February 28, 2005
Funding for upgrades at border crossings
Municipalities get bigger share
of gas tax in federal budget
By Grant Cameron
staff writer
Canadian municipalities will soon have more money flowing into their coffers to invest in public infrastructure, thanks to a budget tabled in the House of Commons last week by federal Finance Minister Ralph Goodale.
The minister confirmed that beginning this year the federal government will start sharing a portion of revenue from the federal excise tax on gasoline and also invest in infrastructure at border crossings.
The government will transfer $600 million to municipalities this year, up from the original commitment of $400 million, and gradually raise the amount to $2 billion per year by fiscal 2009-10 and every year thereafter.
In addition, the budget confirmed that existing infrastructure programs — like the Canada Strategic Infrastructure Fund and the Border Infrastructure Fund — will be renewed as initial allocations expire.
Meanwhile, the budget also proposes ending the corporate surtax and reducing the income tax rate paid by companies — a measure that will specifically help small- and medium-sized construction enterprises.
Goodale announced there will also be an immediate injection of $300 for Green Municipal Funds and of that amount, half would be spent on brownfield cleanups.
The budget was silent, however, on the issue of funding for Canada’s highway system. Opposition critics also noted that a number of the measures in the budget would not take effect for years down the road.
Michael Atkinson, president of the Canadian Construction Association, welcomed the gas tax commitment although he was disappointed it will take five years for government to ramp up to the $2-billion figure.
Atkinson said he’s also pleased the federal government is going to continue the existing infrastructure programs.
“They have made a commitment to, in fact, renew those programs when they reach the end of their term. So once again, we’re very enthused about the government’s long-term commitment to infrastructure.”
On the downside, however, Atkinson said highways were virtually ignored in the budget.
“Whereas the federal government has taken a great role in the municipal area, they have not done so in the area of our strategic highways. That is of some concern because we feel it is going to take a similar effort by the federal government, with the provincial governments, to really turn that dire situation around.
“It is somewhat ironic that since the early ‘80s or so since we’ve been harping on the need to invest in our national highway system, and even more basic than that, for our country to have a national highway program or policy, we’re the only developed nation in the world that does not have this kind of long-term plan for a strategic highway system.”
Mary Lawson, president of the Canadian Home Builders’ Association said the budget is a step in the right direction because it pays down the debt, controls spending, and commits long-term funding for infrastructure.
“The $600 million allocated this year under the gasoline tax sharing program is a step in the right direction, given the huge infrastructure deficit in our cities.”
Lawson was extremely pleased with the corporate income tax reductions and said the budget also contains initiatives that will enhance economic productivity, especially in the areas of skill development.
“This is particularly important to our industry because of skilled labour shortages and the opportunities we have to introduce new urban technologies such as community energy systems and brownfield remediation.”
Andy Manahan, development promotion representative with Local 183 of the Universal Workers Union, was pleased that the gas tax funding is now in writing but he wanted it immediately ramped up to $1 billion a year.
“At least there’s a commitment, although I’m not sure increasing the money every year is the best method.”
Manahan also said he was pleased that the government is setting aside $225 million over five years to quadruple the number of homes retrofitted under the EnerGuide for Houses Retrofit Incentive program.
The budget was the eighth consecutive balanced budget — the longest unbroken string of surpluses since Confederation.
“Last summer, we set out an ambitious agenda for Canada’s future — to maintain our unparalleled fiscal success, to invest in our people, to achieve a more productive and environmentally sustainable economy, and to bolster Canada’s role in global affairs,” Finance Minister Goodale said.
“This budget takes major steps to deliver on those commitments.”
In his budget speech, Goodale said that at least half of the new revenues to be transferred through the gas tax would be dedicated to sustainable infrastructure.
“Our commitment was to transfer a total of $5 billion over five years — beginning with a penny per litre or $400 million in this coming year. We will do better — starting at $600 million, not just $400 million — and then rising as promised to five cents per litre or $2 billion in 2009-10, and continuing thereafter indefinitely.”
Goodale noted that the new revenue transfers would be in addition to existing municipal, rural, strategic and border infrastructure programs. On taxes, Goodale said the corporate surtax would be ended in 2008.
The overall corporate rate will remain at 21 per cent until 2008, when it will be reduced a half percentage point. It is to fall to 19 per cent in 2010.
Companies are also getting faster writeoffs for investments in environmentally friendly energy systems such as co-generation plants providing both heat and power or windmills and micro-hydro projects. The capital cost allowance on such systems will rise to 50 per cent a year from 30 per cent.
Goodale also noted in his speech that, all told, the government is committing a minimum of $4 billion over five years for action on climate change — not including the commitments to green public infrastructure.
Specifically, a Clean Fund is being created which will use the marketplace and competition to pursue the most cost-effective green projects aimed at lowering greenhouse gas emissions.
The fund will have an initial capital base of $1 billion and, invest in high-quality environmental projects.
The government is also quadrupling Canada’s Wind Power Production Incentive, something Goodale said will create enough energy — with zero emissions — to power one million Canadian homes.
'Our only caution would be that whatever program is put in place it must be linked with certified contractors so the job is done right. We want to make sure the money does not go into the underground economy.”
Andy Manahan
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