March 5, 2010

Budget 2010

No extension of stimulus project deadline concerns Canadian Construction Association

‘Counterproductive’ to ‘arbitrarily’ yank funding for projects underway or near completion, CCA says

VINCE VERSACE

staff writer

OTTAWA

With no new infrastructure funding for Canada’s construction industry to sink its shovels into in Budget 2010, a concern still remains for stimulus projects currently underway, says the Canadian Construction Association.

“It seems somewhat counterproductive to have project funding arbitrarily pulled back for those that are underway and near completion,” said CCA president Michael Atkinson.

“Those projects may be delayed beyond the March 31, 2011 deadline due to reasons beyond the control of a municipality or contractor. It defies any kind of logic in terms of the overall economic stimulus it was intended to create.”

The second year of the government’s action plan is pegged at $19 billion, which includes $7.7 billion geared toward infrastructure funding.

Finance Minister Jim Flaherty said the government remains firm on its March 31, 2011 deadline for stimulus-project completion and it will not fund them beyond that date.

Flaherty added that the government has refused requests for additional funding and is focused on balancing its books within five years. The government aims to slash its deficit in half over the next two years to $27.6 billion and by 2014-15 have it at $1.8 billion.

WILLIAM CONWAY/PROGRESS PHOTOGRAHY

The government will extend its First Nations Water and Wastewater Action Plan for two more years and will conduct a review of its current approach to First Nations infrastructure funding. Every year the government invests about $1 billion in First Nations infrastructure.

Atkinson noted that the lack of continued infrastructure stimulus and little new infrastructure investment dollars demonstrates why governments cannot just invest in key infrastructure to stimulate the economy in the short term.

“You need infrastructure as the key underpinning to Canada’s continued competitiveness and growth,” said Atkinson. “Governments at all levels need to learn from lessons of the past.

To cut capital spending when the fiscal situation gets tight is very dangerous — you are essentially borrowing from your future.”

The budget also announced that the Employment Insurance premium rate will remain frozen to the end of 2010 with no indication of what will occur in 2011. CCA and other business experts are concerned that with a freeze on EI rates ending in 2011, it could hike employer contributions the maximum 21 cents to $2.63 per $100 of employee insurable earnings.

“Given that 90 to 95 per cent of construction firms are small business companies and such companies are key to economic recovery, it is unfortunate to possibly have maximum increases starting in 2011,” said Atkinson. “It will be a burden to undertake those increases during this fragile recovery, especially with government hoping to look at employment gains.”

George Gritziotis, executive director of the Construction Sector Council, noted that though eventual EI hikes could be a concern, construction had a busy year in 2009 and will continue to do so this year thanks to the economic stimulus plan and expected economic recovery.

“EI could create a more restrictive ability for the industry in hiring, but we also have to keep in mind there is a load of work out there,” Gritziotis said. CSC anticipates that 50 per cent of construction-related stimulus projects will unfold this year.

The government reports it has stimulus funding in place for 16,000 projects, of which 12,000 have begun or have been completed.

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