic Co-operation and Development (OECD) has given its support for this plan as a way to grow the economy, and create jobs across America.

You can check out how much funding is going to each state from the DWSRF and the CWSRF at epa.gov.

Alan Siebenthaler is marketing/territory manager at Hamilton Kent.

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