Question Period Note: COUNCIL OF THE FEDERATION REQUEST FOR INCREASED INFRASTRUCTURE FUNDING

The Council of the Federation recently called for increased federal infrastructure funding and flexibilities. How will this government support provinces and territories’ infrastructure needs?

• In response to the challenges brought on by the COVID-19 pandemic, the federal government is working closely with all partners to support economic recovery and to meet immediate infrastructure needs.

• The Department continues to diligently process reimbursement claims and accelerate project approvals to create jobs and improve the quality of life for Canadians.

• The Government of Canada recently introduced the new COVID 19 Resilience Funding Stream based on feedback from the provinces and territories to support the pandemic response, get projects started quickly and strengthen community resilience.

• On September 18, 2020, the Council of the Federation released a letter calling on the federal government to address a number of key priorities:

  ◦ Infrastructure: The Premiers are seeking an increase in federal support for infrastructure by $10 billion per year for 10 years. Furthermore, they are calling for the federal government to streamline its approach to infrastructure, and provide greater flexibility to provinces and territories “in order to respect their priorities.”

  ◦ Health Care: The letter calls on the federal government to immediately increase the Canada Health Transfer (CHT) by $28 billion, from $42 billion to $70 billion, in order to preserve and improve healthcare systems. This increase would bring the federal share of the CHT to 35%, and the Premiers indicated that this proportion should be maintained over time with an appropriate increase in the annual escalator.

  ◦ Fiscal Stabilization Program: The Premiers are seeking that the program be more responsive to economic circumstances and downturns in the resource sectors. Specifically, they call for eliminating the per capita limit, reducing the revenue reduction threshold for non-resource revenues from 5% to 3%, and reducing the threshold for resource revenues from 50% to 40%.

Infrastructure Canada funding support to provinces and territories

• Infrastructure Canada’s largest active-intake program is currently the Investing in Canada Infrastructure Program (ICIP) which is investing $33.5 billion over 10 years via allocations to provinces and territories. The conditions for this funding are outlined in integrated bilateral agreements signed between Canada and each province and territory.

• Infrastructure Canada has introduced a number of short-term flexibilities to the Program to enable provinces and territories to prioritize a wide-range of pandemic and community resilience infrastructure projects and address pressing needs in a timelier manner. To this end, in August 2020, the new COVID-19 Resilience funding stream was established under the program. Provinces and territories can transfer up to 10% of their original Program funding allocations into the new stream. Not only does it allow for a wide range of projects to address the pandemic and improve community resilience and offer accelerated project approvals, projects funded under the stream are also eligible for a significantly larger federal cost share – up to 80% for provinces, municipalities and not-for-profit organizations in provinces, and up to 100% for Indigenous projects and projects in the territories.

• More broadly, the Government of Canada is also helping provinces and territories address the fiscal challenges brought on by the pandemic through the Safe Restart Program (SRA). The SRA will invest $19 billion to help provinces and territories safely restart their economies and make our country more resilient to possible future surges in cases of COVID-19.

• In addition, Infrastructure Canada provides funding through the Gas Tax Fund for community infrastructure priorities. Recognizing the significant impact of the pandemic on municipal budgets, the Government of Canada accelerated the delivery of the 2020 allocation of the federal Gas Tax through one payment in June 2020 to help municipalities move forward with infrastructure priorities quickly.

• The Government of Canada has also introduced the Canada Healthy Communities Initiative (CHCI), being implemented by Infrastructure Canada, which will provide up to $31 million in federal funding to support communities as they deploy new ways to adapt spaces and services to respond to immediate and ongoing needs arising from COVID-19 over the next two years.

Investing in Canada Infrastructure Program

• The $33.5 billion, 10-year Investing in Canada Infrastructure Program is delivered through bilateral agreements with each province and territory. Under those agreements, provinces and territories prioritize eligible projects for funding within agreed funding allocations in the areas of public transit, green infrastructure, community, culture and recreation infrastructure, and rural and northern communities infrastructure. The agreements include commitments to prioritize a fair share of municipal projects, and ensure that projects supporting Indigenous populations are considered for funding.

• Over the past year, close to 33% of the funding allocated for provinces and territories under the 10-year programs has already been approved for specific projects. The vast majority of projects submitted thus far have been projects benefiting municipalities and local communities, notably for public transit, water, wastewater, community, and recreation infrastructure, and for local roads.

• With respect to projects benefiting Indigenous peoples, to date $310 million has been committed to 78 First Nations projects, $281 million to 17 projects in Inuit Nunangat, and $16 million to two Métis projects (as of September 22, 2020).

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